- Digital therapeutics (DTx) delivers evidence-based therapeutic interventions and behavioral therapies via software that replace or complement the existing treatment of a disease.
- Insider Intelligence forecasts DTx to be a $56 billion global opportunity by 2025.
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As pandemic anxiety and depression continue to harm people’s mental health, digital therapeutics (DTx) is more important than ever before. This, combined with the $18.5 billion Teladoc-Livongo merger, has heated up competition in the virtual care space and catapulted the global DTx market to reach $56 billion over the next five years.
What is digital therapeutics?
DTx delivers evidence-based therapeutic interventions via software, like mobile health and wellness apps, that replace or complement the existing treatment of a disease. They diverge from the broader digital health market in that they must be approved by regulatory bodies—and displaying proof-of-concept is at the core of their model.
Digital therapeutics market
DTx vendors leverage their tech to treat chronic and behavioral conditions, which gobble up the lion’s share of the US’ healthcare spending. The surging need for therapeutic treatments combined with long-term effects of the pandemic is fueling growth in the global DTx market.
Previously, Insider Intelligence expected the DTx space to hit nearly $9 billion by 2025, but our new forecasts expect DTx to be a $56 billion global opportunity by 2025.
Over the next five years, there will likely be an uptick in merger and acquisition (M&A) activity and closures among DTx companies. Pharmaceutical companies will likely also become active acquirers of DTx providers, and large M&As are a key sign of market maturity and future growth.
Those that choose not to get on the DTx bandwagon might miss out on a massive opportunity—and drug companies and medical device makers that don’t jump at the chance of linking up with DTx providers risk losing market share to emerging competitors.
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Digital therapeutic regulations
There has been an increase in regulatory acceptance and venture capital (VC) funding for the DTx market, as investors place their bets on consumers’ heightened interest in DTx platforms.
The FDA has been paving the way for swift DTx development—empowering DTx vendors to launch their platforms quicker than ever before. In April, the FDA loosened regulations surrounding approval of digital mental health tools to hasten their time to market.
Digital therapeutics trends
The Teladoc-Livongo megamerger put a spotlight on the power of digital therapies and the virtual care market. As a result, other telehealth players are eyeing DTx platforms to enhance the value of their services. In October, PlushCare cofounder and CEO Ryan McQuaid told Insider Intelligence that telehealth vendors “need to ensure that they’re choosing the right partners … if we do get [DTx] into patients’ hands, these solutions need to have clinical evidence, support improved outcomes, provide a great patient experience and reduce costs.”
Pharma companies have been strategically pouring cash into DTx firms to capture a slice of the growing DTx market. And with the FDA greenlighting multiple DTx treatments, pharma companies can invest in DTx solutions with more confidence that they’ll see a return on investment (ROI).
Telehealth vendors have been charting unprecedented growth amid the pandemic, and are now more financially stable and able to expand their portfolios. DTx should help telehealth vendors improve patient outcomes, and in turn prop up the value of their product to patients and payers. As the DTx market swells alongside the digital health boom, more cash-rich telehealth vendors may purchase DTx startups, or develop their own DTx solutions in-house.
Top digital therapeutics companies
In the Digital Therapeutics Report, Insider Intelligence details the top DTx providers making waves in the digital health space, diving into what each company offers, recent funding, investors, FDA clearance, patient outcomes, provided treatments, and significant partnerships. The companies mentioned in the report include:
- Virta Health
- Akili Interactive
- Pear Therapeutics
- One Drop
- Lark Health
- Propeller health
- Kaia Health
- Happify Health
Future of DTx and digital health
The emergence of digital medicine threatens to reshape the entire healthcare value chain—and because drugs interact with nearly every healthcare stakeholder, DTx solutions are leading a variety of players to carve out room for digital solutions.
The US mental health crisis is only getting worse amid the pandemic, so DTx players that want to remain most attractive to their payer and employer partners should branch out into behavioral therapies.
And while we expect to see heightened activity in the space over the next several years, a few hurdles to growth remain:
- Government-based insurers like Medicare have been slower to cover DTx, likely due to outdated regulatory framework.
- DTx vendors need to ensure their platforms are integrated within the electronic health record (EHR) or software that physicians’ already work in.