Why Healthcare Startups Should Invest in Wearable IoT

The Healthcare industry is in the midst of a digital revolution, and healthcare wearable IoT development is at its forefront. For a digital healthcare startup, choosing wearable IoT development offers quite a few benefits. The main of them are getting into a growing market with possibilities of high ROI and sustainable competitive advantage. Healthcare IoT development helps to address the emerging needs of an aging population, increasing pressures on healthcare systems, and new opportunities in preventative health and personalized care. Surely, regulatory compliance in software and hardware development increases the time-to-market and overall costs. However, partnering with experienced wearable IoT development teams can streamline the process. 

In this blog post, we’ll break down market trends, cost vs benefit analysis, and outline directions for gaining a sustainable competitive advantage.

The growing market demand for wearable IoT in healthcare

Healthcare is the second fastest-growing industry globally. Looking specifically at the market of wearable healthcare devices, Statista shows how the market value of wearable healthcare devices is distributed across different geographic regions. 

• The growth in Europe is going to surpass 320% for 2029 compared to 2023; 
• Asia-Pacific will see more than 360% market increase for the same period; 
• the USA will expect slightly over 270% growth during the same timeframe.

The total value of this market was $25.14 billion in 2023. The global projection for 2029 is expected to be at $76.11 billion which is about 300% market growth.

In addition, the overall IoT market in healthcare is going to reach even higher numbers as shown below. While the global projection for wearables is at around $76 billion for 2029, IoT overall is expected to reach the $160 billion mark. Similarly, the projection for IoT at $305 billion is likely to correlate with wearable devices. As such, wearable devices toward 2032 might well reach the $145 billion mark. 

Why is healthcare wearable IoT development growing so fast?

1. Technological development. Currently, both hardware and underpinning software are improving by leaps and bounds. Sensors are becoming more and more accurate. At the same time, AI and ML are getting better at recognizing minor abnormalities and spotting early trends or irregularities. 
2. Healthcare digitalization. The pace of adoption of digital technology within the healthcare sector is racing. Hospitals and other healthcare institutions recognize the benefits of having electronic health records integrated throughout the patient journey. Overall,the rise of telemedicine has triggered the adoption. 
3. New opportunities for preventative health.  People recognize that investing in prevention provides a much higher quality of life and better economic outcomes than managing a disease somewhere down the line. In all this, continuous monitoring offered by wearable healthcare devices enables efficient measuring and tracking. 
4. Increasing spread of chronic diseases. To better manage a chronic condition, one requires specific continuous data relevant to this condition. For instance, a person with hypertension might measure blood pressure with a home BP cuff a couple of times per day. However, it does not give a full picture of how BP fluctuates at different times and for different activities. This is where continuous monitoring gives a much more detailed insight and enables precise and personalized care. In the USA, the number of people with hypertension was 1.13 billion in 2015. And, the sad reality is that now in the USA 60% of people have at least one chronic condition, while 40% have two or more. 
5. Growing consumer adoption and awareness. People are painfully aware of health challenges and costs. Plus, after the pandemic, there has been a significant increase in consumer awareness of health trends, benefits of fitness wearables, and the general science behind healthy lifestyles. 

Summary for healthcare wearable IoT development market trends

All this points to a quite beneficial alignment of trends in wearable IoT development. As Bill Gates said “I was lucky to be in the right place at the right time. But many others were also in the same place. The difference was that I took action.” Custom healthcare app development is available to nearly everyone. 

Cost vs. benefit analysis for startups

Costs of a business in healthcare wearable IoT development includes quite a few distinct categories. Regulatory compliance is one of the most influential ones. Starting with hardware manufacturing, you will have significant R&D spending. Then ensues setting up the manufacturing process with the following FDA approval process. 

To cut costs and save time, you can choose to use pre-made components. They have already been tested so you just set up an assembly line to create the final product. But it still requires testing and approval as a finished piece. 

Sometimes, a hybrid approach can be used to benefit from great existing components and manufacturing the one that needs to be customized for your particular device. This way, you can have moderate cost savings. 

