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The Rise of Digital Therapeutics

Digital healthcare startups raised over $29B in venture funding last year, almost doubling the amounts invested into the sector in 2020. This explosion in interest was led, in part, by increased optimism over the future of digital therapeutics—a branch of digital healthcare utilizing mobile technology to achieve positive patient outcomes.

So, what exactly are digital therapeutics, and why are they firing such investor excitement?

Defining Digital Therapeutics

Digital therapeutics—aka DTx—is the moniker of a subset of digital healthcare companies, ones using software to achieve well-defined milestones in the treatment or prevention of specific health issues2. A defining characteristic of these digital healthcare startups is the nature of their software—designed according to the tenets of evidence-based medicine, the programs are meant to complement or replace acknowledged in-person therapies for chronic diseases and other health concerns.

Usage of the term digital therapeutics was introduced by industry players3 to draw a line of distinction around clinically-verified apps and software that meet the stringent outcome-focused results expected in modern medicine. It is intended to highlight their difference from less rigorously-tested products that cater to digital healthcare trends under broader mantles of “wellness” or “well-being” without specific, documentable goals. The term also sets these companies apart from those doing more wide-ranging work in the health field, such as digitization of records or construction of virtual-care infrastructures; in other words, digital therapeutics deal in specifics, while digital care companies deal in broader generalities.

DTx companies operate services in a range of modalities that extend the reach of traditional healthcare providers, moving point-of-contact care out from the doctor’s office to wherever patients happen to be. This may take the form of therapies for mental health delivered via mobile apps—such as simple games or activities that boost positive thinking to reduce anxiety, or AI-led text conversations designed to nurture gratitude as a way of fighting depression.

Alternatively, some digital therapeutic startups focus on software that bridges the gap between patient and provider—transmitting data that helps caregivers provide real-time, contextual care for chronic conditions. Examples include app/monitor combos that provide diabetic patients with snapshots of their blood sugar numbers and nudge them toward healthier diets, as well as software that transmits vital signs for heart and respiratory patients to their primary or specialty care providers for analysis.

Opportunities and Challenges

The breadth of consumer exposure to digital healthcare in general—and digital therapeutics, specifically—during the Covid pandemic has opened the minds of many consumers to the benefits of virtual healthcare options. Healthcare offices have seen how DTx can ease their patient load, patients have enjoyed the convenience and accessibility of on-demand care, and healthcare startups have seen first-hand the scalable potential of their services.

Challenges do exist, however, as healthcare startups work to bring their products to market. Although exposure to care-on-demand and prescription digital therapeutics increased during the pandemic, recent studies have shown a lingering reluctance among patients when it comes to AI-driven services4. Data security and privacy concerns also figure here, with patients unsure of how well transmission of intimate data is handled, or how well-secured details of ongoing therapies might be on a mobile web platform.

And while medical infrastructure may have seen its digital transformation hastened by the pandemic, significant difficulties still remain. Outdated frameworks in the insurance industry have raised problems for healthcare startups looking to develop by-prescription DTx, creating roadblocks between startups and their target groups. Also, the slow and sometimes cumbersome clinical trials process has proven inadequate for the fast-paced development and to-market goals of DTx startups—with another possible revolution in how therapies are vetted possibly in the works5.

The Future of DTx

So where do digital therapeutics go from here? Health organizations, government entities, and pharmaceutical companies are all taking note of evidence showing the practicable applications of digital therapies, boding well for their eventual integration into mainstream medicine.

While it may take some time for the medical industry to fully embrace the digital healthcare revolution, digital therapeutic and other digital healthcare startups will undoubtedly continue to roll out products that build on the efficiency, personalization, and accessibility that the digital dimension can bring to standard treatment practices. And investors are only too pleased to help.

Talk to incipient about how your company can personalize your digital therapeutics offering today.

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