The Current Success and Potential Growth of Medical Wearable Devices

Analysis by: Elvira Golod, Anisa Panjvani, Amaka Uzuakpunwa, Xiao Li, Sara Kamalmaz

Wearable medical devices allow for continuous monitoring and management of chronic diseases such as he monitors and glucose monitors, or they can have therapeutic functions that aid in the treatment of the disease, such as insulin pumps and hearing aids. These devices have been designed and developed to be non-invasive, miniature and portable, allowing patients to wear them around the clock with minimal discomfort1. The clinical benefits for wearable medical devices have made them a huge success due to the fact that they provide clinicians with deeper insight into the chronic disease of that particular patient, therefore offering more tailored care2. Wearable medical devices are currently a successful market, with great potential for further growth in the future. Competitor analyses indicate that all devices on the market include features that are necessary and required for effective data retrieval and monitoring, emphasizing their success on the market, and hence creating a successful market in turn. The science behind such devices also helps to validate their successful and continuous use. SWOT and PEST analyses highlight the accomplishment of the current market, and project that the future is looking bright for wearable medical devices. Likewise, current trends and market share, along with future projections, indicate a strong market, with great potential for future growth.

Competitor Analysis
Wearable medical devices is a rapidly growing market with great potential for the future allowing it to be highly competitive, hence the devices within this field need to include particular features to ensure their success. Fashion is starting to play a large role in the type of devices being used and chosen, and so the look and comfort of a wearable medical device is extremely important in determining its success on the market.

Figure 1: Brainstorm of the main feature that are included in medical wearable devices. [Brain image retrieved from clipart]

This is because the medical device you wear sends a message about the user, just as the type of jewelry or clothes you wear does, and so devices that fit in more with your overall look will be more likely to be bought and used3. Other features such as being waterproof and weatherproof are also very important for use. These features not only make the device easier to use, but also increase the devices’ durability4. User friendliness, via features such as telecommunication, wireless connectivity and an easy user interface will likewise improve the products success on the market4. Additionally, the compactness, portability and multi-functionality of these devices are crucial factors that all devices currently on the market have managed to achieve. The decrease in size of medical devices, to the extent that they are barely noticeable and are portable, is one of the main attractions to a wearable device, and predicts its continued use5. Overall, for a device to be successful on the market and for it to be able to outcompete other similar devices, it needs to require most of the above-mentioned features, as all of these have been shown to increase the purchases of such products.

Regulatory approval and competition for wearable medical devices can be challenging which creates a high barrier of entry for competitors, but also ensures that once overcome, their product can be one of the few that are sold to medical companies which increases the success of this field as only the top products make it onto the market6.

Figure 2: Two factors of the Porter’s Five Forces Model.

Using the Porter’s Five Forces Model, the specific barriers to entry for new entrants is with regards to access to distribution channels and government policy. New entrants would need to convince medical companies and clinicians as to why their device is better than the current ones on the market. Examples of such features could be the accuracy of data collection — their devices must be highly accurate for FDA approval as well as for consumer use. From a competitive standpoint, these devices should also be able to provide a long-term view of the patient’s overall health, improving the physician’s diagnosis and treatment, as well as enabling the option of early interventions to prevent future complications7. Additionally, the specific applications of medical devices render the need for high precision and quality control. This will inevitably increase the production cost of the device, which is a reason for the high selling price of these products8. However, to be competitive on the market, the device either has to be affordable or has to be covered by insurance, which creates an additional barrier for start-ups9. Therefore, there is a high barrier of entry for new entrants due to competition and regulatory control requiring great precision and quality; however this creates a market that only contains the top devices, ensuring the market’s success.

The large potential for growth of wearable medical devices due to market fragmentation and decreased direct competition makes it an attractive market to enter8. Although these devices need to have particular features to render them successful (as mentioned previously), there is little direct competition between the different devices on the market. For example, glucose monitors and ECG monitors are two of the leading devices on the market, generating most of the revenue and holding the largest market shares10. These devices work on two different chronic illnesses and hence make up different fragments of the market. This lack of direct competition between devices that are used for different diseases creates a market that is easier to succeed in, as the competition is then only within the specific fragment of the market. Looking at Porter’s Five Forces Model, wearable medical devices is also an attractive market to enter due to the decreased rivalry caused by the lack of direct competition. The unique market fragmentation creates an atmosphere in which market share isn’t as much of a competition as there is rapid industry growth. Price competition is also low as devices for different diseases cannot directly compete with each other, hence their selling price won’t greatly affect one another. Overall, the wearable medical devices market has a large potential for growth in the future due to its market fragmentation and decreased direct competition.

