The market for personalized medicine in the United States is already $232 billion, and it is projected to grow 11 percent annually, according to a new report published today by PricewaterhouseCoopers LLP, entitled The Science of Personalized Medicine: Translating the Promise into Practice. Personalized medicine, which targets individualized treatment and care based on personal and genetic variation, is creating a booming market, but it is a disruptive innovation that PricewaterhouseCoopers says will create both opportunities and challenges for traditional healthcare and emerging market participants.
PricewaterhouseCoopers projects that the market for a more personalized approach to health and wellness will grow to as much as $452 billion by 2015. Its estimates are based on a broad view of the market opportunity beyond drugs and devices to also include demand for high-tech storage and data-sharing as well as low-tech products and services aimed at consumers' heightened awareness of their own health risks.
According to the report:
- The core diagnostic and therapeutic segment of the market - comprised primarily of pharmaceutical, medical device and diagnostics companies - is estimated at $24 billion and is expected to grow by 10 percent annually, reaching $42 billion by 2015.
- The personalized medical care portion of the market - including telemedicine, health information technology and disease management services offered by traditional health and technology companies - is estimated at $4 billion to $12 billion and could grow tenfold to over $100 billion by 2015 if telemedicine takes off.
- The related nutrition and wellness market - including retail, complementary and alternative medicine offered by consumer products, food and beverage, leisure and retail companies - is estimated at $196 billion and is projected to grow 7 percent annually to over $290 billion by 2015.
The promise of personalized medicine has been predicated upon advances in genomics, proteomics and metabolomics, completion of the human genome map and development of "targeted" diagnostics and therapeutics. Genomic testing enables physicians to identify an individual's susceptibility to disease, predict how a given patient will respond to a particular drug, eliminate unnecessary treatments, reduce the incidence of adverse reactions to drugs, increase the efficacy of treatments and, ultimately, improve health outcomes.
"Medical science and technological advancement have converged with the growing emphasis on health, wellness and prevention sweeping the country to push personalized medicine to a tipping point," said David M. Levy, MD, global healthcare leader, PricewaterhouseCoopers. "We are now seeing a blurring of the lines between traditional healthcare offerings and consumer-oriented wellness products and services. The market potential is enormous for any company that learns to leverage the science, target individuals and develop products and services that promote health."
New Market Participants
Consumer demand for personalized care is creating new opportunities for market participants, for example:
- DTC Diagnostics: The direct-to-consumer (DTC) diagnostic market is growing and controversial. Genetic testing products for in-home use are empowering consumers with real-time information, enabling them to predict their medical risks, detect disease earlier and better manage their health status. Market research analysts estimate the current size of the global market for genetic testing at $730 million, with a 20 percent annual growth rate. Though a relatively small portion of this market, DTC testing is expected to grow rapidly in response to consumer demands and declining prices.
- Consumer: Consumer products companies are not only leveraging the new science in the development of new products but also have the marketing expertise and insights to target consumers that many healthcare organizations don't have. Food and beverage companies have long fortified their products with vitamins and other nutrients, and through advancements in science and food manufacturing they will increasingly tailor products, packaging and promotional activities that appeal to health-conscious consumers. As early as 2003, Nestle, a global leader in foods that deliver nutrition, health and wellness benefits, announced that it was "moving from an agrifood business to an R&D-driven nutrition, health and wellness company." The pace of growth in this area, however, may be set by complex issues such as establishment of a regulatory approval pathway for the validation of health claims, intellectual property protections and cost of research and development.
- Telecom and Technology. Technology companies, including some with little or no health expertise, are capitalizing on emerging opportunities to manage vast quantities of genetic and other health data and build IT infrastructure and connectivity solutions.
Challenges for traditional healthcare
The growth of personalized medicine will change the role of traditional healthcare organizations and create new challenges. Most notably, it is one of the market forces driving the changing business model of Big Pharma away from the blockbuster drug model to a more collaborative model focused on outcomes and specialized therapies.
Primary care providers may have to build new service lines around prevention and wellness in order to replace revenues lost from traditional medical procedures. When they do, they can expect to face low-cost competition from non-healthcare companies skilled in consumer marketing and consumers armed with knowledge of their options. In addition, physicians will need training in genomics and proteomics in order to stay relevant in the area of personalized medicine. To educate the next generation of physicians and nurses in the complex issues raised by genomic and proteomic science, universities will have to update their programs.
How payers approach personalized medicine will be critical, as their reimbursement schemes will influence the business models of pharma and diagnostics companies as well as providers who depend on third-party payment. Payers that want to embrace the new science will have to rethink how they define coverage. Insurance premiums today are based on actuarial statistics that apply to large, predictable populations. By contrast, personalized medicine targets small populations which are far less stable and predictable from an actuarial standpoint.
"There is an urgent need to increase the value of healthcare, but we can't get there by fixing the healthcare of yesterday. We need to replace our current focus on treating disease with a better approach that is personalized, preventive, predictive and participatory, the basic tenants of personalized medicine," said Gerald McDougall, principal in charge of personalized medicine and health sciences, PricewaterhouseCoopers. "Greater collaboration around personalized medicine should be a key strategy for health reform."