"China Digital Therapy White Paper 2.0": Discover the key success factors in the whole process from R&D to business

"At most, I have to see five investment institutions a day
.

" This is a problem for the boss of a head digital therapy company

At most, I have to see five investment institutions a day

When the wind lightly borrows its strength, he enters the sky in one fell swoop
.

There is no doubt that digital therapy is on the cusp of investment

When the wind lightly borrows its strength, it enters the sky in one fell swoop

In May this year, eggshell Institute of Rehabilitation technology transfer and joint development of China Council for the Promotion of digital therapy System Engineering Committee (chips), far Yi capital jointly issued the first edition of "China Digital therapy industry White Paper", made from the connection to intervention Theme
.

With the rapid development of the industry, it is also facing some new problems.

From connection to intervention "White Paper on Digital Therapy in China 2.

1.
Software as a service, redefining digital therapy

The essence of digital therapy is the digitization of services

In the first edition of "China Digital Therapy White Paper 2021", the Eggshell Research Institute defined the connotation of digital therapy : software-driven, evidence-based medicine, intervention measures , and the core function is to prevent, treat or manage diseases
.

Connotation: software-driven, evidence-based medicine, intervention measures to prevent, treat or manage diseases

Traditional intervention methods for diseases include medicines, equipment, services, and others
.

Services are provided by doctors based on professional knowledge and experience, and face problems such as varying levels, non-replicability, and limited per capita benefits

The essence of digital therapy is the digitization of services
.

The doctor's experience is transformed into software, through data precipitation, continuous iterative optimization, and finally all digitized service content is turned into digital therapy

The essence of digital therapy is the digitization of services

The essence of digital therapy is the digitization of services

Compared with traditional services, digital therapy has advantages such as replicable, accumulative, lower cost, and more convenient access
.

Its disadvantage is that it cannot provide difficult services (such as surgery) and can only partially replace manual services

Reproducible, accumulative, lower cost and more convenient partial replacement of manual services

Digital therapy can be divided into three sub-concepts: digital vaccine, digital medicine, and digital medical advice

Prevention, diagnosis, treatment and rehabilitation are the four core links of medical treatment
.

Digital therapy uses digital technology to reconstruct the core medical process and access interface, penetrate the diagnosis and treatment process step by step, and realize the whole process of digital intervention

Among them, the diagnosis link is the category of medical artificial intelligence.
The core is to find problems, but not to solve them, and it does not belong to digital therapy
.

The other three links can have digital therapy (the core is to solve the problem) .
We define them as: digital vaccine, digital medicine, and digital doctor's order, corresponding to the three functions of prevention, treatment, and rehabilitation
.

Digital therapy (the core is to solve the problem) digital vaccines, digital medicines, digital doctor orders,

Three categories of digital therapy: digital vaccines, digital medicines, and digital doctor orders

2.
Analogous to traditional medicine, digital therapy also has targets

Traditional drug targets refer to the binding sites of drugs in the body, including gene sites, receptors, enzymes, ion channels, nucleic acids and other biological macromolecules.
The total number of drug targets that have been discovered so far is about 500
.

Although digital therapy does not specifically enter the body of the drug components, it also has its own targets
.
It mainly affects patients through information (such as text, pictures, and videos on the App), physical factors (such as sound, light, current, magnetic field, and combinations thereof)
.

During the intervention process, some organs or substances will change, which will affect the course of the disease
.
The target of digital therapy is the key substance in this human pathway
.

The target of digital therapy is the key substance in this human pathway

For example, the target of digital therapy for diabetes is HbA1c (glycated hemoglobin), and the target of digital therapy for ADHD (attention deficit) is dopamine
.

The target of digital therapy (partial excerpt)

Therapy also includes a digital digitized form of " digital active ingredient " and " digital adjuvant "
.
"Active ingredients of digital therapy" are mainly responsible for clinical treatment benefits, and "adjuvants" include virtual assistants, natural language processing systems, digital incentive systems, digital drug prompts; communication with doctors, communication with other patients, and clinical diagnosis and treatment record information and so on
.
"Adjuvants" are necessary elements to ensure that patients get the best experience and long-term use of digital therapy
.

