In 2021, almost everyone knows the top industries to watch. These industries are fast-growing and innovative. They have the potential to change our lives. Industries like tech, pharmaceuticals, healthcare, finance, and energy fill this category and deserve our attention.
Most people are relatively familiar with these large industries. What is more interesting is watching smaller businesses within these larger areas or those that fit into two or more of these categories. These are the companies where real growth, disruption, and investment potential lie.
One industry that sits at the crossroads of healthcare and technology is the Software as a Medical Device (SaMD) industry. SaMD is a term that describes any type of software that functions independently from other medical devices and provides the ability to diagnose, treat, alleviate, or prevent medical conditions. Here are a few reasons why Software as a Medical Device is an industry to watch in 2021 and beyond.
SaMD is part of rapidly growing industries
The medical device industry, in general, deserves watching and SaMD is one of the hottest segments of that market. The medical device industry has been growing at a rapid rate – 4.4% compound annual growth rate (CAGR) from 2015 to 2019 – for several years now. As of 2019, it was a $450 billion-plus industry.
Production and supply chain issues caused by the COVID-19 pandemic made that number dip slightly in 2020 but experts predict it will not merely return to previous levels, but will grow even faster. Beginning this year, CAGR in the medical device world is projected to increase to 6% over the next three years. This would create a $600 billion-plus industry by the year 2023.
While these numbers bode well for SaMD, the growth numbers in the software industry are even better. In the last five years, software for systems and applications has a CAGR of over 18% and, as with SaMD, experts predict that this number will only grow in the next five years. Projections indicate this type of software could grow at a rate of 22% to 25% in the next five years.
SaMD will likely affect your life
To be classified as SaMD, as opposed to another type of healthcare software, one of the requirements is that it provides a benefit for a patient and could do harm if it fails or is misused. This is just a small part of the definition, however. Orthogonal has a good explanation of what distinguishes an SaMD device. The point is, these are serious medical devices and you should be well-informed about use and abuse before using them.
As a patient with a chronic condition such as diabetes, you may be able to use an app on your phone that calculates the correct dose of medicine you need at a given time. Or, to help with sleep apnea, you could turn your smartphone into a medical device by using the microphone to monitor your breathing while you sleep and send an alert if it detects an interruption. You could even wear an EKG on your wrist with SaMD and your smartwatch to monitor your heart condition.
These are just a few of the current, real-life applications of SaMD available to patients in 2021. There are plenty more and, at the rate this software is developing, there will continue to be even more. Being an informed patient will allow you to utilize SaMD more effectively and understand it when you do.
Regulations around SaMD will likely change
Like any new technology or device, figuring out the best way to regulate SaMD it is important so that, first and foremost, people are kept safe while developers continue to innovate. This is a delicate and sometimes difficult task. The U.S. Food and Drug Administration (FDA) is responsible for medical device regulation and, as a part of that, SaMD regulation.
Normal medical devices are classified and regulated by how much risk is associated with their use. Class I is the least risky and applies to medical devices like bandages (yes, these are considered medical devices) and non-motorized wheelchairs. Class II is in the middle. Here you’ll find devices that require special labeling like acupuncture needles or a CT scan machine. Class III includes the riskiest devices that need strict regulation because they help support a patient’s life. This could include such devices as pacemakers or defibrillators.
The FDA is working on classifying SaMD products into similar categories. Accomplishing this involved hiring more people who are familiar with software development and programming. These new hires are now working with developers and patients to come up with the best framework for regulation. This will be a careful process that is worth watching to see how the regulations grow and change over time as both the software and the way it is used change.
There is money to be made in SaMD
This is not financial or investing advice by any means but, with the way SaMD is growing, it is likely there is money to be made in the near future. You can invest in private SaMD companies, buy stock in publicly traded ones, or find funds that invest in these types of companies. However you do it, putting some money toward this industry could turn out to be a good idea.
SaMD is disrupting the healthcare industry. This fact, coupled with the increased use of technology in all areas of life, but especially in healthcare, brought on by the pandemic, makes it seem like the tipping point for the industry could be near. This might not mean you should go invest now but, if you believe in SaMD, it is definitely worth watching where these companies go financially.
SaMD is a tantalizing mix of healthcare and technology making it one of the most fascinating industries of 2021 and beyond. If you are not already tuned into this industry, you’ll want to be soon because it is growing fast. Regulations for it are rapidly evolving and it is likely that this new technology will affect your life someday. It might also make for a very nice investment.