According to the World Health Organization, skin /dermatological diseases affect almost 900 million people globally at all times. The impact of skin conditions on quality of life, well-being, and mental health of people, along with the fact that the visible skin change could be an indication of more severe medical illnesses beneath, present an enormous socioeconomic burden. The pandemic has transformed the dermatologic practice with novel digital services enhancing the quality of care and improving health outcomes in this space. In a candid conversation with Dr. med. Martin, CEO of dermanostic, one of the forerunners and according to company the largest online dermatology practice in Europe, we explored how dermanostic’s digital service empowers people with skin conditions by providing diagnosis, personalized treatments and prescriptions in just 4 hours, their business model and commercial strategy, as well as the importance of building an ecosystem and the trends that shape the space.
Today, millions of people suffer from some form of a skin disease, like acne, eczema, contact dermatitis, cancer, and psoriasis. In some cases, a skin condition’s effect on one’s quality of life could be devastating. And still, in a lot of countries the waiting time to address a skin change by a qualified dermatologist can take months. The pandemic has transformed the way dermatology care is delivered.
Integrated digital care models with focus on providing more efficient and tailored care to patients with point of care diagnostic tools and teledermatology have been a game changer for many. Easier online access to dermatologists from one’s own comfort place, less waiting time, reasonable cost, user friendly and secure high-end quality care services have impacted positively health outcomes and enhanced the standard of living.
Funds in the digital dermatology space are also catching up with the rest of the digital health sectors. Different stakeholders are partnering with and / or investing in novel start-ups to gain market share and / or strengthen their positions in the digital dermatology market. Just this month (January 2022) Beiersdorf has invested in dermanostic via its OSCAR&PAUL Beiersdorf Venture Capital unit, in October 2021 Zerigo Health, a connected skin therapy company scored $43M with some of the investors being Cigna Ventures, Leverage Health Solutions and Leaps by Bayer.
What does it mean to have a successful teledermatology service? Why does it make no sense for a dermatologist to offer a video consultation? How big is the digital dermatology market? What are the key trends that drive the market?
To explore the teledermatology space, we talked to Dr. med. Martin, CEO of dermanostic, about how the company has disrupted this market in Europe in just 2 years, their key competitive differentiator and engagement strategy, how a digital health ecosystem can play a key part in the patient journey and what is ahead of dermanostic!
Enjoy the interview!
Research2Guidance: In November 2021, you won the German Medical Award in the “Medical Health” category and got a 2nd place at GRÜNDERPREIS NRW. Congratulations to you and your team! Can you please briefly introduce dermanostic.
Dr. med. Martin: Thank you. Our team is happy and very proud with the honors.
dermanostic is a company founded by four doctors with a mission to empower people with skin conditions by offering diagnosis, personalized treatment, and prescription by experienced dermatologists at a flexible time and place, without having to wait weeks / months.
In April 2020, our patient-friendly app was released. We treat all skin, hair, and nail changes as well as sexually transmitted diseases with our teledermatology service.
Anyone can contact our high-qualified dermatologist via a smartphone. One just needs to download our app, take and upload 3 photos of his/her skin condition, and answer a short questionnaire. Within 4 hours a digital doctor’s letter with a diagnosis and specific treatment recommendation, including a prescription will be sent back.
In less than 2 years, we have become the Europe’s largest teledermatology practice. We have now 50 000 patients treated by us.
Research2Guidance: This is impressive. You have launched your teledermatology service during the pandemic, which was a driver for the increase in the telehealth adoption and usage. Yet, dermatology might be viewed as a bit more specific area. Did you have any challenges?
Dr. med. Martin: Yes, you are right. At the beginning when we were introducing our teledermatology service, we had to argue a lot if telemedicine works, if a dermatologist can really do the diagnosis via an image sent through a smartphone, is it possible, is it safe enough, etc.
Today, we no longer have such conversations. No one is asking us such questions or is questioning the possibility of getting personalized treatment therapy for a skin condition. I think with time most of us have used telehealth, we know how it works and what to expect and we like the convenience it offers; thus, we believe it’s worth it. It was fascinating to witness this shift in people’s / stakeholders’ perception.
