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Decoding the Chinese Digital Therapeutics (DTx) Market

 Last Update: 2022-12-30
 Source: Internet
 Author: User

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Digital Therapeutics (Digital therapeutics, or DTx for short, is a software-driven, evidence-based intervention program for the treatment, management, and prevention of disease
.
Digital therapeutics can be used alone or in combination with other therapies such as drugs or medical devices
.

Digital therapeutics

Generally speaking, digital therapy uses digital medical technologies such as AI analysis models and remote monitoring methods to provide professional, effective and personalized disease treatment interventions and patient management
for patients with specific diseases.

Digital medical technologies such as AI analysis models and remote monitoring methods are professional, effective and personalized disease treatment interventions and patient management

Based on the experience and insights of IQVIA's team, this article will sort out the development status and main characteristics of China's digital therapeutics market, explore the digital therapeutics business model, and put forward the key topics of digital therapeutics business layout and strategic deployment to help enterprises layout
.

1 History of the global and Chinese digital therapeutics market

Around 2007, global digital therapeutics began to germinate, and a large number of research literature on the application of digital technology in patient disease management (including research on CBT and other treatment methods), digital therapy products were launched
one after another.

Global digital therapeutics are beginning to sprout

After 2015, DTA (Digital Therapeutics Alliance) The alliance was approved by the FDA, and the FDA began approving disease intervention products in software form as certified digital therapeutics products
.

Since 2020, the foreign digital therapeutics market has been booming, and digital therapeutics products have begun to enjoy green channels for approval and fast listing mechanisms - in just one year, more than 75 digital therapeutics products have passed DiGA (Digital Health Alliance) Fast approval and certification
.

Compared with the rapidly developing global market, China's first digital therapy product (Zhilan Health's Xiaobei, an auxiliary management software for the interruption of mother-to-child transmission of hepatitis B virus) was officially approved as a medical device
in November 2019.
Since then, the successful approval of digital therapeutics products including Shukang, Takeda myPKFiT, Zhongxi Medical (a subsidiary of Zero Krypton) TH-002 has also represented milestones at different stages
.

The first digital therapeutics product was launched in November 2019

Figure 1: Key milestones in China's digital therapeutics market

2 Characteristics and trends of China's digital therapeutics market

After several years of exploration, China's digital therapeutics market is expected to enter a new stage of rapid growth and show three major development characteristics:

Three major development characteristics

I.
Continuing to be favorable and gradually clarifying the macro policy environment

II.
[Emerging Edge] A local digital therapy innovation enterprise with a hundred flowers

III.
[Eager to try] Leading companies in the pharmaceutical field have entered the market

1 See the | of the clouds Continue to be favorable and gradually clear macro policy environment

National policy level: The government continues to promote the digitalization of China's medical field, continues to support the development and innovation of digital medical software and hardware industry, and lists breakthroughs in digital therapeutics related fields as special topics
for scientific and technological development.

At the national policy level:

Medical supervision: The State Food and Drug Administration, the Health Commission and other institutions have successively updated and issued regulatory requirements and guidance documents related to artificial intelligence medical software and medical device software, providing clearer guidance
for the classification and definition of digital therapy products, registration review processes, data security specifications, etc.

Medical regulatory level:

At the regional government level: People's governments, NMPAs and health commissions, including Hangzhou City, Hunan Province and Hainan Province in Zhejiang Province, have issued various opinions and development plans to accelerate the construction of the local digital health industry and build a digital therapy and innovative medical highland
.

At the regional government level:

Figure 2: Pairs of governments and regulators at all levels

Guiding policies for digital health-related industries

2 Emerging | A local digital therapeutics innovator with a hundred flowers

The initial exploration of China's digital therapeutics market is inseparable from the investment and trial and error of a number of start-up companies, dating back to around 2014, a number of local innovative companies have begun to learn from the development path of global digital therapeutics and invest in the development of digital therapeutics products adapted to the Chinese market
.

At present, more than 70 local innovative enterprises have entered the Chinese digital therapy market, of which more than 20 digital therapy products have obtained medical device registration certificates
.

