🔍
How Apple Plans To Become A Big Player In Health Care - YouTube
Channel: CNBC
[0]
If you zoom out into the future and
you look back and you ask the
[4]
question, what was Apple's greatest
contribution to mankind, it
[10]
will be about health.
[12]
Apple's biggest contribution to the
world is they invented the
[14]
touchscreen smartphone, which is completely
upended everything in the
[19]
last 15 years.
[20]
But it's a great sales line.
[21]
You know, the best is still ahead.
[23]
Apple is on a bit of a health craze.
[26]
Something big is actually going on.
[28]
I believe we're at the very
beginning of the indispensable role of
[34]
health tech. I think it enables a
whole new network of companies, a slew
[37]
of startup companies, to be able to
capitalize on this data and help
[41]
improve outcomes. So if there's any
technology company today that's well
[45]
positioned to pull this off and
build the trust of health care
[50]
institutions and consumers,
it is Apple.
[54]
It's an area that has not been incredibly
digitized in the past 20 or 30
[59]
years, like other sectors have been.
[61]
And there are some very good reasons
for the company's move into health
[64]
care. Health care accounts for
about 18 percent of U.S.
[68]
GDP. That is massive.
[70]
That is one of the last
remaining markets that Apple could actually
[73]
grow. The App Store created about
five hundred billion dollars, so half
[78]
a trillion dollars worth
of economic activity.
[80]
Absolutely huge. And I think that Apple
could create a market that is
[86]
similar in that size
for health care.
[88]
But while investors are applauding Apple's
health focus, physicians are a
[92]
bit more hesitant. You know, young
people who are monitoring themselves
[95]
with these devices, driving themselves
crazy, watching their heart rate,
[99]
getting these alerts, thinking there's
something wrong with them, they
[101]
come into my office all the time
and ninety nine point ninety nine
[105]
percent of the time what I
offer them is just reassurance.
[107]
We wanted to explore why and how
Apple is growing its health care
[111]
business, as well as the
challenges the company faces.
[120]
Steve Jobs, a rebel, an
icon, dead at 56...
[124]
Tim Cook has talked about in the
past, you know, the Apple founder, Steve
[129]
Jobs, go through cancer and health
care system and realizing that they
[133]
could make a contribution.
[134]
I think Steve Jobs imprint was all
over the company, and the culture is
[138]
very derivative of Steve.
[140]
But I think Tim has always
been very thoughtful about health.
[143]
And so I kind of think he views
this almost in some ways as his legacy.
[148]
The Apple Watch is seen as
one of Apple's most important introductions
[151]
into the health sector, but that
wasn't its exclusive goal initially.
[154]
It was supposed to be
notifications on your wrist.
[157]
It was supposed to be fashion.
[159]
There was a gold one. And over time,
the watch has become much more of
[164]
the health and fitness device, and they've
sort of ditched some of these
[166]
other things because they realized that
that was actually the most
[169]
compelling use case for people.
[172]
But the Apple Watch isn't
the company's only health initiative.
[175]
Our business has always been
about enriching people's lives.
[179]
And as we've gotten into health care
more and more through the watch and
[183]
through other things that we've created
with ResearchKit and CareKit and
[187]
putting your medical records on the iPhone,
this is a huge deal and it's
[193]
something that is very
important for people.
[196]
We are democratizing.
[198]
When you look at Apple's spends billions
of dollars every year in R&D.
[202]
Right now, I wouldn't say the health
care department or health care team
[206]
at Apple is the biggest, but they can
place a pretty big bet on it.
[210]
And you can tell they're taking it
seriously because the CEO of Apple,
[214]
Jeff Williams, runs the health team.
[216]
We are going to
keep pushing watch forward.
[221]
Apple has three areas of focus when
it comes to health: hardware like the
[225]
Apple Watch, software like the Health
App and ResearchKit, and services
[229]
like Fitness+, Apple's
newest subscription service.
[233]
Some people might provide the software,
some people might provide the
[236]
hardware, which is largely generic or
medical device maker, but Apple
[240]
can combine them all and kind of
have a better user interface, which I
[244]
think they see as their main edge.
[247]
All of these devices and services
revolve around the iPhone ecosystem,
[251]
and while iPhone sales are still
the majority of Apple's revenue,
[254]
wearables and services are
picking up steam.
[258]
iPhone sales have increased an average
of about four percent quarter
[261]
over quarter and about two
percent year over year.
[263]
Since 2017, services have increased an
average of about 4.5 percent
[268]
quarter over quarter and about 22
percent year over year since 2017.
[273]
And wearable sales have grown the most
by far, increasing at an average
[276]
of almost nine percent quarter over
quarter and nearly 35 percent year
[281]
over year since 2017.
[283]
The revenue for wearables is already more
than 50 percent more than iPod
[288]
was at its peak. The danger to Apple
is that next year a Samsung or a
[294]
Huawai or Oppo comes out with
something that really captures the
[298]
consumer's imagination and they
stop buying iPhones.
[300]
That's a danger and really investing
in this health lessons that because
[305]
if these features, you know, really catch
on and people need them, then
[308]
they stick with Apple.