The Validity of the Science Behind the Products
The science and technology behind medical wearables makes them efficient devices that can be easily worn throughout the day, therefore making them successful players on the market. The rapid development of new technology allows for continuous improvement for these devices and thus a growing potential for medical wearables. Insulin pumps are one of the major medical wearables on the market. An insulin pump is a small device that releases small amounts of rapid acting insulin (basal insulin) between meals and during sleep 11.

Figure 3: An example of an insulin pump.

During a meal, the insulin pump is programmed to release insulin in amounts that equal the amount of sugar in the food. This is called the bolus range 11. An insulin pump is composed of a cannula inserted beneath the skin using an infusion set 11. The infusion set is connected to the pump using the Luer connector 11. One Touch Ping, an insulin pump by Animas, is a wireless device that uses a meter remote to detect insulin such that the user does not have to look at the pump 12. The device also has a food database of 500 foods and nutritional information that can be customized according to the user’s personal preferences 12. One Touch Ping is also waterproof so it can still be worn while bathing or swimming12. The enhanced features of insulin pumps make them a popular and successful medical wearable option for diabetic patients.

The science behind hearing aids play a tremendous role in improving the hearing abilities of those who suffer from hearing loss and makes them efficacious players in the market. A hearing aid is a small electronic device worn in or behind the ear that amplifies sounds for people with hearing loss 13.

Figure 4: Types of hearing aids [Image retrieved wikimedia commons]

Hearing aids magnify sound vibrations 13. The amplified vibrations are detected and converted to neuronal signals that are perceived by the brain and thus improve hearing 13.There are three components to the device: microphone, amplifier and speaker 13. Oticon, a hearing aid manufacturer, implements sophisticated technology into its products 14. There are several important features that distinguish their products 14. Speech guard is a crucial feature when the sounds in the surroundings change suddenly 14. The device processes the signals quickly and adjusts the volume automatically, thus preventing the sounds from becoming too loud 14. Another feature, spatial sound, helps the user locate the source of the sound by calculating the signal-noise ratio 14. The directionality feature analyses the pitch, level and direction of noise to improve the ability to understand speech in noisy area s14. Furthermore, connectivity enables the hearing aid to be connected wirelessly to a telephone or television 14. In addition, the adaptation manager helps the user accommodate to the hearing aid by gradually turning up the volume after a specific time interval 14. Hearing aids can also be personalized according to the age, cognitive abilities, and lifestyle of the user to enhance a better hearing experience 14. The feedback shield feature is to prevent the disturbing noise generated when a microphone is close to speakers which is done using phase inversion, frequency shifting and gain control 14. The innovative technology of modern hearing aids contributes to their success and continuous use in the market.
The technology behind ECG medical wearables ensures that they are comfortable and offer freedom to the user, therefore making them an attractive option for patients and a successful medical wearable on the market.

Figure 5: Wireless ECG monitor [Image retrieved from wikimedia commons]

An electrocardiogram records the heart’s electrical activity and gives the doctor an account of how the heart works 15. It shows the heart rate, the rhythm of the heart (whether it’s steady or irregular) and the strength and timing of the electrical signals detected 15. ZIO XT Patch is an ACG medical wearable made by iRhythm 16. It records the heartbeats in a discrete and wireless method throughout the day and night for up to 14 days 16. The results are sent to the iRhythm clinical app and are analyzed by an FDA approved algorithm 16. Dr. Kennedy, a cardiologist, used ZIO XT Patch to record a concerned patient’s heart rhythm and found out that she suffered from supraventricular tachycardia 17. Dr. Kennedy recommends using ZIO XT for diagnosing heart conditions as it is small and easy to wear 24/7 17. Therefore, ECG medical wearables are very effective for patients with heart conditions and are a strong player in this successful market.
PEST Analysis
A PEST analysis further demonstrates the prospects of medical wearables. Political factors for Canada paint a positive picture for the future of wearable medical technology.

Figure 6: Elements of the PEST analysis. [Image retrieved from BECKMANN-BIO]

In Ontario, the Ministry of Health and Long-Term Care has an Assistive Devices Program (ADP) that helps get necessary equipment to those with long-term physical disabilities. This program usually covers three quarters of an approved price, or more if someone is receiving social assistance benefits. Hearing aids and insulin pumps are among the many wearable medical technology covered in the program.18 With the cost of medical wearables being offset by governments, investors will be drawn to these devices as this increases the likelihood of getting a return on their ventures. These investments will help the medical device market thrive.

