Digital Therapeutics Gains Traction: Commercial Breakthrough on the Horizon with Recent Submissions and Policy Advances
Since the beginning of this year, the commercial implementation of digital therapeutics abroad has been making substantial progress.
Recently, the UK’s National Institute for Health and Care Excellence (NICE) publicly recommended seven digital therapeutics for mental health to alleviate the significant pressure on the country’s mental health service system. Meanwhile, the US Centers for Medicare & Medicaid Services (CMS) proposed adding new billing codes for digital therapeutics in the draft rule for the 2025 Medicare Physician Fee Schedule, and sought to make permanent certain telehealth billing codes applicable to digital therapeutics. Once approved, this would represent a major step forward in the commercialization of digital therapeutics.
Domestic progress is also noteworthy, particularly as Hainan has further upgraded its policy support. In late August, the General Office of the People’s Government of Hainan Province issued the “Three-Year Action Plan for High-Quality Development of Hainan’s Digital Health System and Digital Health Economy (2024–2026),” which outlines specific plans and deployments for coordinating multiple departments to build Hainan’s comprehensive digital health system, including digital therapeutics.
Previously, Hainan has made significant explorations in the implementation of digital therapeutics application scenarios through policy support, providing a testing ground for the nascent commercialization of digital therapeutics in China. On the other hand, as products complete development and enter the market, domestic digital therapeutics companies are gradually embarking on the path to commercialization...
During the initial implementation phase, most innovative technologies undergo a prolonged and arduous struggle, and digital therapeutics, as a frontier field, is no exception. Identifying valuable application scenarios for digital therapeutics that enable patients, physicians, payers, and regulators to rapidly understand the product has become the key to accelerating and enhancing the effectiveness of their implementation.
Hainan is at the forefront of China in this regard. As early as 2023, it proposed the introduction of innovative application scenarios for digital therapeutics, integrating them with various ongoing public health initiatives and the responsibilities of medical institutions at all levels and types. This approach not only facilitates the broader adoption of valuable digital therapeutics but also leverages them to accelerate, improve, and enhance the efficiency of public health work, thereby achieving a win-win outcome.
Based on this, Hainan has begun to rapidly promote the integration of digital therapeutics into government public welfare initiatives, thereby exploring innovative application scenarios for digital therapeutics. These scenarios aim to showcase the advantages of digital therapeutics, first establishing benchmark effects on a small scale before expanding province-wide. Ultimately, the successful application of digital therapeutics in Hainan will serve as a national model, driving the broader implementation and adoption of digital therapeutics across China.
Since 2023, Hainan has successively introduced digital therapeutics to empower cognitive rehabilitation for the elderly, diabetes management within the “2+3” Health Service Package, and interventions for children aged 0–6 with autism spectrum disorder. In January 2023, the “Pilot Program on Digital Therapeutics for Cognitive Rehabilitation in the Elderly” was listed as one of the practical livelihood initiatives for 2023 by the Hainan Provincial Committee of the Communist Party of China and the Hainan Provincial People’s Government. In October 2023, Hainan launched the pilot program for digital therapeutics in diabetes management under the provincial “2+3” Health Service Package. In February 2024, “Digital Therapeutic Interventions for Children Aged 0–6 with Autism Spectrum Disorder” was included in Hainan’s 2024 provincial-level livelihood projects. The achievements of these three initiatives were showcased at the 2024 Digital Therapeutics Conference.
Taking the pilot of digital therapeutics for diabetes within the “2+3” health service package as an example, among the 4,909 diabetes patients under management in Baoting County who participated in the pilot, the fasting blood glucose compliance rate increased by 13.1%; in Lingshui County, with 10,297 patients under management, the fasting blood glucose compliance rate increased by 14.17%. The mere few months of piloting have fully demonstrated the significant impact of digital therapeutics in diabetes management.
As one of the service providers selected for Hainan’s “2+3” Health Service Package project, Yidu Tech’s digital therapeutic for diabetes has successively received approval from both China’s National Medical Products Administration (NMPA) and the U.S. Food and Drug Administration (FDA). Li Yuhan, head of Yidu Tech’s Digital Business Division, candidly told VCBeat that while similar government-led public benefit initiatives may yield limited commercial returns in the early stages, they hold significant importance for advancing digital therapeutics: “Government-driven projects can provide the most urgently needed support for corporate innovation, such as policy backing, initial funding, and guarantees for resource implementation. This helps build a platform for local medical institutions, patients, and healthcare stakeholders to engage deeply, thereby creating the possibility for further exploration of business-to-consumer (B2C) models.”
