The value proposition of consumer medical devices should not be ignored, not now, as consumers increasingly engage in personal health, nor in the future of healthcare, where patient generated data is instrumental in population health management. In a way it can be argued that personal health management is a prerequisite for effective population health management.
It comes as no surprise that things are not where they need to be. Connectivity rates have increased immensely in the last five years, pointing at better circumstances for integrated health initiatives, yet meaningful use has not moved much. Connectivity should not be mistaken for continuity. This is perhaps the biggest hurdle facing the consumer medical devices market, in terms of long-term growth.
Global market update:
The world market for consumer medical devices was worth an estimated $11.4 billion in 2017, up from $10.6 billion. IHS Markit sustains its previous forecast levels, with minor adjustments. This market is expected to reach $16.2 billion in 2022, at a compound annual growth rate (CAGR) of 7.3%. Americas and EMEA are nearly identical in size, both representing approximately 40% of the global markets. The United States remain the largest country market, with over one-third of global revenues. The China market, more than tree times smaller than the US market, remain the fastest growing with a CAGR of 12.4% to reach $1.8 billion in 2022.
Hearing aids continue to be the largest category with approximately $6 billion in revenues for 2017. The hearing aid market is experiencing moderate to high growth, as adoption is set to increase among the baby boomer segment. In Q2 2018, Widex and Sivantos (previously Siemens Audiology) announced their intent to merge. If approved, the new company will become the third largest hearing aid manufacturer, behind Sonova and William Demant.
Another noteworthy category is electrocardiogram devices, which is poised for high double-digit growth rates in the forecast period. In 2017, FDA approved AliveCor’s Kardiaband, a band for Apple Watch that provides medical grade ECG readings. In addition, Apple is rumored to include ECG in the next generation Apple Watches. IHS Markit anticipates consumer ECG to reach global revenues of $72.1 million, at a CAGR of 38%. In addition to consumer ECG, patches also remain a high-growth category.
In terms of the competitive environment, hearing aid manufacturers William Demant and Sonova remain the market leaders due to their dominant positions in hearing health. The merger of Widex and Sivantos will bring the company right behind Sonova in overall market share. Beyond hearing aid manufacturers, Omron has further cemented its leading position in consumer diagnostics and therapeutics, as its healthcare segment grew more than 30% in 2017.
It is not all good news in consumer medical devices. Although this remains a small transaction, Nokia exited the market with the divestment of its digital health portfolio, which originated through the acquisition of Withings in 2016.
Sensor technology and algorithms continue to improve. In recent years, optical sensors have experienced significant uptake for heart rate monitoring. However, optical sensors have yet to deliver in terms of accurately detecting other vitals such as glucose levels and blood pressure. It is highly doubtful that optical sensors will be able to deliver within these use cases, despite many previous attempts. For glucose monitoring, Dexcom released the G6 in early 2018 – its latest generation continuous glucose monitoring solution, which does not require any additional finger pricking by the user. Diabetics using the G6 will technically not need a glucose meter. This advancement will not impact the five year forecast for glucose meters, but is surely a sign that the conventional glucose meter will become obsolete at some point.
Beyond sensor improvements, manufactures continue to embed intelligence in devices in some way or another. In iHealth Labs Clear blood pressure monitor, user experience has been enhanced with voice and with colors that qualify blood pressure levels. In Omron’s newest blood pressure monitor, Evolv, the so-called Intellisense Technology ensures correct positioning of the cuff without any user interference. Poor position of the cuff is the number one cause of low quality home readings. Intelligence also appear at more sophisticated levels in the hearing aid market. In Q2 2018, Widex released the first hearing aid featuring machine learning that automatically adjusts the hearing aid settings. Poor hearing aid fitting is among the top factors for low market penetration. Automation will bring entirely new efficiencies to the hearing aid market’s value chain, and further increase penetration. Current penetration rate is approximately 20%.
Finally, there are also improvements in software that are pointing at better circumstances for continuity. Apple’s health app now features an actual health record that individuals can carry with them always. More than 40 health systems in the United States have integrated with Apple’s health records. This does not imply a main stream adoption, and certainly not so in a global context, but there is a clear effort to bring continuity of data in healthcare, and the execution is best-in-class so far.
For questions or inquiries, please contact Roeen Roashan, Roeen.Roashan@ihsmarkit.com