Research2Guidance: Your model is business to consumer. How do you ensure your commercial success?
Dr. med. Martin: Yes, our business model is B2C.
Our focus is patients and for us is key to offer higher-quality medical assessment of their individual cases, the right therapy recommendation and overall, the best user experience. We are working with the finest dermatologists, as of today 12 doctors, and we make sure that their experience and expertise are the right match through our internal medical auditing. It is important to note that dermanostic is not a platform, and one can’t find thousands of doctors or just any doctor.
The patients are paying 25 EUR per case, and this is our only revenue stream. Our commercial success depends on patients’ experience and the medical quality we deliver, as well as on the number of patients we serve. We are profitable when we have a lot of patients, more than a thousand a day. I believe that if we have patients that are very really satisfied, the money and more patients will come.
Lastly, we are present where people are. We are active on Facebook, Instagram, YouTube, LinkedIn. Our TikTok videos are very popular. We share short videos on “hot topics” like acne, moles, skin changes in the genital area, etc.
And our team has created a skin lexicon with detailed free information on many skin diseases, explained in an understandable way, which is not only useful, but saves further research and time.
Research2Guidance: Have you seen any difference in users’ behaviour or on your business during the lockdowns and now in the “new normal” when users can choose between on-site and online doctors visit? How many of the patients are coming back for a new prescription, new issue?
Dr. med. Martin: Today, in the “new normal” as you called it, we still have a stable growth. I think there are two reasons for that.
When you use our teledermatologist for the first time, you see how easy it is and how convenient it is for you. In just 4 hours, you get all you need to address your skin condition and get better from a highly qualified experienced dermatologist.
There is this “Oh, wow, I can do that every time. It is time efficient. All I must do is take photos, share them and that is it.” We see that for easy cases people are using our services again and again. Of course, if there is a more complicated case a user might go to an on-site doctor.
The second reason is that the waiting time for an appointment with a dermatologist is long. One needs to wait between 4 to 6 weeks. In some countries in Europe, it could take 2 to 3 months.
For most of the skin problems it is enough to use dermanostic, and one gets diagnosis, treatment plan and prescription all in the comfort of his/ her home.
Nearly 1/3 of our patients are using our services multiple times. It really depends on their diagnosis. For example, atopic dermatitis, acne are chronic diseases, one needs a new prescription every 3 months. With our prescription one can buy the drugs in the pharmacy. Of course, with time the condition gets better, but the treatment needs to be continued.
We also have patients that have different skin changes. They might have used our service half a year ago, they were happy with the treatment and the result, and now they are back with a new skin issue.
Research2Guidance: dermanostic is a German company. In which other countries are you in?
Dr. med. Martin: At the beginning, our focus was on the German speaking region, mainly Germany and Austria. In the middle of 2021, we became feasible in 8 languages, including English. This expanded our global reach, and we could offer our teledermatology service to people around the world.
We have users / patients not only from Europe, but US, South America, etc. We can diagnose their skin conditions and send treatment recommendations; however, because of the regulations our prescriptions are valid only in the EU. So, people outside the EU, including Great Britain and Switzerland can’t use our recipes and will not be reimbursed by their health insurances.
Research2Guidance: Do you have doctors present in all these countries?
Dr. med. Martin: Today, our doctors are based in Germany, and we can meet the needs and expectations of our users/ patients, globally.
For example, we now offer our teledermatology in the Netherlands, and one of our doctors speaks also Dutch. In the future, when we are at the point “Ok, this market is very interesting, our service is well received and there is a huge demand for it, we definitely need to expand our presence in the Netherlands with doctors and nurses, and even our marketing initiatives, etc., we will do it.” It really depends on the size of the market and our position there.
Research2Guidance: Interesting. Can a patient choose his / her doctor?
Dr. med. Martin: Normally, the patient will get the doctor who is available to look at his / her specific issue right away. But one can choose or wish to “be in touch” with the same doctor he / she got the diagnosis and treatment from the last time. In this case, the waiting time might be a bit longer, as it depends on whether the doctor has the time now, but normally there is no problem, and it doesn’t take weeks or months waiting.