Digital Active Ingredient Digital Adjuvant

3.
Panoramic map of Chinese digital therapy companies

As of September 2021, there are a total of 73 digital therapy companies in China, including companies that have not obtained a medical device registration certificate.
They are divided into eight categories according to the first-level indications
.

A panoramic map of China's digital therapy companies in 2021

Mental diseases, endocrine system diseases, and nervous system diseases are the main indications for digital therapy, which is consistent with the observations in the first edition of the white paper
.

In terms of secondary indications, the product pipeline of digital therapy is more widely distributed
.
In order to facilitate statistics, the Eggshell Research Institute analyzed the most representative products of each company and obtained the following pipeline distribution map
.
Compared with 2020, this year's digital therapy has more specific indications, and it is gradually expanding to major chronic diseases such as tumors and cardiovascular and cerebrovascular diseases
.

4.
Diseases with these characteristics can be made into digital therapy

In the ICD-11 disease classification of the International Health Organization, there are 28 chapters and a total of 27,500 diseases.
Which diseases are suitable for digital therapy?

According to the existing product pipeline and nearly a hundred indications, the Eggshell Research Institute concluded that the suitable indications for digital therapy have the following characteristics:

(1) Long-term management

(1) Long-term management

Refers to chronic diseases that have a long disease development cycle and require long-term management
.
Such as cardiovascular and cerebrovascular diseases (hypertension, coronary heart disease, stroke, etc.
), diabetes, malignant tumors, chronic obstructive pulmonary diseases (chronic bronchitis, emphysema, etc.
), mental and psychological and nervous systems, etc.
as a representative group Diseases have the characteristics of long course, complicated etiology, serious health damage and serious social harm
.

(2) More interventions

(2) More interventions

There are many treatment interventions for this disease, especially post-hospital interventions
.
In addition to traditional medicine and device treatments, other media can be used, such as information (text, pictures, videos on the App), physical factors (sound, light, current, magnetic field, and combinations).
These interventions are suitable for software or Integrated software and hardware
.

(3) There are clear clinical guidelines

(3) There are clear clinical guidelines

This disease must have a clear clinical guideline, that is, evidence-based, rather than empirical medicine
.
The development of digital therapy products should follow the same clinical guidelines, turning traditional services provided by humans into digital products
.

(4) The patient's compliance and self-management level is low

(4) The patient's compliance and self-management level is low

Diseases with low levels of patient compliance or self-management, such as diabetes, mental health diseases, asthma, and chronic obstructive pulmonary disease
.
These diseases have a low rate of drug compliance and over-reliance on patients’ recall descriptions to make treatment decisions
.

(5) Mainly medical diseases, supplemented by surgical diseases

(5) Mainly medical diseases, supplemented by surgical diseases

The indications for digital therapy are mainly medical diseases, and the non-invasive treatment is emphasized, such as mental diseases, eye diseases, and respiratory diseases
.
Surgical diseases are supplemented, mainly for post-operative rehabilitation management and side effects control, such as the side effects of tumor chemotherapy
.

We believe that digital therapy has no limitation on the types of diseases, but has certain limitations on the diagnosis and treatment process and intervention methods of the disease.
It can only digitize some services and replace manual intervention with digital therapy
.

5.
Clinical trials: the only way to continuous optimization

"Evidence-based medicine" is one of the core features that distinguish digital therapy products from traditional digital medical (or digital health) products, and scientific and accurate clinical trial data are the basic elements of evidence-based medicine
.
Therefore, digital therapy products in the true sense must have been verified by clinical trials
.

However, it is not necessary to apply for a medical device registration certificate, which largely depends on the business model of the product
.
2H and 2G modes generally require a registration certificate, while 2C, 2B, and 2I modes are not necessarily required
.

In addition to traditional randomized controlled trials (RCT), real world research (RWS) can be used as a complementary verification of digital therapy clinical trials
.
RWS can observe compliance, and compliance is a key factor in digital therapy
.

The clinical trial process of digital therapy

As shown in the figure above, the development of clinical trials must start from the determination of clinical problems and the evaluation of existing data, using past retrospective data or prospective collection of data, and further to the selection of research design and the determination of statistical analysis methods and data.
Management, statistical analysis, interpretation and evaluation of results, and the need to determine whether to add post-analysis and other steps
.

