Today, there are more than 425M people suffering from diabetes globally. With the global rise of this metabolic disease, digital diabetes care platforms and mobile health app companies strive to present innovative and patient-centric solutions to empower and encourage diabetes patients’ engagement, so they can better manage their health condition.
Diabetes is a growing global epidemic with 642M people expected to suffer from this metabolic disease by 2040. Although there is a huge market potential, the market penetration of diabetes digital solutions, in fact, for all chronic conditions, is still less than 1%.
A closer look at the digital diabetes market shows that there are a few key market players who drive digital diabetes innovation and disrupt the sector with the help of their mobile apps, connected devices and personalized patient-centric data-driven services. Their digital health solutions provide diagnostic support and remote consultations, give automated customized recommendations and are able to intelligently transform real-time data into predictive models in order to better meet diabetes patients’ expectations and make their daily health challenges more manageable.
We had a chance to talk with one of the top market players in the digital diabetes management arena. In his interview with us, Erez Raphael, CEO at DarioHealth shares the future trends in the digital diabetes sphere and how the company engages with their customers.
Enjoy the interview.
Research2Guidance: As a short introduction to DarioHealth, could you please share the story behind it and what DarioHealth’s service offering is?
Erez Raphael: DarioHealth is a leading digital health global company with mobile health and big data solutions that developed a dynamic engagement platform for people with chronic conditions. Diabetes is the first chronic disease managed by our digital health platform and we plan to serve additional indications in the future. Our digital health solution is data-driven, personalized and patient centric. It combines software, application, and medical device with a targeted professional coaching service that is digitally-enabled by our platform. So, we combined everything as a harmonized solution for people with chronic conditions; right now, specifically for people with diabetes. Our ability to collect continuous data, analyze it and provide personalized health guidance/actions with real-time insights helps us empower diabetes patients and make a significant difference in their daily lives.
Research2Guidance: What is DarioHealth’s value proposition and how does it differ from the other diabetes management solutions on the market?
Erez Raphael: At present, DarioHealth provides a unique comprehensive diabetes management platform. Our solution is integrated; thus, we provide all the elements for an exceptional user experience. We empower our users and help them navigate easier and thrive through their unique health journey with not only the world’s first sleek blood-glucose device that automatically syncs with their smartphone to provide accurate, real-time 100% data-capturing, but also with an automated, customized data-driven guidance and precision treatment.
So, I would say, one of the things that makes our diabetes management solution stand out in the market is this very good engagement capability driven by superb data capturing to provide a unique user experience. Second, our dynamic engagement platform and AI technology are trusted by healthcare and wellness providers to monitor and manage the diabetes population as well as to support their personalized and innovative healthcare services. Third, there is a proven reduction in healthcare costs. Studies have shown that DarioHealth’s 1% reduction in HbA1c yields substantial savings of $100 per patient per month.
Research2Guidance: What is your business model and how do you engage with your customers?
Erez Raphael: We are approaching customers in a direct and indirect way. It might be B2C – directly selling to consumer, as well as it might be through B2B, for example, partnering with payers and health providers.
We sell a membership to our customers that gives them access to our software, to our medical device, disposables, and we also offer a coaching service that is adapted to our users’ lifestyles. So, users are getting everything they need under the membership in a monthly fixed price. Sometimes the cost is being paid out of the pocket by users, sometimes it is being covered by a specific insurance company.
We generate bottom-up demand for our digital diabetes management solution with our patient-centric approach. Now that our diabetes management solution has proven to be a valuable daily companion to these chronic disease sufferers and is able to meet their needs and expectations, we have entered the B2B market through health partners (healthcare and wellness providers, payers, etc.).
When it comes to DarioHealth’s engagement model, for us from the start it was important to create a unique, comprehensive digital diabetes management platform that is able to offer one of а kind personalized, data-driven patient / user experience. Our integrated solution combines in a very harmonious way several key elements: number one is user experience of the hardware – 25% of our users will buy a second and a third device to make their access more convenient, number two is user experience of the application and number three is our AI based engine that makes personalized and accurate real-time interaction possible – sending each user the right message at the right time with the right content. And when we add DarioHealth’s personal coaching on top of the digital platform, we create the right conditions for a high level of patient engagement.
