Opportunity and Scope:Technology to Promote IndependencePrognosis Within Next 5 years

Laurie M. Orlov, Aging in Place Technology WatchJuly 2011

Commissioned by Wellness and Health Innovation, Scotland’s national initiative designed to support Scottish companies developing innovative products or services for the wellness and health sector. www.wellnesshealthinnovation.org

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Technology to Promote Independence Prognosis

Within Next 5 years A WHI White Paper

EXECUTIVE SUMMARY

Within the past 10 years, consumer attitudes have changed. Given the morethan 62,000 health-related websites online today, consumers have become“active health care shoppers on their own behalf… enabling them to have theinformation, interest and financial incentiveto consumer health care products andservices more like they consume othermerchandise and services.”(1) And studieshave repeatedly shown that even as theyage, individuals want to remain in theirhomes as long as possible.(2)

Meanwhile, the world’s developed nationsreflect a continuing and permanent ageingtrend. The countries with the greatest percent of population that is ageing, coupled with the country’s overall wealth,offer likelihood of a receptive market for technologies that enable longer independence and ability to remain athome for seniors (see Figure 1).

Factors influencing need for technology to promote independence The ageing of the world’s populations is a permanent trend– for both developed and emerging markets. According tothe UN Population Division Worldwide Population Prospects,nearly all countries in the world will see an increase inmedian age over the next ten years.(3) The reason: global fertility rate fell by nearly 48% from the early 1950s to nowand is expected to drop by another 18% over the next fourdecades.(4) As the populations age, products and serviceswill be required to serve their needs and wants – already in the US, the Baby Boomer generation accounts for thelargest share of sales across most product categories.(5)

In 2011, the projected midyear world population 65 andolder had already reached 545 million.(6) The implicationsof this trend are both positive (market opportunity) and negative (health costs and shortage of care providers of all types). Specifically, given the trend towards aging andthe fact that the oldest of the Baby Boomers turned 65 in2011, three factors together create business opportunitiesfor market expansion of technology products and servicesfor this aging population:

1. Lengthening life expectancy in developed nations2. Percentages of older adults with chronic disease3. Percentage of 65+ populations living alone within

developed nations

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Country Population % of total GDP GDP65+ (millions) Population (billions) per capita

2010

US 39.70 13 $14,600 $47,257Canada 5.14 15 $1,565 $46,183Japan 28.19 22 $5,179 $40,785China 109.80 8 $5,308 $3,921India 64.53 5 $1,290 $1,062Russia 19.20 14 $1,250 $8,906Germany 16.65 20 $3,402 $41,457Italy 12.14 20 $2,107 $35,059France 10.62 16 $2,669 $41,191UK 10.00 16 $2,254 $36,402Spain 8.22 18 $1,470 $32,442Ukraine 7.20 16 $118 $2,592Poland 5.10 13 $467 $12,283Romania 3.12 15 $164 $7,744Netherlands 2.48 15 $805 $48,334Greece 2.15 19 $329 $29,418Belgium 1.89 18 $469 $43,802Portugal 1.89 18 $233 $21,724Sweden 1.75 19 $438 $47,081Czech Republic 1.61 15 $197 $18,898Hungary 1.57 16 $135 $13,563Austria 1.51 18 $385 $45,906Belarus 1.39 14 $50 $5,166Bulgaria 1.33 18 $48 $6,406Switzerland 1.24 16 $508 $66,912Serbia 1.23 17 $51 $6,937Finland 0.90 17 $234 $43,717Denmark 0.88 16 $318 $58,036Croatia 0.75 17 $64 $14,547Norway 0.74 15 $410 $84,444Slovakia 0.67 12 $98 $18,202Bosnia Herzegovina 0.56 15 $18 $4,886Ireland 0.55 12 $218 $47,571

Total Worldwide 526.10 $60,680

Figure 1: Source – Wolfram Alpha (7) (European countries sorted descending by 65+ population)

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1. LENGTHENING LIFE EXPECTANCY INDEVELOPED NATIONS

Today’s older adults, unlike any period in global history, can expect to live well past the traditional ages of retirement,increasingly able to survive to age 85 and beyond. For men,that might mean an additional 5-7 years, for women, an additional 6-8 years. And in developed nations, the percentage of the population age 65+ as projected bythe United Nations is growing – surpassing 1 out of every 5 people within the next 5 years (Figure 2):

Figure 2: Trends in Global Ageing, World HealthOrganisation

2. PERCENTAGES OF OLDER ADULTS WITHCHRONIC DISEASE

According to the 2010 Rand Study, health care spending is growing faster than GDP in most countries.(8) Over 860million people worldwide have chronic diseases, and thespending on chronic diseases is expected to increase. 75-85% of healthcare spending is on chronic disease management.(9) The average person aged 75+takes multiplemedication and has 3 chronic conditions.(10) However,there are numerous barriers to broad-based adoption, not the least of which are patients themselves, but alsoreluctance on the part of providers, according to the Randstudy, for research-based studies that prove efficacy.