6.
Registration and certification: a double-edged sword in commercialization

At this stage, there is no specific supervision or promulgation of relevant guidelines for digital therapy products in China .
The supervision and registration of similar products are subject to approval in accordance with the relevant policies and procedures of medical device software
.

There is no specific supervision on digital therapy products or the promulgation of relevant guidelines in China.
Medical device software

The supervision and registration approval of related products are in accordance with the "Regulations on the Supervision and Administration of Medical Devices", "Measures for the Administration of Medical Device Registration", "Domestic Medical Device Registration and Approval Practices (Regulations)", "Technical Guidelines for Clinical Evaluation of Medical Devices" and "Medical Devices" The Measures for the Supervision and Administration of Device Production, the specific operations mainly follow the "Guiding Principles for Technical Review of Medical Device Software Registration" and "Guiding Principles for Technical Review of Mobile Medical Device Registration
.
"

The registration and certification process of digital therapy, source Zhilan Health

The picture above is the first registration and certification process of digital therapy
.
If additional information is required, 60 working days will be added to the review, and the supplementary information must be submitted within 1 year.
The quality system assessment (30 working days) and the time of the expert review meeting will not be counted
.

7.
There are more than 17 digital therapy products that have been certified in China

As of September 2021, there are more than 17 digital therapy products (approved in the form of medical device software) that have been approved for medical device registration certificates in China.
Except for Takeda's myPKFit (third-class medical device registration certificate), the rest are all second Class medical device registration certificate
.

Approval status of digital therapy product NMPA (as of September 2021)

By analyzing the existing digital therapy registration and certification status, the Eggshell Research Institute found that among the approved digital therapy products, products for the treatment of vision-related diseases accounted for the largest proportion, accounting for nearly 50% , followed by cognitive function therapy products
.

Products for the treatment of vision-related diseases accounted for the largest proportion, accounting for nearly 50%

Approval from the respective provinces sector point of view, digital therapy product registration certification still not gathered on the geographical situation arise , but the number of approved southeast coastal cities significantly more
.
Since 2020, the registration and approval of digital therapy products has accelerated, and a total of about 11 products have been approved.
Discussions on the registration and certification of digital therapy medical devices have also become more heated
.

There is no regional agglomeration, but the number of approvals in the southeast coastal cities is significantly higher

8.
According to different payers, there are 5 business models for digital therapy

According to different payers, there are five business models for digital therapy: 2C (consumer), 2H (hospital), 2B (enterprise), 2G (government), and 2I (insurance).
At present, direct 2C is dominant, and the 2H2C model is optimistic in the future.

.

5 business models of digital therapy

C-end payment: the unity of users and decision makers is the most important business model at present

Before officially entering the coverage of commercial insurance and medical insurance, C-end payment was the most important business model for digital therapy products
.
Touch up in a different way, C can be divided into pay terminal 2H2C, direct 2C, 2B2C the like
.

In the 2H2C mode, digital therapy should be qualified as a medical device, and its medical value has been verified.
Similar to a prescription drug, the doctor has more decision-making power and the patient uses it according to the doctor's advice
.

Direct 2C can refer to current chronic disease management or digital products.
The difference is that digital therapy has more medical value, but it still faces the problem of realization in the early stage
.
Under the 2B2C model, digital therapy is usually of obvious benefit to enhancing the market competitiveness of the company's original business or products
.

H-end hospital payment: use official channels to enhance the medical attributes of products and jointly promote market education

Digital therapy operating in the mode of medical equipment has obvious advantages in the early stage of industry development:

1) Digital therapy products can obtain hospital credibility endorsement; 2) Patients regularly come to the hospital to receive digital therapy treatment and professional medical service evaluation guidance, which is more accessible and easier to accept; 3) In-hospital offline mode, where patients are under the supervision of medical personnel Using it, the doctor can grasp the patient's response after receiving treatment, effectively control the risk, and make dynamic adjustments
.