To share some specific numbers: industry averages are that in general, only 17% of users who download an application continue to use it 30 days later. With DarioHealth’s digital diabetes management solution, users are showing 5 times higher activity rate from initial download. Getting as many users as possible is important, but for us what is equally important is that these users be very active and very engaged with our solution. Only then we are able to really empower them and make a major difference in their daily lives.
The way we measure the engagement is by looking at how much time users are spending with our application and interacting within our platform, as well as with our coaches. And here we have also managed to get remarkable results: Our users access Dario services 6-7 times more than actual visits to doctor. Our engagement capabilities, the time that users spend with the application, with the interaction and with the data points that we collect, all this shows that our engagement is at a very high level. And, of course, we strive to be better and to have even higher engagement, which is also related to the commercial part (selling memberships) of our business. Our combined clinical, commercial and behavioral strengths, together under the same platform create a truly great digital diabetes management solution.
Research2Guidance: What is the role of coaching within your DarioHealth End to End Holistic Solution?
Erez Raphael: Coaching plays a significant role in effectively managing chronic disease conditions. Within our digital diabetes management solution platform, the coaching experience we offer is live and automatic. We have an element of AI technology that helps us provide the right message to the right person at the right time, yet because we are dealing with diabetes there is also an element of human touch.
We have basic and premium coaching. Within the premium we provide live coaching support – it might be voice or chat-based or other. Over time we want to make things more and more automated and more and more segmented according to the specific user, the chronic condition, its stage and its specific profile.
At present, our coaching model is available only in the US. We are planning to expand this service and to offer it to the rest of the world where our solution is available. In addition to the US where we have a strong market position, we are commercially available in other 6 countries around the world: UK, Italy, the Netherlands, Canada, Australia, and Germany. We are ready to serve the 48.5 million people living with diabetes in the seven markets.
Research2Guidance: What will be the business strategy emphasis going forward – B2C or B2B?
Erez Raphael: We started with pure B2C. We wanted to offer a good solution that our users/customers will love, and we managed to create that. As a company our belief is that everything starts with the user. Our focus was and is to deliver a superior end to end digital diabetes management solution to empower diabetes patients to self-manage their own condition by looking at their personalized real-time data and be able to take prompt actions to feel better.
The significant number of users who continuously use and trust our solution, together with the very good users’ reviews, show the real value of our work. We are living in a very connected world and if the user is satisfied with our innovative solution, with our customer support and coaching abilities, then everything else follows. And this is what happened. We are heading towards the 100,000 active users, not just downloads or registered users, but real active ones that interact frequently with our platform and generate revenue for DarioHealth. In a nutshell, with the engagement of 250,000 users , the company’s annual revenues would top $100 million. Also, I believe that more engaged users will bring improvements in clinical outcomes. The patient is part of the engagement, education is part of the engagement, behavior and other crucial elements that our platform provides are part of the engagement.
And actually, just recently (June 25th, 2018) we published some clinical data at the ADA (American Diabetes Association) that showed that for more than 17,000 users we managed to generate a high level of user engagement which resulted in improvement of their clinical outcomes. So, our solution proved that better user engagement leads to better health outcomes. We can see through data that this claim is true, across very large real-world user populations. It is important to note that our evidence is not just based on clinical studies that you typically run in a small, controlled environment. It stems from real-world data set, across large numbers of users. This is the real digital health revolution where success is proven in real world data and not just in controlled clinical studies. These data help us gain greater market share in both the B2C and B2B markets.
Today we are also getting into B2B with our DarioEngage platform. We work alongside our healthcare partners to assist them to effectively and efficiently digitize their solutions. We recently launched our B2B employer strategy that will help us in increasing our market opportunities and share.
Research2Guidance: What is Dario’s pricing model and are you planning to be more aggressive with it while entering new markets?
Erez Raphael: Our pricing model is mainly membership-based. More than 60% of our users are under recurring plans. Once again, this shows the quality of our digital diabetes management solution and its high value perceived by our users.
We are looking into successfully expanding our international market presence and having the same pricing model helps us reach our revenue and profitability goals.
Research2Guidance: Which countries are you concentrating on and why?
