Apple Watch could disrupt diabetes management

The news: Apple’s secret E5 project is making major breakthroughs in developing a continuous glucose monitoring (CGM) system, per Bloomberg.

• The goal is to incorporate the noninvasive monitor into Apple Watch.
• It would be a game-changer for diabetes patients and the consumer wearables market.

The challenge: Two companies already dominate the CGM market.

1. Dexcom (market cap of $44.0 billion), a pure-play diabetes company.
2. Abbott Laboratories (market cap of $180.1 billion), a diversified pharmaceutical and medtech company.

The market opportunity: Diabetes is a serious chronic condition in the US, with 37.3 million people (11.3% of the population) diagnosed in 2019, per the Centers for Disease Control and Prevention.

People with Type 2 diabetes, those who are prediabetic, or undiagnosed represent a major market opportunity that not even Dexcom or Abbott have fully tapped.

• 28.7 million are currently diagnosed with the disease, and 8.5 million people are still undiagnosed, per the CDC.
• 96 million people aged 18+ have prediabetes (38% of the US adult population).
• 26.4 million people aged 65+ have prediabetes (48.8% of that population).
• For context, type 1 diabetics need active management strategies such as CGMs—but they only make up about 6% of all US diabetics.

Apple’s opportunities: Apple dominates both the global and US smartwatch markets.

• iPhone users are primarily driving this growth. That’s a dedicated market that may be willing to upgrade their device, given the right feature incentives.
• We estimate that 33.9% (28.4 million adults) of the US wearables market have an Apple Watch in 2023, which will grow to 35.4% (33.4 million) in 2026.

Our take: Assuming Apple receives approval from the Food & Drug Administration (eventually), the addition of a blood glucose monitor will likely appeal to an even larger audience than diabetics—consumers known as the “worried well,” who are very attentive to their health.

• Wearable ownership is strongest among people who rated their health as excellent (62%), per Rock Health’s Consumer Adoption of Digital Health in 2022 report.
• Among those who said their health was poor or very poor, ownership was low (20% and 23%, respectively).
• The worried well consumers either buy or are gifted their wearables (85%), rather than receive them through a health plan or provider (13%).

Apple has targeted the healthcare market for years, mostly through its Health Records iPhone tool and various monitoring features for the Apple Watch, such as its heart rate monitor. Getting the necessary FDA 510(k) approval for a CGM tool could take time, but not as long as the drug approval process. Competitors, you’ve been warned.

This article originally appeared in Insider Intelligence's Digital Health Briefing—a daily recap of top stories reshaping the healthcare industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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