B-end enterprise purchase: Deeply understand the pain points and needs of the enterprise, and achieve close value integration

In foreign countries, the main logic of 2B2C is: 1) With the mature development of health insurance and the perfect foreign salary system, employers will bear a large amount of insurance expenditures and other indirect costs due to employee health problems
.

2) Form an overall solution with traditional treatment methods
.
Traditional medicine is still the core of the treatment of diseases, while digital therapy is used as a management tool to solve the problem of complications and promote the improvement of the overall benefit of patients
.
For example, Sanofi cooperates with digital therapy HAPPIFY to provide patients with treatment drugs for MS, and HAPPIFY provides digital therapy products to improve patients' emotional disorders caused by MS, and ultimately achieve better MS patients' treatment experience and effects
.

While domestic 2B2C is slightly different from foreign countries, it tends to be the second logic, industry-based pain points and needs, and deep integration with the formation of corporate value
.

G-side government purchases: the patient base is huge or the needs of special fields, national special fund support is the key

2G2C refers to the purchase by the government and the distribution to patients by the government
.
The premise for the birth of this model is: 1) The clinical effects of digital therapy products can be verified; 2) The state has special fund support
.
In the field of medical services, no matter which department ultimately invests, there are already some projects purchased by the government and enjoyed by patients for free
.

The more typical national procurement digital therapy takes place in drug addiction withdrawal scenarios.
The purchaser is a national compulsory drug rehabilitation center.
At present, domestic Xinjing Technology, Wangli Technology, and Syungs have begun to commercialize in this field
.
Other areas also have the possibility of government purchases
.
For example, in the field of autism, on May 30, 2018, the executive meeting of the State Council reviewed and approved the rehabilitation assistance system for disabled children.
With the support of the country’s comprehensive assistance system for disabled children, the China Disabled 12,000 yuan), the subsidy will be directly distributed to designated rehabilitation institutions, and the rehabilitation institutions will reduce or exempt the children’s tuition
.

I-side insurance payment: Commercial insurance and medical insurance funds are both potential payment objects, but the road is hindered and long

The main logic of insurance payment is the intervention of digital therapy, which controls the progression or incidence of diseases, reduces medical support, and achieves the effect of insurance control fees
.
There are two ways to pay for insurance: 1) After the insurance is purchased, it is distributed to the insured for use, and the supervision of the insured is encouraged to use it actively to help the insured maintain a higher level of health in order to achieve cost control
.
2) Insurance, as the ultimate payer, will include digital therapy products in the scope of reimbursement to encourage patients to choose this solution
.

9.
Difficulties and challenges of digital therapy

In the process of commercialization of digital therapy products, there are many uncertainties caused by innovation
.

For digital therapy, it is also a medical device, which plays a vital role in the confirmation, development, and prognosis of patients
.
In the process of approval, the software characteristics of digital therapy are very different from those of traditional devices, and the approval process of traditional medical devices cannot be applied, and there is great uncertainty in commercialization
.
How to standardize the approval and certification of digital therapies, how to establish the safety and effectiveness of digital therapies, and how to promote industrial innovation and medical products that bring benefits to patients are the three major regulatory challenges facing digital therapies today
.

Challenge 1: The classification and definition of digital therapy, whether it is the second or the third type

The difficulty in the approval of digital therapy is mainly caused by two reasons.
One is that the industry has no clear standards, making the establishment of approval norms impossible to refer to; the other is that the regulatory agencies have a weak awareness of digital therapy and it is difficult to make a comprehensive and systematic judgment on the risk.

.

The advantage of the second type certificate is that the difficulty of application and approval is lower than that of the third type certificate, which can speed up the company's product listing process; the advantage of the third type certificate is that it has strict clinical requirements and is highly recognized by experts, doctors and other professionals
.
From the situation of the interviewees of the Eggshell Research Institute, the company usually expects that the product can be commercialized as soon as possible.
Therefore, when the second category can also be reported for the third category , they often choose to take the second category first to realize the product The listing and subsequent C-end marketing and promotion, and then the three types of certificates in the subsequent product iterations, so as to obtain a stronger clinical endorsement, which is conducive to its subsequent hospital-end marketing and promotion
.

