Healthcare is no longer solely a business sector for companies in traditional life science core industries such as pharmaceuticals, medical technology and diagnostics. It is rapidly becoming an interdisciplinary arena that is of interest to businesses from many other industries, such as R&D-driven food and beverage companies, consumer electronics, telecoms, housing/real estate and retail.
This is because of the increasing sophistication of consumers, combined with the drive towards healthier lifestyles, which is leading to the creation of new, cross-industry business opportunities. Innovative technologies that enable increased access to information and greater possibilities for knowledge sharing have led to health consciousness moving from a niche to a mainstream market.
In addition, ageing populations and strong pressure to reduce national healthcare expenditure are driving new business development and exciting consumer health R&D activities in developed countries. Responding to the demands of consumers could be a partial remedy for cost-pressured public and insurance-based healthcare systems, while also providing new business opportunities.
Technological development and changing consumer behaviour
Today’s technological landscape is completely different from the recent past. New generations of consumers use mobile technology as a natural extension of themselves. Consumers are adopting broadband: 34% of the global population now has access to it. Europe is embracing mobile devices: 38% of European consumers own a smartphone or a tablet.
Online retail is annually growing by double digit percentages. Looking further ahead, the Internet of Things (IoT) is extending connectivity to cars, houses and medical equipment. These technology and consumption trends also apply to the healthcare world. As retail consumption patterns change, the same trends spill over into the consumption and provision of healthcare.
The future development of consumer healthcare
Consumer health is a broad definition, covering everything from a gym-goer aiming to stay healthy to a patient looking to manage a chronic disease. Consequently, it comprises a number of business areas, ranging from the large and mature, such as over-the-counter (OTC) pharmaceutical sales, to expected fast-growth markets, such as wearables and mobile apps. The common denominator is the focus on the patient/consumer. Within the consumer health space, it is the individual who is paying the costs and making the decisions.
As a consequence of technological development, both consumers and patients are better informed, have a wider choice, and demand increased personalisation. Today, patients have plenty of options regarding where to go for information and, once they reach the doctor’s office, they already have their own hypotheses on potential diseases and disease management. Patients are also increasingly open to non-state funded solutions and are looking towards solutions outside of cost-pressured healthcare systems.
On top of this, pressure on the public financing of classical healthcare provision is pushing patients towards more self-care. The increased prevalence of 'diseases of affluence' and an ageing population means health systems must move from acute towards preventive care and chronic disease management. As this happens, healthcare and consumer health increasingly converge. Players within traditional healthcare systems will therefore need to adapt to consumer needs and requirements as new entrants step into the market from the consumer side.
Opportunities offered
The actions required to reap the benefits of this development depend on existing capabilities, but it is clear that new business opportunities are available both to established healthcare players and to new entrants. The qualities required to succeed are likely to be a combination of those possessed by the two. To capture consumer interest, players already in the market need new perspectives, whereas new entrants need to ensure health knowledge and credibility.
The consumer health space is naturally more oriented towards screening and prevention, and towards capturing consumers before they become patients. The successful business models of the future will be associated with giving a large population access to awareness and 'prevention' solutions. Innovation will clearly be a driving force here, both in terms of technology and in the development of 'consumer-friendly' business models.
New entrants
New players can leverage existing expertise from their original markets and use them for healthcare products and applications. Telecom operators, who are facing margin pressure in their core business, are looking towards connected devices, for example, for remote patient monitoring, to be a strong revenue driver going forward.
Retailers are also rapidly moving into the health related services market. One development here is the introduction of health centres in which retailers incorporate professional medical services into their offerings. This repositioning of stores is an efficient way of attracting health-conscious customers looking for a one-stop-shop where all their needs are met. Real estate owners and operators also see these 'health centres' as sources of profitable growth at a time when demand for retail space is reducing.
Although new players might lack the credibility offered by a strong healthcare brand, those from the B2C space are strongly consumer-centric and have a deep understanding of their target groups, as well as products and technology that can potentially be leveraged for consumer health applications.
Adjacent industries
For industries that border healthcare, such as food and beauty, consumer health represents a growth market as well as a way to create a positive brand image. Willingness to spend money on diet options perceived to be healthy is increasing enormously and traditional food giants such as Nestlé are developing 'health brands.' After recent food scandals it has become vital for the giants to prove that their food is indeed healthy.
Existing healthcare players
The development of consumer health offers a potential for healthcare players to make money outside of their traditional business models and customer groups. Health service providers are using their health-related brand strength to expand into all types of health related services and products aimed at both consumers and professionals.
Just as it is possible for retail players to add healthcare capabilities to become health centres, it is possible for professional health service providers to dedicate space and time to consumer driven business and achieve theme-oriented retail concepts. In Japan, 'antiageing clinics' are an attractive segment for younger doctors looking to broaden their medical offering outside of public coverage.
The increased amount of information available to patients is not only positive. It also provides a huge challenge for healthcare as hypotheses are often developed from various sources and without clinical education. This tends to drive cost for healthcare as patients demand expensive examinations and tests even if they are not relevant. Healthcare providers who can provide their patients with information in a consumer-friendly manner could gain control by providing constructive information that aligns patient expectations with the medical reality.
Hospitals can further respond by transforming themselves into client-centred organizations that are always connected with their patients, both before they enter hospital and after they leave. Traditional healthcare players should consider broadening their offering to gain additional revenue and customer reach. There is also a potential to partner with retail or consumer goods players who have to ensure they are delivering solutions that appeal to consumers.
Capturing the opportunity
During the course of the last decade, the consumer health industry has risen as an important force that is reshaping the future of healthcare, enabling an individual-centric model whereby consumers play a more central and informed role, alongside providers, in healthcare prevention, maintenance and ultimately, treatment. One thing is clear; there is enormous market potential in this cross-dimensional opportunity space. All players need to improve weak capabilities and leverage strengths:
- existing players such as care providers and life sciences companies need to build consumer insight and sales capability, leveraging their healthcare knowledge
- adjacent players such as food, beverage and beauty companies need to focus on credibility and validation of health claims to satisfy increasingly aware regulators
- new entrants such as telecom operators, consumer electronics companies, retailers and facilities/housing companies will need to build adequate understanding of how to succeed in the highly regulated healthcare space, whilst leveraging their consumer insight and digital technology strengths.
In the centre, of course, is the consumer. Future users of the consumer health offering need to be carefully segmented and understood. Today, there are many means to shadow customer groups to identify their interests, needs, preferences and buying patterns. Big data generated through mobile Internet applications enables companies to gain a much better understanding of the target groups. Consumer understanding then needs to be combined with insight into medical and health developments to find technologies and products that match consumer demand.
Players targeting the consumer health opportunity space need to anticipate what the world will look like several years in the future and what kind of solutions will be offered to consumers. Examining what type of markets, channels and technologies that can or should be targeted is key.
Based on the expected outcome companies need to decide where to be present and build the capabilities required. Cross-industry collaboration can also be expected to increase as a result of industry convergence.
Companies that have shown the ability to capitalize on the development so far have a number of traits in common:
- they master new technologies
- they are knowledgeable of, and take into account, consumer behaviour as well as healthcare development
- they are not afraid to make changes to their existing business models or test completely new business models to capture a new target customer group.
For those that succeed, the rewards are likely to be substantial.