3. PERCENTAGE OF 65+ POPULATIONSLIVING ALONE WITHIN DEVELOPEDNATIONS.

Emphasising the need for remote monitoring and safety-related technologies for older adults, combining the trendtowards living longer, it’s important to consider likelihood of anelderly individual suffering from an undetected adverse eventin their home (Figure 3). The World Health Organisation hasprovided an estimate of the population (based on World Bankcountry income category) living alone in developed nations.

Figure 3: In developed nations, the higher the income,the greater likelihood that elderly live alone

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CATEGORY CHARACTERISTICS GLOBAL MARKET SIZE POTENTIAL BARRIERS/DRIVERS

Chronic disease Disease Management $7.9 billion 2015 High Barrier: Reimbursement ofmonitoring practitioners

Diabetes/blood Glucometer >$8.8 billion High Driver: Consumerglucose self-care trend

Cholesterol Self-testing level 2.3 billion units 2015 High Driver: Consumer self-care trend

Blood pressure Home blood pressure cuffs $1 billion High Driver: Consumer self-care trend

Communication Senior phones, computers, Mass market Mass market Barrier: Senior focusdevices software huge upswing will replace is temporary niche

within 5 years senior focused products

Wearable PERS watches, pendants $3.4 billion 2015 Medium Barrier: High age range formonitoring/PERS short-term use

Remote home Environmental sensors US$2.8 billion by Medium Senior-specific low monitoring (temp, fire, moisture, the year 2015 willingness to use, otherwise

security) in home security market

Dementia care Wander detection $1.8 billion Low Barrier: Providers reluctance to use technology

Behavioral health/ Cognitive fitness $295 million Low Driver: baby boomers, but brain fitness 2009 growth 31%. current vendor track record

Passive activity Sensors placed in locations, None available Low Barrier: Depends on senior monitoring monitor variants from baseline being willing to use;

awareness low

Med management Reminder and notifying Low Barrier: Administration of dispenser devices/doses is problematic

Falls prevention/ Accelerometer and other tech No specific market None as a Feature of other productsdetection to detect falls – feature of other standalone (see Lifeline AutoAlert)

markets product

Figure 4: Global market potential as identified through public information sources

Technology CategoriesThe following technology categories represent the opportunity for vendors of software and services toserve the global market for promoting independence of the elderly (Figure 4). Market sizes are from publiclyavailable documents online (none of the fee-only reports or analyst websites are referenced and should beviewed as an indicator only.

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Market constraintsSeveral constraints make assessment of adoption potentialHigh – that is, a broad market across the developed countries – or Low – that is, will cause adoption to beslower. These include performance of current struggling or defunct vendors on the one hand, or likely reimbursementfrom changes in health policy and/or reimbursement. Given the age range and wealth of developed countries,however, it may still make sense to enter smaller marketniches with innovative technologies that solve specificissues, for example, living alone some distance from family,risk of falls due to medication or recent hospitalizations, worries about cognitive health, etc. Notes on the categoriesof technology and their markets:

a. Remote home (automation) monitoring market.GIA announced the release of a comprehensive globalreport on Home Automation markets, indicating he globalmarket for Home Automation is forecast to reach US$2.8 billion by the year 2015. Europe represents thefastest growing regional market for home automationworldwide and is poised to register a CAGR of more than 10% over the analysis period.(11)

b. Passive activity monitoring. Safety monitoring technologies-those that monitor a person’s activities ofdaily living for falls and wandering as well as track healthand wellness, among many other uses-were valued at $2.3 billion in 2010 and are expected to reach $3.4 billionby 2015, the study concluded.(12)

c. Wearable monitoring – Personal EmergencyResponse System. In a study last year that garnered asurprisingly small amount of buzz, BCC Research reportedthat the global market for elder care technology productswas worth approximately $2.6 billion in 2010 and shouldgrow to about $4 billion in 2015. Of that number, safetymonitoring technologies-those that monitor a person’sactivities of daily living for falls and wandering as well astrack health and wellness, among many other uses-werevalued at $2.3 billion in 2010 and are expected to reach$3.4 billion by 2015, the study concluded.(13)

d. Communication devices/software for 65+ population.Today’s cell phones like Jitterbug, Doro, Consumer Cellularofferings should offer innovative services that create sustainable relationships with customers because smartphones of all types will encroach on the feature phonemarket.