Economic factors suggest that the future of wearable medical technology is a stable investment. Along with the price of gasoline, Canada’s inflation rate is falling. According to Stats Canada, the Consumer Price Index, which measures the variation in prices paid for retail goods and other items by the average consumer, fell 26.9% in the past 12 months19. The low value of the Canadian dollar is also a plus for the medical device sector, as the cost of exporting these products will be favorable for buyers around the world. Further incentives, such as Canada’s Economic Action Plan, are geared towards increasing foreign investment, an important factor in long-term prosperity for both Canada and the future of medical wearables. The federal government of Canada has consistently pursued the reduction of trade and investment barriers, both nationally and abroad20. These economic factors indicate a positive outlook for medical devices in the near future.

Furthermore, social factors indicate much opportunity for the medical device market. With approximately 34% of adults and 20% of children and teens falling into the obese category in the United States21, North Americans are becoming a more health conscious society. Obesity comes with many health problems, with diabetes being a health issue of notable concern. Diabetes treatment and management devices such as glucose monitors and insulin pumps will have increased demand as these obesity rates increase. Additionally, North American cultures are very fashion centered, and what one wears says a lot about the individual. With medical devices becoming more discreet and stylish, such as new hearing aids that are almost unnoticeable, more people are willing to wear them, meaning more people are willing to buy them. These social factors project a positive outlook for the medical devices sector.

Technological factors provide encouraging forecasts for the future of medical wearables. Advances in technology have improved wearable sensors and researchers are working on more complex systems that will enable home monitoring with a wide array of conditions. Early diagnosis of diseases, prevention of chronic conditions, and improved management of neurodegenerative conditions are among the many potential applications of these technologies22. New technologies create more opportunities for the medical devices market to flourish and grow.

The future of medical wearables looks bright, but in order for consumers to use these products, it is important the public is educated and common misperceptions are cleared up. Donna Olegario, a clinician at the Centre for Diabetes at Mount Sinai Hospital in Toronto, says many individuals believe that surgery is a must for insulin pumps, when in reality only a small tube is inserted under the skin. Others believe that medical wearables are uncomfortable. Although it is true that at first wearing a device such as a pump or a hearing aid will be felt, once the individual gets accustomed to the device, it will no longer cause any discomfort. Some people also believe that with medical devices, it is possible to forget that one has a long-term health problem.23 However, this is also not the case. With medical devices it is important to be both trained in its proper use and to check it often to ensure that it is functioning correctly. Once these misunderstandings are dismissed, consumers will be more willing to utilize these devices, and wearable medical devices will become more prominent in our lives, as well as in the wearable technology market.

SWOT Analysis

Figure 7: SWOT analysis summary.

There are various strengths of medical wearables that account for the current success of the market. The major advantage of medical wearable devices is that they are able to record and monitor data from patients in a convenient, efficient and persistent way. This is crucial for several reasons. First, being able to measure important biological signals on a small device allow patients to carry it around anywhere and do not need to stay in a hospital1. This makes the life of patients more convenient. Second, medical wearables allow real time monitoring of a set of biological status from the patients. This is important for the treatment of chronic diseases since taking measurement of multiple data types usually give greater insight on the health status of patients with chronic diseases.2 Third, because medical wearables can continuously collect data from patients, it can help researchers to expand the current available database that can be used for the study of many diseases. With more people from different regions of the world using medical wearable devices, researchers can use a more accurate and wider range of data to better understand diseases. All these strengths can make patients and the clinicians willing to accept medical wearables.
Aside from its own strength, there are also some outside factors that give the market of medical wearables the opportunity to further expand. In developed countries, as the population move toward a more aged structure, the prevalence of chronic diseases will increase.24 Those patients can not treat their disease at hospital and will need to constantly monitor their physiological status. Another consequence of an aging population is that more people will seek for medical care, which can result in overcrowded hospital and longer waiting time5. This will raise the demand for stay-at-home medical options. Both issues will increase the requirement for medical wearables. In developing countries, especially in the Asia-Pacific region, the increase in income makes people seek better health care system and a fast growing demand for medical wearables was predicted.4

There are several weakness of medical wearables that may hinder the current rapid growth of the market. The high cost of these products is a major barrier for further increasing its sales. Another problem of medical wearables comes from technical limitations, for example, continuous glucose monitors (CGM) needs to be calibrated every day, and due to the fact that it measures glucose level from interstitial fluid rather than from blood directly, its reading often delays a few minutes24. Therefore, there are still many improvements that need to be done before medical wearables can achieve greater success.

