Gene Munster: FDA approval is the key to Apple’s health ambitions

“The obstacle for Apple is that from a clinician’s standpoint, the majority of data the Watch collects is primarily for ‘entertainment purposes.’”

From a note posted Thursday to Loup Ventures subscribers:

The Wall Street Journal reported that Apple has an internal project codenamed “Casper,” which has explored the possibility of creating an Apple primary care network. A primary care network is a group of doctors and clinics that focus on delivering basic medical care (general practitioners). While Casper is still an active initiative, we believe it’s unlikely Apple ultimately builds a primary care network given it’s outside of their core competency. Instead, we see the company’s health ambitions anchored in devices and data that can be leveraged by clinicians for care. To achieve this, Apple must secure more Class II-grade medical device features for Watch and potentially AirPods. Class II designations give healthcare providers the legal confidence to trust and use the data these devices collect…

In our conversations with healthcare professionals, the obstacle for Apple is that from a clinician’s standpoint, the majority of data the Watch collects is primarily for “entertainment purposes.” We feel this perspective understates the value of the data these devices collect and validates the hard line between the data gathered from a Class I versus a Class II device in the eyes of a clinician.

It’s worth noting that today the Watch does have a Class II designation for its atrial fibrillation (Afib) feature, granted by the FDA in 2018. A Class II designation ensures that collected data is accurate and safe to be acted upon. Class II certifications have yet to be secured for other Watch features, including general heart rate and blood oxygen monitoring.

We believe one indication regarding Apple’s seriousness related to the health opportunity is whether the company achieves Class II designations for other features on Watch. If successful in winning more approvals, it would pave the road to unlock greater wellness, along with economic value, from Watch data. For example, a patient could submit years of Watch data upon entering the ER, which would be a significant, real-time advantage in diagnosis and treatment. The core question is whether Apple engineers can deliver FDA-grade data accuracy across the spectrum of Watch features.

My take: Muster estimates that 13% of iPhone users are Watch users, and he believes this can, over time, rise to more than 40%. With a billion iPhones, that adds up.

9 Comments

  1. Gregg Thurman said:
    The primary reasons I wear an Apple Watch are all health related. I don’t have any health problems, and I want to forestall them as long as I can.

    7
    June 18, 2021
  2. David Emery said:
    Munster is exactly right. Getting FDA approval will be arduous, particularly for a relatively unprecedented device. Without that, Apple runs some significant risks if it advertises this and then gets sued.

    If they do get glucose monitoring (whether or not FDA approved), I’ll probably buy an Apple Watch (just for that purpose.) Right now I pay $70/month for my Freestyle glucose sensors (read by an app on the iPhone), so an Apple Watch replacement would pay for itself in a year. (Those are not covered by Medicare for me, the rules for covering a continuous sensor are really onerous. That’s dumb considering the cost and relative inconvenience of strip testing.)

    2
    June 18, 2021
  3. FDA approval, on medical grounds, makes sense for Airpods Pro as hearing aids & Apple Watch. However, I hardly expect a government piling on antitrust issues to fast-track a product as useful as Apple Watch. Politics and optics always supersede practicality and benefits to society.

    3
    June 18, 2021
  4. Fred Stein said:
    All we really know is what Tim Cook said, paraphrasing, “looking into the future, Apple biggest contribution will be in health.”

    We might learn from Apple’s fintec and cellular successes. In both cases Apple made the end user experience better and left the back-end to the incumbents.

    The WSJ put Casper the friendly ghost into Pixar’s “Monsters Inc.”

    0
    June 18, 2021
  5. Daniel Epstein said:
    The clinicians concern about too much irrelevant “entertainment purposes” data seemingly should not be hard to overcome. Fairly easy to screen the categories of data to s smaller subset that is the area of interest. The harder part is actually verifying the data is useful and accurate. And of course clearing the rights for the techniques used that are potentially patented by others. Apple should be able to deal with these concerns if it really wants to. Adding a few more biometric measurements to the watch and other devices might take more time than people expect but they seem well on the way to succeeding.

    0
    June 18, 2021
  6. Gregg Thurman said:
    Just thinking out loud, but an FDA approved Apple Watch glucose monitor will cause a run on them like we haven’t seen before, followed closely by a run on iPhones. Further down the road we’ll see an increase in iPad and Mac sales with an accompanying increase in Services revenue along the way.

    3
    June 18, 2021
  7. Jerry Doyle said:
    Question! How much of this is “push-back” from the medical community?

    0
    June 18, 2021
  8. Steven Philips said:
    Well, of course it’s push back. The question actually is whether or not it’s appropriate push back. I suspect the answer to that really isn’t clear.

    0
    June 18, 2021
  9. Kirk DeBernardi said:
    I’m a bit confused by their claim of the  WATCH collecting mostly unserious “entertainment” data.

    App and usage data, but what “entertainment” data?

    Also, Munster’s estimation of 13% of iPhone users as having the watch I believe is quite low. If I remember correctly, Neil Cybart has published a larger estimated percentage of ownership.

    Pedestrian observation here, but I see the  WATCH everywhere especially when I was working at a busy grocery store — young to old.

    1
    June 20, 2021

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