Lastly, you can opt for wellness hardware which does not require any FDA approval. This is much more affordable and faster than all other options. 

Additionally, you should consider the following costs:

• Medical expertise;
• Product testing;
• Clinical trials;
• Hardware stock;
• Medical representation;
• Marketing.

Overall, average estimates might look something like that for costs:

Approach	R&D Costs	Manufacturing Costs	Regulatory Costs	Time-to-Market	Unit Cost Range
From Scratch	$250,000 – $800,000	$100 – $200/unit	$200,000 – $500,000	12-60 months	$200 – $400/unit
Pre-made Components	$100,000 – $250,000	$50 – $150/unit	$100,000 – $200,000	6-24 months	$50 – $150/unit
Hybrid Approach	$150,000 – $400,000	$70 – $200/unit	$150,000 – $300,000	8-60 months	$100 – $200/unit
Non-FDA Regulated	$50,000 – $150,000	$30 – $100/unit	$10,000 – $50,000	3-6 months	$30 – $100/unit

In terms of benefits, this varies greatly too. For instance, Levels startup does only software on a monthly subscription model and provides either Dexcom or Libre CGMs. Its reported results are: 

“143% compounding annual revenue growth, 1,327% revenue growth in total from 2020 to 2023.” Unfortunately, they have not reached profitability yet due to their expensive R&D process. They are aiming to get FDA approval for their software as they tailor it for treating metabolic disorders. Non-FDA-approved software can give general wellness advice, actionable non-medical advice, and track health-related information. It cannot be used for diagnosis, treatment, or as a basis for medical prescription.

• Overall, gross margins for manufacturers-only can be within 20-40%. 
• However, when you add a software component and choose a subscription-based model, you can benefit from scale.
• With SaaS solutions in healthcare wearable IoT development, gross margins of 70-80% are a real possibility. 

Healthcare wearable IoT development: Differentiating your product in a competitive market

The market is dynamic and growing with some degree of volatility. The environment is filled with continuous innovation, changing trends, and evolving expectations. Importantly, regulatory restrictions and personal data laws are becoming stricter. However, when it comes to healthcare IoT development, a lot of companies can enjoy achieving a sustainable competitive advantage. First of all, wearable IoT development includes a hardware part, and once bought, the switching costs are considerable. Hardware works in tandem with a software bit. And the latter includes a little bit of a learning curve. Altogether it makes users even less likely to switch to a competitor’s offering. Lastly, a great characteristic of a company’s capability to produce a sustainable competitive advantage is its inimitability. To that end, healthcare startups always engage in R&D activities to a lesser or greater extent, which results in proprietary technology, unique algorithms, and patented devices. 

Clinically-vetted or general purpose (non-FDA) devices?

That being said, the biggest dilemma of healthcare startups is whether to go for FDA-approved technology or wellness-oriented (non-FDA) one. After all, costs and timelines are drastically different. In addition,  market analysts state that the market is going to tip in favor of clinically tested devices. But it was said more than 7 years ago, and we are yet to see this happen. 

Obviously, going for R&D to develop your product, and then trying to get an FDA approval is a long shot. And non-FDA approved ideas will always be winning in terms of time-to-market and low costs. So, a strategy like the one used by Levels might be the optimal strategy. First, create a consumer wellness software utilizing existing FDA-approved hardware. Then, invest in R&D and strive to upgrade your solution to a clinically tested one. 

Finally, a lot of device-producing companies make their APIs. For instance, the Apple Watch is FDA-approved and has close to a dozen different sensors that collect a range of indicators continuously. Using its HealthKit API one can design their own insight-offering software. Apple Watch can be used with Dexcom G7 to also track user’s blood sugar. Overall, there were 28.4 million Apple Watch users in the USA in 2023. Apple Watch holds 59% of the US market while Fitbit 27%. 

So, we now will share ways to differentiate your healthcare startup whichever path you are going to take.

Non-clinically approved wellness IoT wearables

For this category, a great point of differentiation is creating trendy and aesthetically appealing devices marketed for specific purposes. For example:

• Fitness recovery for performance;
• Biofeedback for mindfulness;
• Women’s health;
• Stress reduction.

