2022 Digital Healthcare Industry Report

The global overall healthcare industry value is projected to reach $665.37 billion by 2028. Focusing on the global digital healthcare segment of the market, it was valued at $145.57 billion in 2021, and it is expected to reach $430.52 billion by 2028, growing at a compound annual growth rate (CAGR) of 16.9%.

The COVID-19 pandemic led to significant shifts in the healthcare sector, as there was an urgent need to adapt and embrace new ways of operating. Many of these changes ushered in the latest in digital healthcare technology and are here to stay. The digital health segment applies software, hardware, and other tech services to the healthcare sector. The space is comprised of categories such as:

• Telehealth and telemedicine

• Mobile health

• Health I.T.

• Wearable devices

• Personalized medicine

• Mobile medical applications

• Clinical decision-making software

Also, the growing emergence of artificial intelligence (A.I.) is expected to continue to play a much more significant role in improving digital health services.

The increasing adoption of smartphones by clinics and hospitals worldwide is driving the digital health market. Digital tools offer providers a complete picture of patient health and give patients more control over their health. As a result, investment in this space is growing, as digital health has the potential to improve outcomes and boost efficiency.

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By Region

North America held the largest share of the digital health market in 2021. However, the Asia Pacific region expects to see the fastest growth over the next five years, with rising healthcare spending in India and China expected to drive this region’s growth. Most hospitals in China have implemented software solutions that improve their digital healthcare objectives.

Trends Shaping the Sector

Telehealth

Today, most healthcare providers offer telehealth options that enable patients to meet via video conferencing or phone calls. In 2020, one-third of U.S. adults had a telehealth visit for themselves or a dependent, and 63% of adults used telehealth as a preventative service, prescription refill, or routine visit. Additionally, 8 in 10 patients report that they are likely to use telehealth in the future.

In the current landscape, a healthcare provider’s telehealth options can be a significant determining factor in gaining new patients and retaining existing ones. Today, patients are more willing to develop relationships with their physicians via video or phone than in the past. Telehealth has also eliminated some of the stigmas around behavioral and mental healthcare.

Since the pandemic, patients have become more invested in their health and view technology as a way to manage their physical and mental wellbeing. As a result, it has driven demand for personalized products, such as at-home testing kits, online counseling, and nutritional education.

Access in rural areas has improved thanks significantly to telehealth capabilities, opening up a more comprehensive range of physicians in various specialties for once more isolated patients. It also eliminates the time and money needed to travel to and from appointments.

Digital Therapeutics (DTx)

DTx is a new category of medicine that delivers evidence-based therapies through software such as mobile health apps that either replace or complement the treatment of a condition or disease. They help to eliminate gaps in healthcare by improving patient access and supporting value-based care initiatives. DTx products are clinically tested and approved by regulatory bodies just as any prescription pharmaceutical.

The global DTx market is growing as the prevalence of chronic conditions continues to grow, and companies are using their technology to treat these conditions. Before COVID, the DTx space was forecast to hit nearly $9 billion by 2025, but estimates have since been revised, putting the DTx value closer to a $56 billion global opportunity.

In the next five years, there will likely be an increase in mergers and acquisitions (M & M&A) among DTx companies and pharmaceutical companies.

The broader availability of 5G technology worldwide will offer performance improvements that will better support emerging technologies, directly improving cost savings, increasing patient access to quality care, and enhancing patient experiences. As a result, 5G technology is expected to create an annual global cost savings of nearly $94 billion by 2030.

Integrated Medical Technologies

Integrated medical technologies are changing how hospitals and healthcare providers communicate with each other and their patients. These technologies include the following innovations:

• Health records are more accessible and easy to organize thanks to cloud-based, online documents that allow doctors to quickly access a patient’s medical records.

• Healthcare professionals now have more streamlined workflows due to faster Internet speeds and increased connectivity.

• The medical side of the Internet of Things (IoT) is growing quickly and includes wearables that can be monitored and integrated with applications.

• Artificial intelligence (A.I.) and machine learning are enhancing traditional medical devices by allowing physicians to get more accurate info in a timely manner, and better manage crises that emerge when patients can’t make it to a facility right away.

• Remote monitoring allows caregivers to quickly check in on a patient’s condition using all of the previously mentioned innovations.

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Personalization

Since the pandemic, people have become more interested in finding ways to actively better their own mental and physical health. They seek more personalization through a variety of vehicles. These include:

• Physical health applications include step-counters, calorie trackers, and other exercise and nutrition apps. These applications collect more quality data with each use and can be easily shared with caregivers.

• Doctors can use this data to create a comprehensive care plan with preventative measures that lower the risk of emergency procedures.

• Mental health applications such as video chatting.

• Gamification techniques are bringing video-game-style operations to healthcare-related applications. They track performance and compare the data to other users, which many individuals find motivational.

M&A Outlook

Investments in U.S.-based digital therapeutics companies increased 40% per year over the past seven years. In 2021, U.S. digital health startups raked in almost $30 billion—nearly doubling the total investment from 2020. This momentum is expected to continue in 2022.

This year, M&A activity will be used to expand reach and the spectrum of care.

More consolidation is expected in various digital healthcare spaces. For example, women’s healthcare is seeing more investment around fertility, pregnancy, and postpartum care, and employers are revisiting their benefits for new parents. There is also an emergence of more companies that offer health tech opportunities for consolidation and product/service portfolio diversification, such as the Pelotons of the world. Investment has also been growing in behavioral health. Companies that did not scale fast enough or raise capital at high valuations will need to pursue deals. Plus, add in the fact that the big players like Amazon could be eying up digital tech firms. The digital health space is quickly advancing, opening up plenty of opportunities for investment, growth, and consolidation through M&A strategies.

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com

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