Today’s healthcare problem is one of the most multi-faceted, and central to the biggest challenges of the modern world. Probably the most defining piece of statistics that underpins the necessity for a more holistic approach to healthcare across the globe is the big shift from infectious diseases to chronic conditions as the leading cause of death. In 1900, 40 percent of all deaths were accounted by 11 major infectious diseases, whereas only 16 percent were accounted by the three major chronic conditions, namely heart diseases, cancer and stroke. However, by 1973 the share of deaths caused by infectious diseases had declined to only 6 percent while the percentage due to chronic conditions had increased to 58 percent. And the gap is only further widening today, meaning exponentially plummeting healthcare cost per individual over his/her lifespan in a globally aging population. Now combine this finding with this: A more recent study suggests that almost half of all deaths can be attributed to largely preventable behaviors, such as obesity and tobacco use.
We all know how governments are teaming up with the healthcare industry, insurance companies and non-governmental agencies around the world to tackle this problem and reinforce healthy lifestyles with mixed success. One big bottleneck, next to industrial food, tobacco lobby and lack of health education and awareness is the failure to equip individuals with tools and technologies of the 21st century to respond to the call to action for leading healthy lives. Interestingly, a few niche firms have moved into this untapped preventive healthcare territory with innovative products and solutions to reap the huge returns.
Here are three fascinating examples that have been on my radar for some time:
- Weight Watchers: The oldest of the three companies, Weight Watchers was founded in 1963 in Brooklyn, New York. It is now a NYSE company with US$ 1.8 billion in revenues offering products and services to assist weight loss and management to millions in 30 countries with 28,000 employees. With its special weight loss formulas, its mission is to help members adopt healthier, smarter eating habits, get more exercise and provide support to reach and maintain their target weight. Weight Watchers offers its plan in two ways: in-person meetings that encourage a community support approach with weigh-ins and counseling, or an online-only program for a US$19.99 monthly subscription.
By the way, Weight Watchers’s corporate history featuring H. J Heinz Company – yes, the ketchup brand – which still sells its packaged foods with the brand to date and one of the biggest success stories in private equity history is a story worth reading on its own.
- FitBit: One of the early movers into the wearable tech industry, since 2008, San Francisco based start-up sells wireless-enabled activity trackers that measure data such as number of step counts and sleep hours for an average price ranging between US$60-130. Fitbit is reported to have a 68 percent market share in the almost US$ 250 million activity tracker market, and has raised US$ 43 million in a funding round last year.
- Text2Quit: Launched in 2011 by Vovixa in collaboration with the with The George Washington University Medical Center, the SMS smoking cessation program has announced a 75,000 user-base. Offering personalized text messages that provide users with educational information and interactive tools to fight abstinence effectively, Text2Quit claims its users double the quit rates at six months when compared to non-users, at a premium of US$ 29.99 for a 4-month subscription. It seems to be doing pretty well when compared to its probably only clinically-backed rival – in a sea of numerous cheap iPhone apps – Craving to Quit that has been downloaded less than 100 times.
All these ventures share three characteristics that players who consider moving into the niche personal preventive health industry should keep in mind:
- Their value proposal originates from the growing need for better preventive healthcare. They essentially address the most crucial areas that need the utmost attention for better physical health: diet, exercise, anti-smoking.
- They come at a small premium, making them million, if not, billion dollar companies.