How IoT is Creating Investment Opportunity in HealthcareFeb 26, 2017
Imagine a world where a sick child can “visit” a pediatrician from the comfort of their own bed, while their parent has the prescription filled without ever setting foot in a pharmacy.
Such convenience will soon become a reality for healthcare consumers and providers over the next decade as the Internet of Things (IoT) transforms the way we go to the doctor and get treatment for common afflictions and diseases. In addition to improving the quality of medical care for millions of patients, we believe such innovation will even provide a compelling long-term opportunity for investors.
In 2016, we published a whitepaper entitled: “The Internet of Things is Transforming Industries.” The paper explains what IoT is all about as well as the changes it can bring across a number of industries, including healthcare.
IoT in healthcare involves mobile devices that connect patients, caregivers and medical providers. We’ve identified three key categories for IoT in healthcare:
1. Remote Monitoring
This allows a patient to be evaluated at all times from anywhere around the world through a smartphone, tablet or implanted device. For example, IoT allows diabetics to monitor their glucose levels via smartphone, and enables their doctors to modulate their care remotely.
This can reduce many headaches in getting basic medical care. For instance, if you have a child who has an ear infection, you can have them examined remotely, and save all the time it takes to make an appointment, travel to the doctor and go to the pharmacy to have a prescription filled.
3. Behavior Modification
Consider a patient who’s been diagnosed with a condition like high cholesterol, which in many cases, can be treated with simple lifestyle changes. Behavior modification technology can function almost like a life coach in a patient’s pocket, helping them to make better decisions around diet and exercise.
Today, we estimate there are around 150 million installed units actively helping patients and caregivers manage healthcare challenges. 1 That figure is expected to grow to 646 million installed devices (not including fitness trackers like FitBit) by 2020, representing a revenue opportunity for the medical device industry of nearly $117 billion. 2
How OppenheimerFunds is Investing in Healthcare IoT
One investment we’ve made is in the medical device company Medtronic 3 , which we believe is positioned to capitalize on the industry’s growth over the long term.Medtronic develops and manufactures a wide range of medical devices, which it markets and sells to hospitals, physicians, clinicians and patients in 160 countries. The company operates in four segments and they’re on the forefront of innovation in each. This includes cardiovascular, minimally invasive therapies, restorative therapies and diabetes.
Today, IoT is a small part of their business, but it’s growing rapidly and we believe it represents a big opportunity for the company’s future. Here are two examples of devices the company is working on:
1. Reveal LINQ
This is an implantable cardiac monitoring system that seeks to allow doctors to diagnose and treat irregular heartbeats that may be related to unexplained fainting. The device is a fraction of the size of a triple-A battery and can be installed right under the skin above the heart. At the end of each day, it uploads data wirelessly to a bedside patient monitor and transmits it to a secure cloud location where physicians can review it.
2. MiniMed Connect
This application links glucose pump and sensor data to smartphones and healthcare providers. Every five minutes, data such as glucose levels, available insulin, sensor life and battery levels are uploaded. Patients can discretely view the information on their smartphones. Caregivers and loved ones can also view it on any web-enabled device and receive text messages when predicted glucose levels get too high or low.
Medtronic’s ambitions go far beyond its current capabilities in helping diabetics manage their conditions. The company is working towards building an artificial pancreas, and their ultimate goal is to have sensors and pumps detect and dose insulin automatically without any human intervention.
Both Reveal LINQ and MiniMed Connect are new markets for Medtronic. We believe they will be key revenue sources that will help the company to grow over time and could potentially generate significant returns for investors, even in low growth environments.