More than 70 local innovative companies and more than 20 digital therapeutics products

Across different disease areas, serving various patient populations, and achieving differentiated patient intervention purposes, local innovative companies have shown a competitive situation
of "a hundred flowers".

"A hundred flowers bloom"

Figure 3: Example of the classification of local innovative companies in China's digital therapeutics market

3 Jump | Leading companies in the pharmaceutical field have entered the market

The development of China's digital therapeutics market is inseparable from the entry of pharmaceutical companies - with years of experience in patient treatment and management, in-depth research results in the field of diseases, strong medical resources and mature cooperation models, pharmaceutical companies have unique advantages
in the field of digital therapeutics.

The entry of leading pharmaceutical companies has a unique advantage

Since 2020-2021, we have observed that many leading companies have begun to deploy their digital therapeutics business in China, connect local resources, and build a local digital therapeutics ecosystem
.

The layout of China's digital therapeutics business is also of great significance to pharmaceutical companies:

(1) Cooperate with doctors and therapists to participate in supporting the long-term management of patients' diseases, consolidate the cooperative relationship between pharmaceutical companies and clinical experts, and jointly explore new models
of disease management.

(1) Coordinate with doctors and therapists

(2) Provide patients with professional disease management knowledge and management tools to stimulate patient enthusiasm and ensure patient compliance
.

(2) Ensure patient compliance

(3) Explore new commercialization models through digital therapeutics and increase revenue channels
for enterprises.

(3) Revenue channels

Figure 4: Digital therapeutics market in China

Examples of leading pharmaceutical companies and strategic partners

3 Key topics in the strategic layout of digital therapeutics

At present, there are still many internal and external challenges for enterprises to promote the digital therapeutics business layout, and IQVIA believes that it can summarize its three strategic issues in the short, medium and long term:

Three strategic issues

(1) Short-term: Positioning and compliance | Do digital therapeutics products need to apply for a medical device registration certificate?

(2) Mid-term: Business model and closed-loop | Through what channels are digital therapeutics products promoted and patient drained?

(2) Mid-term: Business model and closed-loop | Through what channels are digital therapeutics products promoted and patient drained? ②

(3) Long-term: large-scale development | How can digital therapeutics products achieve wide coverage and volume?

(3) Long-term: large-scale development | How can digital therapeutics products achieve wide coverage and volume? ③

1 Short-term topic: Do digital therapy products need to apply for a medical device registration certificate?

For digital therapeutics, there are still unclear areas of relevant policies, and many companies have disagreements on whether digital patient management and intervention products need to apply for a medical device registration certificate:

From the current policies and guidance documents, digital therapy software products are eligible to apply for medical devices

Strictly speaking: for the population of patients with specific diseases (or for the use and intervention of clinical professionals), with the purpose of disease prevention, diagnosis, treatment and intervention, should be regarded as SaMD (Software as a).
Medical Device)

IQVIA believes that digital therapeutics companies should determine the positioning and registration strategy of digital therapeutics products "according to local conditions" based on multiple dimensions such as "product function, target audience, user, clinical value proposition, business model and channel"

Figure 5: Regulations and guidelines for digital therapeutics software

The application and approval process for medical device software registration certificate is complex, covering a number of key steps such as registration inspection, classification definition, clinical trial or evaluation, involving enterprises, partners, FDA and many other participants, enterprises need to design a perfect path blueprint in the early stage of product listing (and even development) to promote the construction
of digital therapeutics business.

Figure 6: Digital therapeutics products are judged by multiple criteria

Whether it falls under the category of medical devices (and management classification)

IQVIA Insights found that the average medical device registration certificate application time for digital therapeutics products (taking Class II as an example) is more than one year, which varies according to factors such as product functional complexity, clinical trial (or clinical evaluation) requirements, clinical endpoint design, and team experience
.