Threat to the market of medical wearables also exists and they can potentially slow down the current fast-growing market. First, because these devices involve the collection of personal data, privacy is a major concern for consumers as people are worried that the data might be hacked or used in the wrong way.25 Second, as an emerging new type of product, the governmental regulation still needs to be improved. For example, third party companies who hold the data storage should be included in the regulation list5. Third, because the devices are for medical uses, the FDA have a very high standard to approve any of the products, this makes start-up companies hard to get their products into the market fast and make profit quickly.26 All the mentioned threats must be addressed accordingly for medical wearables to achieve their full potential.

Ultimately, although there are certain weaknesses to this market and some threats it faces, the market for medical wearables are still expected to grow because the strengths it holds and opportunities it can grasp outweigh the negative factors. Furthermore, the weaknesses can be improved as cheaper products will be available in the future and the threats can be reduced when the government establishes new laws that enforce better privacy protection. Therefore, as the strengths and opportunities of the market can effectively reduce the threat and overshadow the weaknesses, the future of medical wearables looks bright.

Current Sales Trends, Market Share and Possible Forecasts
Medical wearable devices are gaining momentum in the technological world, and this momentum is being propagated by various technological innovations introduced into the market. These innovations have made medical technology more portable and more wearable, and have also increased market sales. Some of these wearable medical devices that make up the market are Heart Rate Monitors, Activity Monitors, ECG, Glucose/Insulin Management, Pain Management, Pulse Oximeters and many more27. These major wearable medical devices are what make the market a huge success.

Most of these medical wearable technologies have shown increasing growth in market share and are predicted to maintain this growth. According to “Transparency Market Research” (2013), medical wearable devices was valued at USD 2.0 billion in 2012 and is expected to grow to a substantial value of USD 5.8 billion in 2019.

Figure 8: Medical wearable devices are projected to make more than double the revenue generated in 2012. Due to rise in demand for these technologies, 2019 is predicted to yield USD 5.8 Billion in revenue, which is a major increment from USD 2.0 Billion, made in 2012.

A maturing compound annual growth rate (CAGR) of 16.4% was predicted from 2013 to 201928, and it is evident that wearable medical devices will continue to generate sales that will continuously solidify their place in the market and increase their growth. One major aspect that contributes to the growth of wearable medical devices is the strategic alignment being initiated amongst vendors28. DexCom and Animas entered an agreement together in 2013 to integrate DexCom’s CGM technology with Animas insulin pumps, and DexCom did not stop there but continued by making another agreement with Roche33. Agreements like these helped fuel the growth of the Global medical wearable technology market and has made it more successful28. Some of the key vendors controlling the market space are Abbott Diabetes care Inc., DexCom Inc., Medtronic Inc., Philips Healthcare, BodyTel Europe GmbH and ZOLL Medical Corp they contribute to the success of medical wearable technology27. Most of these power companies are located in North America, which currently holds majority of the purchase power (45%)30.

Figure 9: America continues to hold the major purchasing power (45%) due to the high number of major medical wearable companies that are positioned in America. Europe holds the second major purchasing power followed closely by Asia pacific and the Rest of the World.

The purchase power continues to expand to countries like Asia pacific, Europe, North America and RoW, this expansion shows how promising the wearable medical technology market is globally27. One of the leading North American companies called DexCom and is doing well in the medical wearable device industry, deals in glucose monitoring systems, which are on high demand due to the high rate of consumption present in North America. Dexcom reported a revenue growth of $257.1 million for the full-year which ended on December 31, 201431. This was an increase of 64% from $157.1 million product reported for 201331. DexCom has experienced a lot of growth due to the high demand in medical wearable technology and these results reiterate the success of wearable medical devices31.

Another major medical wearable device company in the market that is showing promising growth and contributing to the success of wearable medical devices is Medtronic. They just released their annual report filing SEC form 10k for the fiscal year 2014, and they are reporting a net sale of $17, 005,000 for the year 2014; this is a 2.5% increase from last year which ended with net sale of $16,590,00032. These major medical wearable device companies are just a few examples of many thriving companies in this industry. Medical wearable devices are here to stay and this is evident through their rising market share in the economy. These devices have remained successful and their globally growing foundation will generate increasing revenue in the economy making wearable medical devices a driving force in technology32.

Overall, wearable medical devices have seen tremendous advancements in recent years and will continue to prosper. The quality and quantity of data that these devices provide, combined with increasingly stylish and discreet designs, are just a few reasons for their popularity and success. SWOT, PEST, and competitor analyses all point to a positive future in the biotechnology sector. The science behind these medical wearables, coupled with current trends and future projections also indicate a strong market for these devices, with many prospects for even further success.


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