Australia's digital health industry set to drive economic growth

ANDHealth has released a report demonstrating that Australia’s emerging digital health industry is in a strong position to tap into growing global demand for digital health solutions. The COVID-19 pandemic has provided a catalyst for the industry, but it has also exacerbated a number of existing commercialisation challenges such as access to customers (71%), ability to raise capital (62%) and ability to secure government funding (44%).

Globally, the digital health market is predicted to reach US$505.4 billion by 2025, up from US$86.4 billion in 2018. ANDHealth’s report — Digital Health: The sleeping giant of Australia’s health technology industry — is reported to be the largest analysis of Australia’s digital health industry, spanning 317 companies and highlighting how aligned our sector is to global market opportunities.

ANDHealth CEO and founder Bronwyn Le Grice said, “Australia’s decades-long policy of supporting innovation, our significant investment into digital health capabilities and infrastructure, and now our highly successful management of the COVID-19 pandemic has given us an unprecedented opportunity to build a world-leading digital health industry.

“ANDHealth’s data shows that our local sector has a pipeline of world-class innovation and technology. However, digital health companies face some unique challenges as they move along the path towards commercialisation, not least of which is that as a sector it struggles for recognition and appropriately focused funding structures here at home.

“To fully realise the potential of this nascent sector, we need to provide support. This sleeping giant, if awakened, will achieve the triple aim of economic growth through high-value STEM-based job creation, increased advanced manufacturing and clinical trials activity, and sovereign health system capability and resilience.”

A blueprint of Australia’s emerging digital health industry

‘Digital health’ is a term that is largely misunderstood as ‘health IT’. However, ANDHealth’s report uses the US Food and Drug Administration (FDA) definition, which is much broader and includes categories such as mobile health, wearable devices, telehealth and telemedicine, and personalised medicine. It analyses 317 Australian digital health companies, providing a blueprint of the local sector.

International reports point to a number of significant drivers of digital health in a post-pandemic world including telehealth and telemedicine, remote patient monitoring, the diabetes market, mental health and addiction, symptom checking and triage tools, digital therapeutics and clinical decision support technologies.

Australia’s industry is well aligned to some of these opportunities with:

• 37% of companies developing technologies aimed for home use (remote patient monitoring);
• 25% focused on diabetes and other chronic diseases;
• 17% focused on mental health;
• 13% focused on clinical decision support; and
• 10% focused on diagnosis and screening.
   

“While only 9% are focused on telehealth and telemedicine, ANDHealth believes this reflects the limited reimbursement for these types of businesses prior to the COVID-19 pandemic,” Le Grice said.

“Assuming ongoing reimbursement frameworks for telehealth, we would expect to see significant growth in the numbers and maturity of companies across this segment.

“Beyond telehealth, the regulation of software as a medical device provides an opportunity for reimbursement for remote patient management platforms, which can further support patients to access high-value care in their home. This will create market pull for a significant number of local companies.”

In Australia, the vast majority of companies are looking at processes and behaviours at the clinical and patient level. A third (33%) are deploying technologies in self-management of disease, patient behaviour change and medication management. Another quarter (26%) are seeking to address challenges in workflow (both clinical and non-clinical).

COVID-19 has highlighted the need to keep as many people out of hospital as possible, and in Australia we see over one-third of companies (37%) looking to deploy technology into the home, and a further 8% into the workplace. More than one-third (36%) of companies aim to see their products and services used in a community care, aged care, primary health (GP) or allied health setting, with only 19% focusing on in-hospital or surgical settings for implementation.

Pre-COVID industry sentiment: a maturing industry, but accessing key skills and expertise is a challenge

Before COVID-19, this emerging industry was maturing. Most companies were in the early development stage, completing detailed feasibility studies as they moved towards proof of concept. A healthy number had progressed to evidence-building in the lead-up to market launch.

When ANDHealth surveyed 53 digital health companies in December 2019, half said they either had preliminary (26%) or quality clinical evidence (24%) for their product claims. Commercial validation is also an important step forward, and almost one-third (31%) of companies were fully in the market and being paid full price for their products. Another quarter (26%) were working with early adopters of their products on commercial validation, either at full price point or an introductory rate.

However, a large portion of these companies felt they did not have access to some key skills and expertise needed for commercialisation. Four in five (80%) were either only somewhat certain, uncertain or unsure that there are qualified consultants who can help them with their regulatory strategy. More than one-fifth (22%) said there were very few or no consultants to help with reimbursement strategies, and 62% said they were not sure. Almost a quarter (24%) of companies lacked any confidence that they had the skills to move offshore.

Post-COVID industry sentiment: a double-edged sword of increased opportunities and challenges

ANDHealth surveyed its database of companies again in May 2020 to understand how COVID-19 had impacted them. Like most, the pandemic has forced digital health companies into making some big shifts. On the positive side, 30% had pivoted to new business opportunities, a quarter (24%) had hired staff and 21% had accelerated their expansion plans. However, there has also been a significant downside, with a quarter (24%) forced to pause clinical trials and a further 15% pausing commercial trials. A quarter (24%) also stated they had laid off staff.

One of the ironies for the digital health sector is that, although the pandemic has caused disruption and in some cases damage to companies, it has also provided unprecedented opportunity. When asked what the potential positive impacts of COVID-19 would be on the digital health sector, respondents named increased acceptance by the medical community (74%), increased acceptance by patients (50%), more reimbursement for digital health technologies (24%) and a larger market for digital health technologies (24%). The areas identified for most potential growth post-COVID were telehealth (85%), remote monitoring (68%), data analytics (35%) and digital mental health (29%).

But while the pandemic has provided opportunity, it has also exacerbated a number of existing commercialisation challenges for the industry. When asked how COVID-19 will impact their business, the top three issues were access to customers (71%), ability to raise capital (62%) and ability to secure government funding (44%).

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