Digital therapeutics

What are digital therapeutics?

A new trend out of the fast-growing mobile health (mHealth) market for life sciences, digital therapeutics are software products used in the treatment of medical conditions. A growing number of start-ups and well-established technology companies are introducing innovative applications designed to enable patients to take greater control of their care. They are similar to customer wellness apps, but with one key difference: Digital therapeutics focus on delivering clinical outcomes.

Patients engage with digital therapeutics through mobile apps that:

• Offer basic guidance, such as techniques to overcome insomnia or administer first aid.
• Work in conjunction with a drug regimen to address more complex conditions, like asthma or cancer treatment.
• Use cognitive or motivational stimulation (gamification) to promote behavioral change—allowing biopharma companies to improve adherence and health care institutions to provide preventative measures that could delay or prevent the onset of a chronic disease.
  
• Connect with wearables and consumer electronics to track and capture data and communicate with patients.
• Interface with medical equipment, such as tracking blood sugar levels, by picking up wireless signals from a sensor embedded in the patient’s skin.

In addition to addressing different medical conditions, digital therapeutics also support various stages of the patient health care journey. They can collect, synthesize, and analyze patient data so clinicians can personalize treatment and work with the patient to avoid complications.

Back to top

Better health care through digital therapeutics

Digital therapeutics have the potential to address unmet patient needs that traditional treatments and therapies have been unable to provide. Companies that are able to leverage life sciences technology to address these gaps, in combination with faster product development timelines, could gain a significant advantage over traditional life sciences companies.

For pharmaceutical and medtech companies, digital therapeutics offer a way to differentiate products with a relatively low capital investment, especially compared to the R&D costs normally associated with a drug or medical device. Digital therapeutics also offer an opportunity to extend product life cycles, differentiate products in development, and fill in any gaps in the market for traditional medicine.

The potential of digital therapeutics has inspired companies across industries to explore their options. Technology giants are looking to enter and change the healthcare landscape; payers want to see how digital therapeutics affect reimbursement models while exploring how the patient data collected through such products can be leveraged to inform coverage. Start-ups are introducing innovative ideas to attract investors.

Life sciences companies must weigh how a digital therapeutic offering could compete with—or erode market share for—existing treatments. On the other hand, digital therapeutics could be an important differentiator to help pharmaceutical companies “deliver value beyond the pill.” Digital solutions are also an opportunity for growth, as reflected in the total investment in digital therapeutics, which to date has topped $600 million.¹

¹ Crunchbase Analyst Reports, May 2018. http://www.crunchbase.com

Back to top

Putting life sciences technology to work

When it comes to deciding what type of solution to offer, companies have two avenues to explore. One is to pursue specific therapeutic areas (TAs); the other is to consider digital capabilities that are agnostic of TAs.

TA-focused strategy. By focusing on a specific TA, pharmaceutical and medtech companies can use their clinical and therapeutic expertise to identify opportunities for introducing digital therapeutic applications. A TA-focused strategy can breathe new life into low-growth TAs, (such as cardiovascular) by offering digital therapeutics that complement and differentiate existing offerings. This strategy offers incremental growth rather than transformational, making it more challenging for digital therapeutic initiatives to attract the funding they need.

Digital-capability focused strategy. This strategy allows organizations to focus on the art of the possible—to look for innovative ways that digital therapeutics can be used as a treatment. For example, a digital application might use analytics to stimulate behaviors that reduce disease severity. While a digital-capability focused strategy can be transformational, it also requires bigger investments and a dedicated approach to execute.

After deciding on the type of digital therapeutic solution to offer, some pharmaceutical or medtech companies will choose to build the required capabilities themselves. Others will team up with another company to build digital capabilities, access them through an acquisition, or license them from another company.

Back to top

Navigating the challenges

Unlocking the potential of digital therapeutics requires traditional life sciences companies to navigate a number of challenges, including:

Mastering the art of the deal. Companies will need to develop cross-industry connections and robust alliance management competencies. In turn, technology acquisitions will need to find and negotiate deals based on criteria, diligence focus, valuation approach, and terms that fall outside the usual life sciences acquisition playbook.

Developing digital capabilities and technology industry expertise. Life sciences companies need to master incorporating technology products in the R&D pipeline, establishing new trial designs and operational processes, and developing more go-to-market strategies.

Launching an industry-disruptive product. Digital therapeutics could put life sciences companies in the position of piloting products and defining uncharted territories without a regulatory roadmap. In addition, companies will need to work across industries to develop a reimbursement model for digital therapeutics that may differ from existing models.

Digital therapeutics are poised to shift medicine’s emphasis from physically-dosed treatment regimens to end-to-end disease management based on behavioral change. While nontraditional competitors are entering the market, pharmaceutical, biopharma, and medtech companies can respond by combining their health care knowledge with software technology know-how to co-define the life sciences technology market and capitalize on the growth potential of digital therapeutics.

Back to top