U.S. Digital Therapeutics Market - Industry Outlook and Forecast 2022-2027

MARKET INSIGHTS

The U.S. digital therapeutics market is expected to grow at a CAGR of over 33% from 2022 to 2027 and is expected to cross $8 billion by 2027. Continuous research & innovation, an increase in the incidence of chronic diseases, awareness among the masses, and approval by the regulatory government will help to expand the U.S. digital therapeutics market size in the upcoming years. However, increased pharma investment and healthcare focussed start-ups are more likely to act as market drivers for the digital therapeutics market and impact and shape the future of the U.S. digital therapeutics market to a more significant extent.

Healthcare and technology have merged and created a new category of digital health known as digital therapeutics. Digital therapeutics (DTx) is a subset of digital health that delivers therapeutic interventions to patients utilizing evidence-based, clinically evaluated software for treating, managing, and preventing a broad spectrum of behavioral, mental, and physical diseases and disorders. Digital therapeutics plays a significant role in the treatment and disease management of various chronic and mental health conditions. It presents potential solutions for chronic disease management, including congestive heart failure, type 2 diabetes, Alzheimer's disease, and cancer.

Digital therapeutics (DTx) deliver evidence-based therapeutic interventions to patients driven by high-quality software programs to prevent, manage, or treat a medical disorder or disease. They are used independently or in concert with medications, devices, or other therapies to optimize patient care and health outcomes. DTx products incorporate advanced technology best practices for design, clinical validation, usability, and data security. Regulatory bodies must validate them to support product claims about risk, efficacy, and intended use. It empowers patients, healthcare providers, and payers with intelligent and accessible tools for addressing various conditions through high-quality, safe, and effective data-driven interventions.

Regulatory jurisdictions most frequently categorize digital therapeutics as a subset of software as a Medical Device (SaMD), a framework developed by the International Medical Device Regulators Forum (IMDRF). All DTx products qualify as SaMD, but not all SaMD products are approved as digital therapeutic. However, a dedicated FDA regulatory framework for SaMD products remains in flux. Some DTx must undergo randomized controlled trials under the premarket approval process to demonstrate safety and efficacy like traditional pharmaceuticals.

IMPACT OF COVID-19 ON DIGITAL THERAPEUTICS

After the COVID-19 pandemic broke out, the utilization of DTx applications in various fields boomed. DTx provides unique solutions to satisfy healthcare needs, reducing the danger of COVID-19 exposure during a hospital visit. The COVID-19 pandemic joined the other major drivers for the growth of DTx, such as enhanced focus on preventive healthcare, high incidence of chronic diseases, and affordable gadgets due to technological advancements. In the post-COVID era, DTx became a dominant player in the digital health market, and its scope is likely to lift the U.S. digital therapeutics market.

Entry of Several Start-ups and Rapid Surge in Funding & Investments for DTx Companies

The goal of digital therapeutics is to treat chronic conditions at scale, relieving some of the significant stressors on the medical system, such as physician shortages. With the rise in the prevalence of chronic diseases, there has been a growing awareness of digital therapeutics. Owing to the gradual adoption of DTx, several companies have emerged in the digital therapeutics market, working with extreme expertise and intent to satisfy therapeutic needs. Furthermore, U.S. digital therapeutics market saw significant funding growth in 2021, with start-ups delivering medical interventions using evidence-based software for managing and treating a broad spectrum of diseases reporting surging investments. Investments in DTx were at a record in 2020 with $1,065 million with 64 deals. DTx start-ups are likely to increase at an incredible rate, and competition is fierce for the favor of providers, payors, and employers.

Digital therapeutic solutions have caught the eye of big pharmaceutical organizations that started to invest and form strategic alliances with digital therapeutic companies. The rising need to create value beyond drug discoveries, increasing pricing pressures, and the steady incline in chronic and complex diseases all around the globe have majorly contributed to these partnerships. For instance, in early 2021, Click Therapeutics and Otsuka Pharmaceuticals announced a new remote clinical trial conducted on Verily's Project Baseline platform. In addition, many DTx companies have attracted significant venture and private equity financing to compete with traditional biotech pharma & companies developing drugs for similar indications. For instance, Pear Therapeutics developing DTx for substance and opioid use disorder raised around $139 million.