Erez Raphael: We choose the most cost-effective markets to bring our personalized healthcare management to diabetes patients. We also look at where we can launch successfully with our membership approach and where we can sell our device. We believe that at this stage, the selected 7 markets where our product is approved, which includes the U.S. and Germany, some of the largest markets in the world, can establish DarioHealth’s platform very successfully as a global market leader. We will spur the adoption of our innovative digital diabetes management platform across these current markets and we plan to expand into new geographies. Last year, for example, we successfully launched into the German market, making our innovative and personalized diabetes platform available for the first time in the EU’s largest market. It is an important step in DarioHealth’s global footprint and it helps us reinforce our leading position in direct-to-consumer segment.
Research2Guidance: Do you agree that behavior change can play a significant role in managing diabetes? Do you have proof that it changes how people with diabetes take care of themselves?
Erez Raphael: Yes, I agree. Managing diabetes depends on our daily habits and behavior. With real-time personalized insights and easy-to-read and understand analytics, our digital diabetes management platform can help patients improve control over their health and easily transition their behavior to achieve a better health outcome for themselves.
Research2Guidance: There are already quite a few very good diabetes solutions (mobile apps package together with sensors or services), yet the penetration within the target group is very low. (Addressable market is more than 425M people, but less than 1% of them are using the available digital health solutions). Do you see a reason for that?
Erez Raphael: I have no doubt that, moving forward, penetration will accelerate and be much, much higher. It’s been relatively slow so far due to various reasons. The first reason is the slow adoption of performance, data-driven digital solutions by payers. The more we see solutions like DarioHealth’s platform generate evidence of clinical outcome improvements, the more adoption will increase. The second reason is the nature of the digital health solutions. If we look at the healthcare market and specifically at the mobile health solutions that are created to support the healthcare journey of patients with chronic conditions, we might see a very nicely designed app and we could see some kind of cloud-based solutions that provide, for example, remote coaching. However, when we look closer at the available overall digital health integrated solutions, we recognize that the journey digital health companies are offering is still not providing the best integrated user-centric medical device solutions. For example, users don’t want to use an app and feed data into it. They also don’t want to set up a call with a coach, the expectation is to have a seamless integrated user experience!
I do believe that in a few years from now, the chronic conditions market will reach much higher penetration rates than 1%.
In the digital health sphere, there are a lot of discussions about personalization. In my opinion, personalization can happen with real, good in-context data. If digital solutions are not patient-centric and user friendly, they cannot capture meaningful data and therefore will never be really personalized. I believe that at this point in time there are not so many digital health solutions that offer great user experience.
Engagement is a key ingredient that leads to higher market penetration. Patient engagement comes from how well the digital health solution is able to address and meet the specific needs and expectations of the target group. The overall personalized and data-driven experience integrated in one solution prompts for daily patient interactions. The moment a digital solution is seen as a valuable daily companion by the patient, a needed assistant that uniquely guides him/her to a healthier behavior, is the moment when this digital health solution will be truly differentiated and will have a dominating presence in the life of the patient. And when the overall engagement is there, the payers/insurers are driven to support the solution and the higher penetration will follow. Progressive health insurers together with key digital health providers, like DarioHealth, can play a leading role in the digital health transformation.
If today we see a market penetration of less than 1%, in a few years we will see many more solutions that are personalized and patient-centric, which is one barrier to be solved. The payers’ community will take an active part in financially rewarding healthier and cost saving behavior, and this will also enable a higher penetration. I think that 5%-10% market penetration will be achieved for digital health solutions for diabetes and most chronic conditions.
In fact, a lot of market players are trying to get into the digital part of the diabetes management and at the same time we witness a lot of investment happening. Over time, there will be more solutions like DarioHealth’s. I would like to see more and better patient-centric solutions on the market, and together with our competitors we will revolutionize the market. I believe that when digital health diabetes solutions reach market penetration of 5%-10%, DarioHealth will be one of the leading players digitizing diabetes management. This is where the market is going and this is where DarioHealth is already headed.
We like the fact that more players are entering the space. Ultimately, educating the industry is an important and also very expensive mission, so the more players out there, the faster the education will be. Eventually, the winners will be selected by the users!
We are witnessing a very exciting era where one of the biggest industries is transforming and revolutionizing in a tremendous way.