These topics are gaining momentum in the social media space while more specific and different ones are also possible. There is more and more talk of the idea of the ‘Quantified-Self’. So, creating a device that will smoothly mesh with the user’s lifestyle and bring value to a specific area is a way to differentiate. In addition, incorporating AI and gamification for healthy habit adoption can create a real change in a person’s life.

Software-only path for Healthcare IoT development

There are already existing IoT devices for which you can develop your own software. The insight layer is as much if not more important as hardware bits. The points for differentiation in software wearable IoT development are vast. 

When you think of the purpose such as to improve one’s well-being, several unsolved challenges exist:

• Accounting for user context;
• Interpreting the data norms accordingly;
• Personalization.

User Context

Having a collection of continuous raw data might be a pointless endeavor. Users need it to be clear and actionable. But also, actionable in a way that is relevant for the user’s context. You can develop a solution for healthcare IoT development that:

• is aware of environmental context in real-time,
• adapts to habitual history, 
• dynamically changes according to scenarios or goals, and more. 
• You can introduce here empathy, culture, and more advanced technology like AR or VR.

Interpreting data

For other devices, tackling the issue of interpreting results according to the relevant standards is another point of differentiation. Measuring oxygen saturation with different devices will not produce comparable results. Now, users can utilize rings, watches, and earphones for this. Respectively, they measure oxygen saturation on a finger, wrist, or ear. Users might want to use all of these or switch between them. Developing algorithms that take into account measurement location and device type can be a unique point of differentiation.

Personalization

With personalization, there is an ocean of opportunities. After all, all medical advice is pretty generic. For instance, let’s take a cliche of 10,000 steps per day. And software apps develop entire grids of ‘achievements’ starting with that number and going up. For someone with a chronic condition or a heart disease, doing even 10,000 can be harmful. Additionally, seeing that you cannot achieve this number would be demotivating. This person would want to be encouraged and adequately praised for achieving, say, 4,000 steps. On the other end of the spectrum, there is a fitness enthusiast who does 20,000 on a slow day. For this person, getting celebratory animation for a 10,000 mark is meaningless. To conclude, this challenge is present for basically any health metric.

Other software

Strangely, the adoption of wearables is slow for one major reason. Health professionals are not trained in analyzing the data. So, why not develop software to train professionals in interpreting data from different devices? Why not create some decision-support tools that integrate wearable data with patient records? Maybe even some collaboration SaaS solution?

There are also other stakeholders in healthcare: insurers, hospital management, caregivers, pharmaceutical companies, and so on. All of them can also benefit from understanding data coming from IoT devices and wearables for their decision-making. 

Additionally, one should always consider the connected industries like dietary supplements or other wellness interventions. Developing a software which will specifically measure the outcomes of taking particular supplements or else might create a positive change in one’s wellness journey.

Clinically-approved hardware strategy

To differentiate a startup here, one needs medical expertise, competence in biomedical manufacturing, and knowledge of regulatory requirements for compliance with different legislation. Generally speaking, one can differentiates itself by focusing on one or some of these:

1. Miniaturization of devices;
2. Sensor precision;
3. Combining capabilities;
4. Multiple certifications: CE, FDA, ISO 13485;
5. Specialization;
6. Durability and battery life;
7. Focus on emerging biomarkers;
8. Creating an ecosystem of devices;
9. Ergonomics and minimization of discomfort.

Final Words: Partnering with experienced wearable and IoT development teams

In order to successfully launch a digital healthcare startup, one needs a trusted partner in healthcare wearable IoT development. Custom IoT Development is often the only viable solution. The complexity of wearable IoT development always requires tailored algorithms and bespoke hardware-software integrations. In addition, healthcare IoT development requires only experienced wearable and IoT development teams. Outsourcing the development will enable your digital healthcare startup to focus on R&D, marketing, building distribution channels, and customer relationship management. 

For a step-by-step process, you can read our comprehensive article How to Develop a Custom IoT-based MVP App?

FAQs: Why Startups Should Invest in Healthcare IoT Wearables