Research2Guidance: Do you plan in the future to expand your service and offer video consultations with a dermatologist?
Dr. med. Martin: No. We are offering teledermatology via image and text, called “store-and-forward” solution or asynchronous telemedicine. This live consultation via video is not feasible in the dermatology, because the quality of the camera during the session is not good enough to set a diagnosis, also it depends a lot where one has a skin condition, for example, if it is something on the face is easier to show during the video consultation, but what if it is on the foot or genital area?
And from a doctors’ point of view: asynchronous telemedicine allows high quality service to be delivered, as it is easy to receive good skin images, read the answers to the questionnaire and make the diagnosis, and it is highly convenient. Video consultations are time consuming and for the doctor it doesn’t make any difference on-site appointment or a video appointment. There is no benefit, so it is not that attractive to offer telemedicine in this form.
Research2Guidance: Very good points. Who are your competitors and how do you differentiate your service offering?
Dr. med. Martin: We must separate the market into two segments, we have the teledermatology market, where market players focus on teledermatology, like we do, and we have the market with a general telemedicine.
If we look at the teledermatology market, dermanostic is the biggest player in Europe for now in terms of patients’ cases. There are some smaller companies that have a similar service offering, but their business is organized a bit differently. dermanostic is not a platform. We have our own highly qualified doctors dermatologists, and we do a lot of medical quality assessment. So, this is one of our “unique selling points”.
And if we look at the general telemedicine market, there are big players that have a lot of patients. But they are mainly focused on general medicine. For example, for a skin condition like acne one can get a prescription there too, but in general there are no dermatologists and / or the few specialists have no teledermatology experience.
One needs experience and practice, and it is not enough just to be a doctor. We have training for our doctors, so we make sure that they are good in diagnosis and in teledermatology. Another point that makes us stand out in this space.
Research2Guidance: How big is the digital dermatology market. Where is the most advanced market and why?
Dr. med. Martin: Typically, the US is the biggest and most advanced digital health market in the world. In terms of investments in digital health it is a leading market as well.
It is not that easy for a European company to go to the US and of course the other way round is valid too. I would say the challenge is more of a legal thing. If you are a doctor in the EU, you can practice in every EU country and you are allowed to make a diagnosis, yet you can’t just like that practice in the US. So, one needs to establish its own entity there.
There are some studies which state that the overall market volume for teledermatology will reach $40 billion US worldwide by 2028.
Research2Guidance: What are the trends in the space that excite you?
Dr. med. Martin: What excites me a lot is combining different telemedicine techniques. For example, one is wearing a smart watch which is measuring his / her heart frequency, blood glucose levels, etc. It is one thing to see some numbers, but what if the next step is to get a recommendation, for example, a special food or I even get a message “This morning you will get a different recipe for a smoothie because it will make you feel better today.” So, this e-health with having several ideas connected to empower a person with individualized tips and actionable insights is great.
And if we look at the A.I., how about doing a diagnosis without a doctor. When there would be an A.I. which is great at this, a lot of companies will try to offer that, and it will be very easy for the patient to use it.
Research2Guidance: Are you thinking in the A.I. direction?
Dr. med. Martin: Yes, we are.
It all depends on the quality of the images, and it is not about the quality of the image itself, as it is always good, but you have a lot of data points that need to be considered. Today, we have dermatology images, but they are in clinics. Every clinic who has its own dermatology department has a special photographer just for the pictures.
But this is not the reality when a patient sends his / her own photo. You might see a dog behind the person sitting on the sofa and it is hard for the A.I. to locate the skin in the photo. So, you need a large database with real photos taken in a natural environment. We are collecting all the images, and we are doing our first assessments, first proof of concepts on that. Proud to say, we have very good results. It depends on the disease, but on common diseases we have about 70% automatic scanning. However, at present, we are not allowed to use that on real patient cases because of a lot of legal requirements. So, we are not!
Research2Guidance: For just nearly 2 years on the market, you have your fair share of success. To accelerate your growth, drive innovation and offer a better user experience, have you thought about building your ecosystem?
Dr. med. Martin: It is very important to have an ecosystem and I believe a company must try to work / partner with every stakeholder, because this is the most beneficial for the patients.