Research2Guidance: What challenges are you facing? Are there any international market specific differences?
Erez Raphael: DarioHealth is operating in the global digital health space by utilizing big data to better serve diabetes patients with dynamic and novel mobile health solutions. We charge for membership and we are very oriented to performance in terms of clinical outcomes. This is a very progressive model and it takes time to transform the market from selling, for example, disposable medical devices into selling clinical outcomes / performance-based solutions. Some of the payers / insurers welcome this model, but transformation takes time.
Looking into the global market, we see more and more payers / insurers in North America and particularly the USA that are more open to the progressive way of covering insurance. Europe and the rest of the world are a bit lagging behind. And this is in a way the challenge, as we need to make sure that we show how our digital diabetes management solution yields genuine value that leads to better quality of life for patients.
It is a great time in the digital health arena, especially when more and more payers are focusing their efforts and business strategies to improve patient health outcomes among their member base. We are very happy that we are one of the first in the market to use patient personalized data for better managed care and offer real captured data that proves better user engagement, leading to better health outcomes.
Research2Guidance: Are you interested in expanding your business in the future to serve and help improve the lives of patients with other chronic conditions?
Erez Raphael: Yes, absolutely. We are looking at other chronic conditions and this is something that we are going to embed into our platform very shortly. We have the foundation and we believe that digital health, digital coaching and technology are something that should be applied to other chronic conditions.
Research2Guidance: What trends do you see in the digital diabetes management area of the future?
Erez Raphael: I believe that eventually things will be very, very data driven. More segmented and more personalized, so people will get the specific treatment that makes sense for them. The solution will be integrated according to users’ data (it should be an indication, health lifestyle change, things related to food & nutrition and so on). One of the most significant shifts will be that digital diabetes management will be predictive. This means other elements surrounding the chronic condition will help derive conclusions from the data, thus create prevention. The whole treatment will be much more effective, will slow down the progression of disease, leading to increased quality of lives and reduced costs.
Research2Guidance: Your device depends on the mobile device. Do you have a special relationship with any of the mobile manufacturers to address this challenge?
Erez Raphael: Yes, it is not easy to operate a medical device out there when you have hand-set providers that are changing their solution and on the other hand we have regulatory agencies like the FDA. However, we managed to correct this challenge in the last years by creating a relationship with the FDA and with market players that are coming from the hands-on world. We are doing a good job, and this is a part of the user experience that we provide for our users. We believe that eventually digital health should be embedded into consumer products and so that users don’t need two separate devices (mobile and medical device) just because it is easier to deal with from a regulatory point of view. We are facing this challenge and we are winning it.
Research2Guidance: Who do you see as the key competitors?
Erez Raphael: There are some good market players; however, every competitor has its own niche. This is a positive thing, as we have more and more players that educate the market on the concept of payers paying for proved clinical outcomes and not for tools. That’s the real digital health revolution and we are proud to be part of it. DarioHealth is a unique comprehensive digital diabetes management platform that integrates all the components together into harmonized full data and real time capturing solutions. I believe that eventually consumers will vote on who gives them the best user experience and really helps them improved their outcomes.
Research2Guidance: What is next for Dario Health? Where do you see the company in the near future?
Erez Raphael: We have created a high-growth business as an early player and leader in digital healthcare. Revenues have increased more than 80% year over year. Our plan is to accelerate user growth and to be a dominant player in the market. This, I believe, should result in significantly higher revenue for the company.
Research2Guidance: Thank you, Erez, for your answers. We wish DarioHealth all the success.
About DarioHealth Corp.
DarioHealth Corp. is a leading global digital health company serving tens of thousands of users with dynamic mobile health solutions. We believe people deserve the best tools to manage their treatment, and harnessing big data, we have developed a unique way for our users to analyze and personalize their diabetes management. With our smart diabetes solution, users have direct access to track and monitor all facets of diabetes, without having the disease slow them down. The acclaimed Dario™ Blood Glucose Monitoring System all-in-one blood glucose meter and native smartphone app gives users an unrivaled method for self-diabetes management. DarioHealth is headquartered in Caesarea, Israel with a regional office in Burlington, Massachusetts. For more information, visit http://mydario.com/.