Let's discuss hardware first.
[312]
The Apple Watch is a standout
among the companies health initiatives.
[315]
Not only does the most recent watch
offer ECG recording and heart rate
[319]
monitoring, it also includes blood
oxygen monitoring, which is very
[323]
medically-minded and not a huge selling
point for the average consumer.
[327]
Apple does not report revenue made
from the Apple Watch alone, but
[330]
wearables, a category that includes
Apple Watch, along with products
[334]
like iPods, contributed about six point
five dollars billion in revenue
[338]
in quarter three of 2020.
[340]
The estimates of watches that have been
sold are, you know, 60 million
[344]
over the years, 70 million over the
years, and if the average selling
[348]
price is around 300, 400 dollars,
that's a lot of money.
[352]
That's substantial. That's, you know, that
could be its own company.
[355]
The tagline is, The future of
health is on your wrist.
[358]
And so I think they're being
very intentional about saying that this
[361]
device is not just a wearable,
it is really about health.
[365]
Some of the biggest names in
medical equipment include Abbott, Johnson
[369]
and Johnson and GE Healthcare.
[371]
But Apple is not really competing
with these companies right now.
[374]
It's way outside
of their wheelhouse.
[377]
It's basically an entire
new kind of business.
[379]
There's a lot of regulation there.
[382]
Innovation is much slower for obvious
reasons, because we have to ensure
[386]
safety at each step of the way.
[388]
And so I think that Apple is
very, very unlikely to be making a
[392]
pacemaker anytime soon.
[394]
Apple also provides software solutions
like HealthKit, which was
[398]
announced back in 2014, and
ResearchKit, which helps health care
[402]
professionals use data from Apple
devices for medical research.
[406]
Their devices are used widely
in hospitals, for example, nurses
[409]
frequently use iPhones or iPads
to track medication administration.
[413]
I use my iPhone on rounds
to look up patient data.
[416]
When it comes to medical records,
right now that market is completely
[420]
dominated by Epic, one company
based out of Wisconsin.
[423]
There's a lack
of inter compatibility.
[425]
It's very difficult and
expensive to switch systems.
[429]
And so because of that, there
really just hasn't been much competition
[432]
and innovation. That's where
Apple comes in.
[435]
Apple has a reputation of innovating a
stale market, and the company has
[439]
already struck deals with some of
the biggest health care institutions
[442]
to get health records
on the Health app.
[444]
Well, I think the hardware ecosystem
that they've created with the
[448]
iPhone, with the watch, and I think
ultimately with AirPods as well, are
[452]
the tools that will allow them to
kind of collect health data for
[455]
patients and then build those tools
for developers to create unique
[461]
applications that help treat
patients in new ways.
[463]
And that's what's really exciting to
us, is the combination of all
[466]
three. Most recently, Apple announced
Fitness+, a subscription workout
[471]
service that will join Apple's lineup
of other plus services like Apple
[475]
TV+ and News+.
[477]
Fitness+ is taking on competitors in
the health and wellness category
[480]
like Peloton and other at-home fitness
programs, and with the pandemic
[484]
keeping so many people at home, it
was an ideal time to strike.
[488]
But Peloton does have a
leg up on Apple.
[490]
Peloton has created devices
that Apple hasn't created.
[493]
They've got the connected treadmill, they've
got the bike, and so there
[497]
are some limitations, I think, in terms
of how much Apple can really
[499]
provide in terms of the level
of experience that Peloton has created.
[506]
There are some unique challenges
in the health care space.
[509]
For example, Apple has regularly complied with
the FCC for all of its
[513]
wireless products, but devices that deal
with your health have to answer
[517]
to another federal entity.
[519]
Looming over the horizon is
the Food and Drug Administration.
[523]
And if you do certain things like
test glucose for diabetes testing, you
[528]
will be regulated as a medical
device and for good reason.
[531]
If you get the glucose meter
wrong, you can kill people.
[534]
Apple has many electrical engineers that
can explain why this is
[538]
completely compliant with FCC rules,
whereas the medical people, you
[541]
know, they have to hire,
they're building that team.
[543]
It's a totally different ballgame. The
company has flown under the radar
[547]
of major regulations, thanks in part
to its classification as a fitness
[551]
and wellness device manufacturer, not
a medical device manufacturer.
[555]
In fact, the Apple Watch has a
De Novo classification under the FDA,
[559]
meaning it is a medical device
for which general controls alone, or
[564]
general and special controls provide
reasonable assurance of safety and
[568]
effectiveness for the intended use, but
for which there is no legally
[572]
marketed predicate device.
[574]
Apple really wants to say,
"this is your health buddy.
[577]
It's basically a medical device.
[578]
You know, you need this to track
your vital signs." But legally, they
[582]
got to be like,
"this is about wellness.
[584]
This is about, you know, fitness.
[587]
This is about health
as opposed to medicine."
[592]
So Apple's relationship with the FDA is
growing more complex as it adds
[596]
more medically focused sensors, but
some physicians are not convinced
[600]
that all their patients need the
information coming from these sensors.
[604]
There are definitely situations where, as
a doctor, I appreciate and
[608]
value the data coming in
from an Apple Watch.
