Health + Fitness
8 digital health investment trends: what to expect from 2023
Investments in the global health and wellness market will reach around $24.8B in 2023, with an annual growth of 22%, shows the new Health and Wellness Market Predictions Report 2023, prepared by researchers at digital health and wellness company Kilo Health.
The report analyzes the total investment amounts, market size, and key factors of market shifts to present possible predictions for 2023. It covers the last four years: 2019 (pre-pandemic), 2020 (lockdowns), 2021 (introduction of vaccines), and 2022 (post-pandemic/inflation).
These global events were the cornerstones of market fluctuations and became the main focus of the analysis and predictions for the upcoming year.
What data tells us about investors’ preferences in the health and wellness industry?
The Personal Health & Self-Care category gets less interest
Investments in the Personal Health & Self-Care category peaked at the pandemic’s height in 2020–2021. However, the investments fell significantly in 2022 and are anticipated to fall by 30% in 2023.
Growth during the pandemic years was fueled by the fear of visiting doctors’ offices while the virus was rampant. People chose safe and easy methods of self-care. As COVID-19 restrictions are now lifted and live doctor appointments resume in most countries, the need for at-home treatment is decreasing.
Interest in smart health devices also dropped after the pandemic. For example, purchases of smart scales increased by 43% in 2020 and 18% in 2021 but declined by 25% in 2022. At the same time, the sales of smart blood pressure monitors grew by 43% in 2020 and 42% in 2021, followed by a 24% fall in 2022.
Another reason for the limited growth of the Personal Health & Self-Care market is the inaccuracy of self-care medical devices, such as pregnancy and fertility test kits.
2. The Medical System industry shows steady growth
Medical System investments have been increasing since 2019 and are predicted to grow by 36% in 2023, reaching $6.6B. The overall investments are expected to increase almost fivefold since 2019.
The main reason for this growth is the lack of systems and poor design. Governments across the globe are shifting their investment focus to better-designed and innovative medical systems ensuring cost-effectiveness and sustainability. Developing countries mainly focus on expanding infrastructures and medical services, while the priority of developed countries is digitalization.
Furthermore, the percentage of geriatric patients across the world, especially in developed countries, is rising, and with poor diets and sedentary lifestyles, investments in Medical System are anticipated to rise further.
3. Solutions for Health Diseases gain more interest
2020 sparked a huge increase in investments in the Health Diseases category. Growth could be attributed to COVID-19 when people became more attentive to their health and its management. During that time, digital products soared in popularity. Despite a setback in 2021, the category continued growing in 2022 and is expected to reach $7B in 2023.
According to WHO, it is estimated that the population of people above 60 years old will rise from 12% to 22% by 2050. A study from Precedence Research shows that each older patient has suffered from at least two or more major chronic disorders.
Unfortunately, chronic diseases such as diabetes, cancer, and congestive heart failure are rising in prevalence. That is contributing to the adoption of remote patient monitoring services, which, in turn, is expected to boost the demand for IT solutions in the industry.
4. Investments in Fitness stabilized after the pandemic
2021 is a huge outlier in the Fitness category. Due to the closure of the gyms, digital solutions remained the only viable option for working out. Accordingly, investments reached $1.9B in 2021. There was a huge decline in 2022, where investments dropped to $0.3B.
As pandemic restrictions were lifted and physical gyms reopened, the demand for digital products dropped, limiting the growth of fitness apps, trackers, and the sales of workout equipment.
The investments are expected to increase in 2023, reaching $0.7B, as exercising is the most popular lifestyle change people want to make in the next 12 months.
According to WHO, 2.8 million people die each year as a result of being overweight or obese. That is a huge expense to the medical system and will surely be addressed by investors and governments, promising future growth for the category.
5. More attention to Mental Health solutions
The global COVID-19 pandemic highlighted the importance of mental health. For many people, the pandemic was a trigger that increased the prevalence of developing mental disorders. Accordingly, millions of dollars were poured into the category throughout 2020 and 2021.
2022 was a slower year, as the relevance of COVID-19 decreased, but long-term growth is still possible, and the investments are expected to reach $2B in 2023. The increase in the prevalence of mental disorders, the rise in the geriatric population, and the growth in awareness programs regarding mental health drive this growth.
The market is also expanding as a result of increased education about mental diseases and efforts to reduce stigma.
Emergency mental health services will also play an important part in the category’s growth. Such services provide assistance to patients who require immediate help, which can be done both physically and digitally.
6. Changes in the Financial Wellness market
In the US, 57% of employees report experiencing stress when dealing with their finances. The main concerns include saving for the future, paying monthly bills, and credit card debt. These worries prevailed after the COVID-19 pandemic in 2020–2021 and record-high inflation in 2022.
The US Financial Wellness market is expected to grow at a CAGR of approx. 9.9% during the period of 2022–2028. The growth is largely owed to employee and employer interest in financial security. Today, more than 8/10 public companies offer financial solutions to help employees reduce stress and improve their overall well-being. However, 35% of their employees are unaware of the benefits offered.
Thus, increasing employee engagement through clearer messaging will be a key factor in developing this market, especially when investments are projected to grow by 42% in 2023.
7. Investments in the Beauty industry might start recovering
The Beauty category, which had the biggest decrease in investments during the pandemic, received the same investment amount in 2022 as in 2021 ($0.1 billion).
Mandatory masks, the decrease in social interactions, and physical store closure temporarily slowed down sales. The market quickly adapted to the new hygiene standards and started to focus on online beauty stores. Beauty brands had to come up with new ways to sell their products without the user testing them out. Hence, AR and AI technologies were more often introduced into beauty e-commerce.
In 2022, revenue in the Beauty and Personal Care industry was $564.40B, with projections of 4.76% (CAGR) growth between 2022 and 2026.
2023 seems to be a recovery year for the Beauty category. The market players have shown their ability to adapt to the changed consumer needs and continue to do so: more brands are becoming inclusive to people of color, new toxin-free products are introduced into the market, and the successful use of influencer marketing, which drives 65% of consumers’ purchases of cosmetic products.
8. Fluctuations in investing solutions for Older Adults
The global elderly care market is expected to reach $2.366B by 2028, growing at a CAGR of 6.8%. A rapidly aging population and increased need for care drive market expansion. In addition, the number of chronic diseases, such as cancer, diabetes, osteoporosis, and cardiovascular diseases, is the reason for this market growth as well.
Due to the pandemic, internet and digital tool usage has increased among the elderly – in 2019, 47% spent 1–3 hours per day on the internet and apps, while in 2021, 42% spent 4–6 hours. Also, the usage of virtual physicians among the elderly has grown from around 6% in 2019 to over 20% in 2021.
Investments in this category are fluctuating. After a huge increase in 2021, 2022 had a drop, with the expectancy of a future increase in 2023.
One of the main barriers to adopting digital solutions to improve health for the elderly is technology complexity. Focusing on simplicity and functionality are the key factors for future players in this industry.
The final notes
Kilo Health research shows that In 2021, health and wellness investments experienced a record year, thanks to the shift to virtual healthcare during the pandemic. However, after reaching an unprecedented high in 2021, venture capital investments in the rapid expansion of digital health companies slowed down in 2022.
The future seems promising for many categories, and growth is projected to continue in 2023 as digital health companies lead the way in healthcare innovation using artificial intelligence, machine learning, data analytics, and telehealth.
There are many attractive opportunities to invest as companies show their ability to adapt to the changing world, innovate, and develop the best solutions for rising consumer needs. The investment market will recalibrate to a more sustainable run rate.
Read the full report here: https://publuu.com/flip-book/15285/226589/page/1