Digital therapeutics and telehealth companies can contribute to solutions more effectively than ever by leveraging data from wearables and other digital sources. These technologies can drive more profound insight, influencing patient behaviors to prevent and manage chronic conditions. With the pandemic significantly raising the adoption of telehealth and virtual care, telehealth companies are looking to digital therapeutic platforms to enhance the value of their services. For example, Aetna's telehealth business unit, Healthagen, collaborated with Welldoc and LifeScan to assess the usage and potential health benefits of OneTouch Reveal Plus.

Artificial Intelligence & Virtual Reality assisted Digital Therapeutics.

Software applications are playing a significant role in providing digital therapeutic solutions. Mobile app-based digital therapeutic programs are being delivered at a low cost and massive scale, helping prevent disease progression and saving insurers billions of dollars. Some digital therapeutics are replacing medication with behavioral-based treatment, such as apps that use visualization exercises to help people with insomnia.

For the U.S. Digital Therapeutics market, where many new and innovative applications are launched frequently, A.I. plays a significant role in driving personalization and engagement to help patients achieve better health. AI-enabled therapeutics offer diagnosis and personalized care by tailoring the treatment and anticipating needs and challenges based on the individual's behavior. Digital therapeutics coupled with artificial intelligence (A.I.) and machine learning (ML) allow more effective clinical observations and management at the population level for various health conditions. Furthermore, virtual reality in digital therapeutics is gaining significant attention. It focuses on mental health, such as studying the mental states based on brainwave patterns. It also targets the promotion of healthy lifestyles through innovative virtual coaching.

INSIGHTS BY APPLICATION

In 2021, the treatment & disease management segment accounted for more than 80% of the market share. This treatment & management market will increase its domination during the forecast period and is likely to grow at a faster growth. This segment includes managing and treating diseases like chronic care, mental health & neurological disorders using DTx. Digital therapeutics are being increasingly adopted due to the growing concern of chronic diseases. It is intended to help patients change their behaviors, often through cognitive-behavioral therapy (CBT), to successfully implement care plans for their chronic health or mental health conditions.

• Treatment & Disease Management: Vendors targeting the treatment and management of various diseases are Teladoc, Canary Health, Noom, Cognoa, Pear Therapeutics, CureApp, 2Morrow, Sharecare, and others
• Preventive Care: This includes pre-diabetes, weight management, and others. Vendors involved in providing digital therapeutics in these areas are Omada Health, One drop, WellDoc, Lark Health, and others.

INSIGHTS BY END-USERS

In 2021, healthcare providers accounted for the largest share of 29.11% in the digital therapeutics market in the United States Digital Therapeutics empower patients, healthcare providers, and payers with intelligent and accessible tools for addressing a wide range of conditions through high-quality, safe, and effective data-driven interventions. It promises many advantages for physicians, care providers, patients, payers, employers, and other stakeholders. As primary end-users, patients are at the core of the DTx landscape. Most therapies are delivered via smartphones or tablets to patients, increasing access to care compared to traditional treatments.

COMPETITIVE SCENARIO

Vendors dominating the U.S. digital therapeutics market are developing strategies such as partnerships, collaborations, joint ventures, mergers, and acquisitions for their growth and establishment. Major companies made successful partnerships to advance the adoption of DTx. Noom and Eversana partnered to cater to patients with chronic conditions and rare diseases and check patient adherence and engagement for long-drawn-out therapies. The U.S. digital therapeutics market consolidates with vendors indulging in strategic acquisitions and collaborations with pharmaceutical companies to enter the digital therapeutics market and extend their presence in the market. Some significant acquisitions also took place in the U.S. digital therapeutics market are:

• Biofourmis acquiring Gaido Health
• Virgin Pulse acquiring Blue Mesa
• Novartis acquired the digital therapeutics firm, Amblyotech.

Vendor partnerships and strong I.T. capabilities are essential to successfully implementing digital therapeutics across the healthcare value chain. Vendors need to collaborate to take digital therapeutics forward from single-use applications into system-wide integration with other infrastructures to deliver cost-effective and high-quality care to patients.

Major prominent vendors accounting for a significant share in the U.S. digital therapeutics market include 2Morrow, Akili Interactive Labs, Cognoa, Fitbit, Kaia Health, Lark Technologies, Teladoc Health, Omada Health, Pear Therapeutics, ResMed, WellDoc, Dario Health, and Happify.