e. Personal chronic disease monitoring (telehealth/telecare) According to BCC Research, the ‘telehome’ market, which represented 28.5% of the global telemedicinemarket in 2009, is expected to capture nearly 35% by 2015.This sector is valued at nearly $2.9 billion in 2010 and isexpected to increase at a 22.5% compound annual growthrate (CAGR) to reach $7.9 billion in 2015.(14) The telehealthmarket is much smaller according to a just-publishedreport: from Research and Markets: “Tele-health monitoringequipment markets are growing because units decreasethe cost of care delivery while improving the quality of careand the quality of lifestyle available to patients. Healthcaredelivery is an increasing concern worldwide. Markets at$607.5 million in 2010 are anticipated to reach $3.1 billionby 2017.”(15)

f. Falls prevention/detection. 4,601* Adult Day FacilitiesServing approximately 172,500 Seniors with “temporary”wandering solutions market worth an estimated $23M. Fall detection has been shown to be an attribute of othertechnology categories like PERS, for example, rather thana unique category in and of itself. Fall prevention – basedon balance, for example, may have a future opportunity,but has not yet emerged as a category.

g. Cholesterol: The global market for Cholesterol andOther Cardiovascular Testing is forecast to cross 2.3 billionunits by the year 2015. Key factors driving market growthinclude ageing population, increasing incidence of cardio-vascular diseases, and growing awareness among peopleabout the significance of reducing the unhealthy cholesterollevels. The fastest growth is likely to emanate from theJapanese cholesterol and other cardiovascular testing market. The Japanese market is projected to register aCAGR of 6.7% over the analysis period.(16)

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h. Blood pressure: Clearly a part of the trend to self-care,the global market is $1 billion as of 2010.(17) Blood digitalblood pressure monitor market was $341.9 million in Japan alone, 2010.(18)

i. Diabetes self-monitoring blood glucose. Global marketsize is $8.8 billion in 2008, United States is the singlelargest market, representing 40% of all market growth, but has begun facing declining market prices and slowergrowth since that time. Ultimately, a combination of technology innovations, patient education, and economicincentives may be needed to significantly expand theSMBG market and build sustainable long-term dollar growthfor SMBG vendors, according to a study commissioned by the Diabetes Technology Society in 2009.(19)

j. Medication management. Medication non-adherence isan expensive and potentially deadly problem, resulting in89,000 deaths and $100 billion per year in unnecessaryhospital costs. The American Heart Association reports that medication non-adherence is the number one problemin treating illness today.(20) Despite this problem, home-based medication management and dispensing is presentlya niche and small market, constrained by the need forcareful management of dosage loading at regular intervals. To date, pharmacies have experimented in, but are notactive, in promoting home-based electronic medicationmanagement, hence the market designation as ‘Low’.

k. Dementia care: The only market size example includes4,601 Adult Day Facilities Serving approximately 172,500Seniors with a “temporary” wandering solutions marketworth an estimated $23M.(21) Other categories in dementiacare can include customized delivery of books, music, orreligious material, for example. It could also include onlineor sharable video or online games. The video game industry is expected to grow to $70 billion worldwide by 2015.(22) Also, according to AARP, 26% of the 50+ population in the US plays games online today.

l. Behavioral health. Includes cognitive fitness, depressionmitigation, virtual coaching. Cognitive fitness marketreached $295 million in 2009.(23)

©2011 Wellness and Health Innovation

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REFERENCES

1. Health care without the doctor, California healthcare Foundation, May, 20092. AARP http://assets.aarp.org/rgcenter/general/home-community-services-10.pdf3. Nielsen “The Global Impact of an Aging World” One exception is Niger in Saharan Africa.4. Ibid5. Ibid6. Facts for Features US Census Bureau News, March 23, 20117. www.wolframalpha.com8. www.rand.org/content/dam/rand/pubs/occasional_papers/2010/RAND_OP323.pdf9. www.zigbee.org/zigbee/en/events/webinars/2009_11_10_Webinar/2009_11_20_Webinar.pdf10. Merck Institute of Aging and Health 2004, The State of Aging and Health in America11. www.prweb.com/releases/home_automation/security_controls/prweb4531994.htm12. www.ltlmagazine.com/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=72753110ACC047F0A29B964AEE0F1E3E13. www.ltlmagazine.com/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=72753110ACC047F0A29B964AEE0F1E3E14. www.bccresearch.com/report/HLC014D.html15. www.businesswire.com/news/home/20110610005498/en/Research-Markets-Tele-Health-Monitoring-Market-Shares-Strategies16. www.prweb.com/releases/cholesterol_testing/cardiovascular_tests/prweb8121191.htmwww.strategyr.com/Cholesterol_and_Other_Cardiovascular_Testing_Market_Report.asp 17. MTB Europe, January 30, 200718. www.yanoresearch.com/press/pdf/591.pdf19. www.ncbi.nlm.nih.gov/pmc/articles/PMC2769893/20. www.onemedplace.com/blog/archives/492621. Data is US, from worldwide Zigbee Alliance Meeting 2009 www.zigbee.org/zigbee/en/events/webinars/2009_11_10_Webinar/2009_11_20_Webinar.pdf22. http://venturebeat.com/2010/05/25/video-game-industry-to-hit-70-billion-by-2015-but-growth-will-slow/23. www.sharpbrains.com