Figure 7: Medical device registration certificate for digital therapeutics

Key application steps, participants

2 Interim Issues: Through what channels are digital therapeutics products promoted and patients drained?

In terms of product commercialization channels, IQVIA summarizes the four mainstream options in the market:

Mode 1: Direct 2C (direct promotion and drainage to end patients)

Direct marketing and drainage of products to the target group: Many companies (especially in the early stages) directly promote digital therapeutics products to the target group, and convert them through free trials, AI evaluation experiences
, etc.

Mode 2: 2H (Hospital & HCP) 2C (promotion and drainage through hospital and doctor channels)

Hospitals (and front-line doctors) have relatively concentrated patient resources, have a greater say in patient treatment and long-term intervention, and have relatively high patient compliance
.

There are a variety of specific cooperation methods under the 2H2C model, including: 1) education and promotion in the group of doctors, and transformation of patients with the recommendation of doctors; 2) Build a digital therapy "model room" with the hospital, and build a digital therapy center in the hospital
.

Mode 3: 2I (Insurance) 2C (Cooperation with commercial insurance companies to serve policyholders)

Some digital therapy companies will also choose to launch digital therapy products in the form of cooperation with commercial insurance, and as a domestic digital therapy company that has successfully "gone overseas", the commercial success of Shukang in the US market is also inseparable from close cooperation
with the commercial insurance ecosystem.

Under the 2I2C model, we have also found two mainstream cooperation methods, including: 1) "selling" the right to use digital therapeutics products to commercial insurance companies as a way to improve service differentiation and competitiveness; 2) Cooperate with commercial insurance enterprises to identify the target groups of digital therapy services among insured persons and carry out targeted patient conversion
.

Mode 4: 2A (Association) 2C (Outreach and drainage in cooperation with related disease associations)

In addition, individual digital therapy companies benefit from long-term and in-depth cooperative relationships with disease associations and rehabilitation associations, reach strategic cooperation with associations, and conduct trial and promotion
of digital therapy products through associations (and their affiliated community rehabilitation centers, etc.
).

Figure 8: Examples of major business models for digital therapeutics products

IQVIA summarizes four key factors for determining the promotion of digital therapeutics products and patient drainage: the number of patients reached, the conversion rate of target patients, patient compliance and stickiness, and the replicability
of business models.

Figure 9: IQVIA summarizes the key factors of business model research

3 Long-term issues: large-scale development | How can digital therapeutics products achieve wide coverage and volume?

In the long run, digital therapeutics companies should plan ahead and plan long-term business paths from product development: Taking the business model mechanism under the 2H2C model as an example, we believe that digital therapeutics products have key issues worth exploring at all stages:

(1) Product development is completed: develop market pilot strategies and adjust digital therapeutics products

(2) After the official launch of the product: focus on the core market to carry out market education and penetration

(3) Product scale development stage: study the application path and success factors of the hospital fee code

Figure 10: In 2H2C mode

Product development path and key issues as examples

From the perspective of large-scale development, the in-hospital charging code for applying for digital therapeutics is very important and will also become the core competitiveness of digital therapeutics companies for long-term development - helping products achieve in-hospital prescription rate improvement, high conversion rate and compliance
.

Based on IQVIA's research, local digital therapeutics companies have practiced the application route of in-hospital fee codes, grasped the key success factors, and identified the key decision makers
in the process.

In the next few years, the commercialization model of digital therapeutics "prescription" is also expected to gradually emerge, and early layout and planning are crucial
.

Conclusion

High quality, accessibility and cost control have always been the three main themes of the development and reform of China's medical system, and the development of digital therapeutics has important significance and role
in improving medical services due to objective limitations such as imbalance of medical resources, differentiation of patient needs, and uneven efficiency of patient management.

High quality, accessibility, cost control, unbalanced medical resources, differentiated patient needs, and uneven patient management efficiency

For pharmaceutical companies, how to carry out digital layout as soon as possible to obtain "first-mover advantages", accurate insight into the successful experience and trial and error lessons of the market to "avoid detours" is crucial, IQVIA is willing to work with all parties to grasp the opportunities of China's digital therapeutics market, explore the path of commercialization, and solve problems at all stages
.

"First-mover advantage" and "less detours"

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