Friday, February 5, 2016

Best of Goldman Sachs digital health market forecast

Below are a select few of the best insights 

Commercially, we forecast a near-term revenue total addressable market (TAM) of $32.4 billion with 45% coming from remote patient monitoring; 37% from telehealth; and 18% from behavioral modification. Chronic disease management falls entirely in remote patient monitoring and accounts for the majority of our TAM projections. At present, we approximate that total revenue is in the several hundred millions with a wide range of company performance, ranging from as low as $5 million to just under $100 million. We acknowledge that the current profit pool is insignificant; however, advancements in technology and sweeping changes to the US healthcare operating environment make us confident in the path to adoption and future revenues. 


Implications for incumbents in a digital health ecosystem. 
Beyond the revenue opportunity associated with digital health technologies, potential systems savings represent a major incentive to adoption – we peg the total savings opportunity (TSO) at $305 billion. When discussing these savings, we are referencing the dollars that we have calculated can be saved through digital health adoption. Taking this one step further, we have sought out to identify the amount of unnecessary/repetitive care or waste in annual US healthcare spending. As is the case with revenue, the vast majority of the opportunity resides in chronic disease management, where we estimate the potential savings could amount to $200 billion, or 66% of our TSO.

In sum we quantify the outstanding “Total Savings Opportunity” (TSO) brought about by digital health to be ~$305 billion (at 2015 chronic disease incidence levels). We expect the penetration of this number to ramp slowly given the early stage nature of these technologies, but have conviction that universal adoption of these systems can cause a significant reversal of trend in healthcare spending growth over time. This number excludes “behavior modification” platforms which stand to eliminate many chronic diseases in general, but on an extremely long term basis.

We build our “Total Addressable Market” (TAM) projection of $32.4 billion in digital health sales as a sum of the most viable near-term opportunity sets (i.e., from the bottom-up). This TAM is comprised of $15 billion in remote patient monitoring, $12 billion in telehealth, and $6 billion in behavioral modification. An important element of these assumptions is that we have isolated our analysis to the most prevalent and highest cost chronic diseases. The logic for this market segmentation rests in the fact that average selling prices (ASPs) are generally in the range of “several hundred dollars.” Therefore, the size of the target patient populations need to be large in order to support the meaningful upfront capital investments needed to validate clinical outcomes and justify high-risk VC commitments. Continuing on that tact, we size telehealth (comprised of standard visits and psychological counseling services) as a $12+ billion opportunity and behavior modification (centered on obesity) as a $6 billion market. In the case study section later in the report, we detail the assumptions behind each component of our TAM build.

It is also important to note that our market sizing estimates represent what we view as a tangible and realistic near-term opportunity for the HC IoT (as we have defined it) and not a “blue sky” or bull case scenario. Framed quite simply, we have sized the market for products that have a targeted aim, a wide addressable market, an operable platform, and drive meaningful and clinically measurable patient outcomes. To caveat our market sizing exercise, we recognize that we exclude a substantial portion of the offerings that comprise the whole of “digital health” (namely consumer wearables, IT solutions, and data-analytics platforms). Each of the aforementioned, individually, could create multi-billion-dollar markets (Healthcare IT, broadly speaking, already has).

Click to view larger image. 


COPD/Asthma Medication Adherence and Disease Management

Propeller Health: inhaler-based sensor to track puffs and prevent episodes
 Invasive Health Failure Monitoring

St Jude Medical's CardioMEMS: wirelessly tracking pulmonary artery pressure
 Non-invasive Heart Failure Monitoring

Vivify Health: Intermountain Health Pilot
Smartphone Enabled Continuous Glucose Monitoring (CGM) 

DexCom SHARE: keeping tabs on diabetes, as easy as checking your email
Remote Cardiac Arrhythmia Diagnosis 

iRhythm ZIO: the wearable patch that provides a diagnosis, faster
Smartphone Enabled ECG for Monitoring and Arrhythmia Diagnostics  

AliveCor: transforming your mobile device into a medical grade ECG monitor
Telehealth 

Doctor on Demand: bringing the physician into the living room
Behavior Modification: Digital Weight-loss Management and Diabetes Prevention 

Omada Health: Diabetes