Keeping Up with Tech: How can digital health start-ups compete with the rise of consumer wellness solutions?

As Apple, Google, and other tech giants expand their services, access to high quality, personal health data becomes more accessible for the average consumer. But what happens to the digital health start-ups operating in this space? We’ll take a look at examples in two popular subsegments- women’s health and cardiovascular health- to see how successful companies have managed to differentiate their services from larger competitors.

In the wake of the COVID-19 pandemic, digital health services are more popular, and more accessible than ever. Cardiovascular digital care and women’s health (also known as “femtech”) are two particularly attractive subsegments, each boasting thousands of app-based solutions and hundreds of millions of users a year. While these two markets appear different on a surface level, they both have a consumer-oriented nature and a huge addressable target market. For app creators, anyone who menstruates can benefit from a well-designed symptom and hormone tracking application. And anyone with an interest in wellness and general heart health is a potential user of a fitness wearable.

Companies are looking to get into these markets, including tech giants like Apple and Alphabet, who now offer wearables and integrated solutions of increasing medical quality. Apple has been progressively incorporating sensors for data capture, offering readings for heart rate, calories burned, steps, blood oxygen, and even a 1-lead EKG which can detect normal and abnormal sinus rhythms. Apple has also taken a step into women’s health, creating an app for menstrual cycle tracking, and launching a cohort study with Harvard School of Public Health. The study will examine the tracked data of over 10,000 women to better understand the science around women’s health and menstruation that will likely guide the company’s future digital health strategy.

Alphabet, Google’s parent company, recently closed a monumental, 2.1 billion dollar acquisition of Fitbit, the second largest consumer wearable. With a similar service offering, the company is also expanding lines directed towards children, women, and launching a multi-year health equity research study.

As these companies continue to make moves into digital health and expand their target audiences, start-ups with similar consumer-oriented wellness and health offerings find their business models and user base threatened by a service offering from a much larger competitive. In order to remain competitive in this market, digital health start-ups must differentiate their product significantly by targeting a more niche audience. In moving away from general consumer health, companies can offer a digital therapeutic alternative or position themselves as a medical device, offering higher quality data interpretation. Both of these strategies involve significant efforts to integrate the solutions within the healthcare system. We’ll take a look at these two strategies through the case stories two successful companies in femtech and digital cardiovascular health. Both of these companies launched with consumer-centric approaches, and have now found a more medical niche.

How can start-ups remain competitive against Apple, Alphabet, and other tech companies entering digital health?

Companies can offer a digital therapy or medication alternative.

The term femtech was coined by Ida Tim, founder of Clue. The company is clearly an industry leader, with over 60 million global downloads and about 1 million monthly active users. Clue offers a free menstrual cycle, symptoms, and hormone tracking app, but had struggled in the past to monetize its services beyond an in-app purchase model. In response to tight competition from similar start ups and the launch of Apple’s cycle tracking app, the company launched the first “digital contraceptive” in 2021. With only information regarding the user’s menstrual start and stop days, the company has developed an algorithm in that alerts users of low risk and high risk pregnancy days. Users can then adjust their sexual activity and use of contraceptives accordingly. A yearlong clinical trial found the digital service to be comparable to all forms of traditional contraceptives, with over 92% accuracy with typical use, and 97% accuracy with perfect use. The service will soon be made available to users in the U.S., and indicates a shift from the company’s original approach, to one that requires the support of healthcare practitioners. While the service will remain over-the-counter, the company is taking significant efforts to market the solution to U.S clinicians, who remain a key distribution channel. (If you’re curious to read more about the growing femtech market, check out our 2020 report, linked here.)

Companies can position themselves as medical devices by offering a higher quality data capture.

Alivecor is a market leader for portable, connected EKG devices. In 2017, the company launched with a wearable EKG strap which could connect to any smartwatch, but shortly removed the device from the market following the release of the Apple watch 4, the first with EKG capabilities.

Instead, the company has shifted to a more medical target population, offering a portable 6-lead EKG sold directly to individuals with diagnosed atrial fibrillation or other heart complications. The company also generates revenue via in app purchase of a premium plan, which includes data export and detailed reports. However, the company has long been precariously placed in between the competition of low-lead, consumer wearable EKGs on the one end, and higher quality, medical solutions on the other. In fact, it has competed with Apple since it removed its smartwatch strap from the market in 2017, the same year it launched almost simultaneously with the Apple watch 4.

To continue differentiating its product, the company is moving towards a more medical, rather than consumer-friendly, product. Kardia has raised its medical accuracy, launching, and gaining FDA approval for its algorithm that interprets atrial fibrillation from premature heart beats, a complicated reading that even cardiologists often misdiagnose. Now, the company also markets directly to cardiologists, allowing for remote patient monitoring. While the product is solidified, the business model remains shaky. Alivecor still sells its devices directly to users but offers an RPM dashboard free of charge to participating doctors. The doctors can also gain financial benefits by taking advantage of several corresponding heart monitoring codes. (Interested in learning about how business models affect success in digital health, and why integrating with the health system is crucial? Read more in our blog piece, Success in Digital Health, linked here).

It’s interesting to note that the company has launched several patent lawsuits against Apple, with most recent efforts attempting to ban the sales of Apple watches in the U.S., under claims of patent infringement. Although with Apple already having faced similar lawsuits, and given the sheer size of the company, this strategy remains a rather shaky alternative.

As competition grows harsher from tech companies, digital health start-ups must adapt their service offerings to stay relevant, especially by redefining their target niche. Providing medical grade data or digital therapeutics are two such strategies. If you are interested in learning more about the changing digital health market, or looking for how to improve your digital service offering, do not hesitate to get in touch with us.

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