A patient has a long health journey, and one needs to have multiple touch points. At present, in Germany, we are partnering with some of the pharmacies. One can go in one of them and say, “I need a skin check”. The pharmacist might look at the skin if it is in a visible place and still, he / she might need a diagnosis or treatment recommendation by a doctor. So, he / she will suggest to the customer to use dermanostic. In this case, the patient gets a combination of offline and online worlds.
Research2Guidance: Some of the skin changes are just symptoms showing on the surface and the root cause could be, for example, a leaky gut and then a more holistic approach is needed. Are you planning to expand your ecosystem to partner with, let’s say, dieticians, nutritionists, meditation specialists, sleep doctors, Pharma?
Dr. med. Martin: I see your point. Today, we are doing it the other way around. We have patients with interesting diseases, and we can see that the dermatology problem is really just a symptom of a disease coming from an internal medicine.
So, as a dermatologist we can’t solve it properly. Of course, we can prescribe a cream, but the problem won’t be solved. So, we have this expert premium with a gynaecologist, urologist, internal medicine, etc. and we can reach out to with “This is a case for you. It is not that we alone as dermatologists can solve this problem.”
And when it comes to other stakeholders, for example, a Pharma is conducting a big study to test a new drug and naturally there are skin symptoms in a lot of these cases. So, we can help their patients to treat these symptoms while taking part in the study and most importantly we can tell our Pharma partners whether their new drug was responsible for that or not. By using dermanostic they do not have to pay a lot for dermatologists and expert opinions, patients do not have to wait weeks or months to have diagnosis, treatment plan and prescription. Often there is another skin problem that is not related at all to the study that has come on the surface, and we can solve it very easily.
Research2Guidance: What lessons have you learned during your entrepreneur journey?
Dr. med. Martin: I think the main lesson for me is one needs a lot of time to succeed in this market. We started with marketing and growth strategies from e-commerce, and soon we realized this approach is not working in the health market.
The healthcare market is based on trust, and it takes time to build a brand that the patient and other stakeholders trust. This is crucial and it is a long way. Especially at the beginning one hears “for how long you have been in the market?” and the honest answer “2 months” leads to “I see. Nice idea. Let’s talk in a year when you have built the name, have a lot of patients, thus you have their trust”.
Now, nearly 2 years on the market, I am happy to say that patients on one hand and the companies on the other hand are coming to us. So, building this trust took time, but it was and still is highly important to focus on that. Only when patients trust you, they will continue to use you, referral you and your service.
Research2Guidance: Just a few days ago Beiersdorf AG announced its investment in dermanostic, through Oscar&Paul Beiersdorf Venture Capital unit. Congratulations. What lies ahead of you?
Dr. med. Martin: Thank you. Our focus in the near future is to have more patients and accelerate our growth in Europe. Being active in more countries is important for us. In Germany our goal is to establish relationships with more health insurances.
At present, we have some partnerships with private insurers who are already paying for our service and their members can get it for free in a way. And this is great, but we also want the public health insurance system to pay for dermanostic. It is a long process and not easy to achieve. Our team is working on that, so we have our first contracts in 2022.
In particular, we expect to be able to leverage the strong market presence of Beiersdorf, the leading dermocosmetics company in Europe, and to include our medical expertise in the Beiersdorf’s universe. At the end of the day, this helps the patients, who now receive holistic teledermatological advice.
Research2Guidance: Dr. med. Martin, thank you very much for this thought-provoking conversation and for sharing your vision and your thoughts about the teledermatology market. We wish you and your team at dermanostic to stay healthy and have a lot of success!
A skin diagnosis including therapy plan and prescription in a maximum of 24 hours: With dermanostic, the dermatologist can be contacted via app, regardless of time and location. Patients need only send in 3 images of affected skin areas and complete a questionnaire. The images are assessed by specially trained dermatologists. Due to the high quality of medical care, 92% of patients are treated completely digitally and no longer need to visit a doctor. The young company from Germany is one of the pioneers of digitization in European healthcare and is the largest online dermatology practice in Europe with over 50,000 successful treatments.