The business side usually expects that the product can be commercialized as soon as possible, so in the case that the second category can also be reported for the third category, they often choose to take the second category first

Challenge 2: The clinical trial schemes of various companies are very different, and there is currently no uniform industry standard

In the digital therapy of the same disease, some products implement randomized controlled experiments, and some products implement single-arm experiments; the number of enrolled groups is also very different, some enrolled only tens of people, and some enrolled thousands of people
.
At the same time, the settings of clinical endpoints are also different, and there is no uniform standard for experimental process management
.

The lack of uniform industry standards has brought certain obstacles to the follow-up promotion of products
.
Digital therapy itself is a new thing and requires the understanding and approval of doctors
.
In the process of educating doctors and cultivating the market, the lack of standards makes the progress of market cultivating slow
.
Take some popular diseases as an example.
There are many types of digital therapy products, and inconsistent clinical data cannot be compared with each other.
It is difficult for doctors to distinguish the clinical effects of the products, and even more difficult to complete the education and promotion of patients
.

Challenge 3: The business model of digital therapy is not mature enough and faces the pressure of large-scale revenue

Each sales path that can achieve the prospect of large-scale sales has its strengths and weaknesses.
In comparison, whether digital therapy products can achieve good large-scale revenue depends absolutely on the clinical performance of the product itself
.
And based on the product-based business model design, daily operation and promotion are the means to empower product sales
.
Regardless of the business model, the time-tested safety and effectiveness will allow digital therapy to be known and accepted by more people
.
Facing the vision of large-scale revenue, practitioners also need to be friends of time
.

Challenge 4: Digital therapy is still in the technology introduction period, and market cultivation will be a long-term topic

At present, most of the participants in digital therapy are still small and medium-sized companies, and large companies are still in the minority
.
Many investors and companies describe digital therapy as a "low-hanging fruit
.
" Good business prospects attract stronger competition, especially from large multinational pharmaceutical companies
.
With the entry of large companies, will small and medium innovative companies face obvious squeeze? Will there be a highly concentrated oligopoly in the end of the digital therapy competition? Regarding the relationship between large pharmaceutical companies and small and medium-sized innovative companies in the field of digital therapy, as the market continues to change, it can be divided into three stages
.

10.
Digital therapy policy call

Call one: Clarify the classification and definition of digital therapy products and speed up the approval process

Eggshell Research Institute believes that clarifying the approval norms of digital therapy is the key to promoting the long-term sound development of digital therapy on the policy side
.
The first step to clarify the approval criteria for digital therapy is to define digital therapy in detail from the policy side and establish an exclusive classification
.
Next, based on the actual situation, with the exclusive definition of digital therapy as the cornerstone, gradually refine and deepen the content of the policy, build a full approval process for digital therapy, and finally establish an exclusive fast approval channel for digital therapy
.

Appeal 2: Build a DTx clinical trial base and promote research on health economics benefits

The research on the health economics of digital therapy should be actively promoted
.
Health economics research can empower the national medical insurance to control costs, and provide a basic basis for 2B and 2I business models
.
The essence of digital therapy is the digitalization of medical services, and digitalization is a natural weapon for reducing costs and increasing efficiency
.
The application of digital therapy firstly improves the shortcomings of the existing traditional medical treatment methods, and secondly, it supplements the gaps in the existing traditional medical treatment methods
.
Both types of situations present good health economics prospects
.

Appeal 3: Policies support industrial innovation and diversified development, and activate the vitality of small and medium-sized enterprises

The industrial innovation of digital therapy requires policy support and guarantee.
It is recommended to set up a special industrial fund for digital therapy to support digital therapy industrial parks to form clusters in the region
.
In the process of innovation, SMEs face high R&D costs, long commercialization cycles, and difficulty in large-scale revenue
.

Call 4: Strengthen the protection of intellectual property rights, especially the supervision and punishment of software product infringement

For innovative products, it is expected that policies can encourage development, and actively promote the diversified development of the industry, and establish a comprehensive understanding of digital therapy by the public through standardized approval systems and other methods
.
At the same time, strengthen the protection of intellectual property rights, especially the supervision of software product infringement, and establish a faster response process to provide fast and efficient ways of protecting rights for enterprises affected by infringement
.