[610]
It's when the watch is driving the
disease rather than the other way
[614]
around that things get into trouble.
[616]
If you look at the the distribution of
ages that own an Apple Watch and
[620]
the distribution of ages that
have atrial fibrillation, they are
[622]
inverse. So, the people who have Apple
Watches are the ones who are
[628]
least in need of continuous monitoring
for atrial fibrillation and vice
[632]
versa. Privacy is also a concern
as health data is incredibly sensitive.
[638]
Luckily, Apple has a good track
record when it comes to privacy.
[642]
Because the business model involves selling
hardware, they can make the
[645]
argument more coherently that it's not
actually in their interest to
[649]
sell your health information
to a third party.
[652]
Because if that were uncovered that they
were doing that, then it would
[655]
be a massive blow to that primary
source of income, which is the
[659]
hardware side. I don't think anybody's
going to trust Facebook medical
[663]
records anytime soon.
[667]
The future of Apple's
health initiatives look positive.
[669]
Having control of that end to end
experience lets them do things that
[675]
other device makers can't do.
[677]
And I think that's why they are
so well positioned in digital health, is
[680]
they can collect that data, they
can create seamless experiences for the
[684]
consumer, and they can also let that
data be leveraged by those third
[688]
party app developers that ultimately, I
think power kind of the next
[691]
wave of digital health with Apple.
[693]
The company has already tackled
heart rate, electrocartiography, blood
[697]
oxygen levels, but there is so
much more that can be developed.
[700]
Blood glucose monitoring is something Apple
has discussed, which is also
[704]
been on the radar
of some other companies.
[706]
This would be a huge breakthrough
for people with chronic conditions like
[710]
diabetes. It would be an
immense story kind of overnight.
[715]
I don't necessarily believe that it's
possible because these are such
[720]
challenging things to do from
just a technical and scientific
[724]
standpoint. This stuff is half.
[726]
This stuff is really hard, you
know, taking sensors that really exist,
[730]
you know, and miniaturizing them and making
10 million of them all work.
[735]
Whether there's any actual benefit
for non-diabetic people monitoring
[740]
their sugar continuously
is totally unknown.
[743]
Unfortunately, that's not going to stop
devices from being introduced to
[746]
the consumer market to
do precisely that.
[748]
And already there are
several in the pipeline.
[751]
Products like iPods might find usefulness
in Apple's health and wellness
[754]
line-up, too. I think over the
long term, what Apple's device actually
[758]
becomes is a medical device that
sort of delivers treatment to patients,
[764]
which is, I think, really the coolest
thing that they could do with
[766]
their ecosystem. And so an example
might be somebody that might have
[770]
depression or chronic pain, they could wear
an earpiece – it could even
[775]
be an AirPod – that delivers a
very small stimulation to the brain and
[779]
it actually helps treat
the underlying disease.
[783]
Now, Apple is not alone in its
pursuit of those health care dollars.
[786]
Google began organizing its health
initiatives under the name Google
[790]
Health in 2018, and now
it boasts over 500 employees.
[795]
Amazon bought PillPack, a prescription
medication delivery service in
[798]
2018 among other health initiatives.
[801]
This is three and a half trillion
dollar market just in the U.S.
[805]
A third of that is wasted spend
and it's that wasted spend that
[809]
technology companies are
going after.
[812]
And it won't just be one
technology company that disrupts, it will
[816]
likely be many.
[817]
But Apple is trying hard to
become a global leader in health.
[821]
The company recently partnered with its
first country to prove that
[824]
point. Singapore is now willing to
reward people for achieving certain
[829]
healthy behaviors and meeting their
goals by giving them money.
[833]
Apple announced it would partner with
the Singaporean government to give
[836]
resident Apple Watch users up to
380 Singapore dollars after two years
[841]
of better health practices like
meditating, exercising and maybe even
[845]
taking a Covid-19 vaccine
when it becomes available.
[850]
There is clearly a lot that can
be achieved in the health care sector.
[854]
It's a really big area.
[857]
Yep, we're just getting
started I think.
[859]
People want to maintain good health,
and the people who have the
[862]
interest, time and money to get devices
or tools to monitor their health
[868]
are going to continue
wanting to do so.
[870]
The question is just whether those
devices actually add anything useful
[874]
for the person versus just giving
them more information to worry about.
[878]
Apple has entered a new
battleground with its health initiatives.
[882]
Peloton, Abbott medical devices, Epic
medical records software, these
[886]
are all competitors Apple is just
now stepping into the ring with.
[890]
And it's still unclear who in 10,
20 years will be the winner.
[894]
I think that the advantage Apple has
is obviously that they already have
[897]
a really great and powerful brand in
the minds of consumers, and they've
[901]
got a billion people around the world
who are using an iPhone, that
[904]
platform that they always
build on top of.
[906]
It fits in with Apple's conception of
itself as a company that is trying
[911]
to do good, you know, leave the
world better than they found it.
[914]
Financially, it could be huge,
massive, bigger than the iPhone.
Most Recent Videos:
You can go back to the homepage right here: Homepage