She believes that as digital therapeutics deliver tangible improvements in residents’ health, all stakeholders will become more convinced of their benefits: “Even patients with poor self-management awareness may be willing to use free products; as the benefits gradually become apparent, it is not impossible that they will pay for more comprehensive solutions in the future. The government should take the lead in initiating and building a sustainable ecosystem, enabling citizens to progress from participation to tangible benefits, fostering continuous shifts in awareness and habits, and ultimately creating a virtuous cycle of widespread benefit.”
Li Yuhan stated that as applications deepen and scale expands, the economic benefits achievable through digital therapeutics will improve: “A key characteristic of digital therapeutics is scalability. The same intelligent underlying infrastructure, combined with specialized personnel, can simultaneously support more hospitals, cities, and patient populations, with economic benefits becoming more pronounced at scale. Yidu Tech is also concurrently advancing collaborations in more cities. The National Digital Therapeutics Center, established this year in partnership with the Tianjin Economic-Technological Development Area (TEDA), plans to replicate and promote digital therapeutics for diabetes and hypertension within TEDA and across Tianjin. We are highly anticipating the insights gained from expanding these efforts to additional cities.”
Following a comprehensive review and evaluation of the pilot program’s outcomes, the Health Commission of Hainan Province issued the “Notice of the Health Commission of Hainan Province on the Comprehensive Promotion of the Diabetes Digital Therapeutics Project” in late August 2024, launching the province-wide rollout of the diabetes digital therapeutics initiative.
This is undoubtedly a significant positive development—after all, if the province-wide promotion of digital therapeutics in Hainan yields favorable outcomes, other local governments may well follow suit.
Although government-sponsored public welfare projects provide a pathway for the commercialization of digital therapeutics companies, this model requires a considerable amount of time to achieve scalability and depends on substantial resource support. Therefore, obtaining medical device registration certificates and subsequently entering hospitals for sales remains the primary commercialization route for most digital therapeutics companies.
Xinjing Technology has currently obtained two Class II medical device registration certificates. Its software for adjunctive treatment of sleep disorders is the first such medical device registration certificate in China—and indeed globally—based on virtual reality (VR) and indicated for the adjunctive treatment of insomnia disorder. Unlike some digital therapeutics companies that have not conducted evidence-based clinical trials, Xinjing Technology has taken a pragmatic approach to clinical research through collaborations with renowned hospitals such as Xiangya Hospital and Shanghai Zhongshan Hospital, publishing multiple academically influential papers.
Cao Qun, Chairman and General Manager of Xinjing Technology, stated to VCBeat that substantial clinical investment serves as strong endorsement for the hospital adoption of digital therapeutics: “We obtained our certification by conducting multicenter clinical trials across different departments in two large hospitals in China, including neurology, psychiatry and psychology, and even cardiology. This provides physicians in various specialties with a practical framework for using the product, enabling them to determine which patients should receive the intervention, at what stage, and how, to achieve optimal outcomes.”
The value of VR-enabled digital therapeutics lies in their ability to deliver personalized and precise treatment regimens, transcending the temporal and spatial constraints of traditional therapies. They have generated positive impacts for patients, healthcare providers, payers, and pharmaceutical and medical device companies. For instance, they can enhance treatment accessibility and adherence, improve patients’ quality of life, and reduce overall healthcare costs.
He told VCBeat that the clinical efficacy of his product has been fully validated through its use in relevant fields and departments. Its application across departments is expanding, enabling one-to-many clinical treatments, while also demonstrating significant benefits in improving physicians’ work efficiency and enhancing hospitals’ economic performance.
“For example, hospitals previously treated sleep disorders through one-on-one sessions, charging 150 yuan per session and requiring at least 45 minutes. A single physician could manage no more than eight patients per day. With our device, group-based personalized therapy is possible, supporting ratios of 1:10, or even 1:20 or 1:30, while still delivering individualized treatment plans for each patient with efficacy comparable to one-on-one therapy. After adopting our device, a hospital in Shandong Province was able to treat up to 120 patients with sleep disorders daily, significantly enhancing both treatment efficiency and economic benefits.”
According to reports, Xinjing Technology currently has over 100 distributors across China and has reached cooperation intentions with pharmaceutical platforms including China Resources and Sinopharm. “Hospital procurement typically involves a delay of approximately six months. Based on sales data from the past three months, average monthly orders have exceeded RMB 1 million. We estimate that order volume will reach around RMB 8 million in the second half of this year, and we project annual orders to reach RMB 30–40 million next year.”
Given the prolonged course of insomnia disorder, patients with moderate to severe symptoms typically undergo inpatient hospital treatment, while subsequent rehabilitative care requires continuous chronic disease management outside the hospital setting. This creates an opportunity for the expansion of the consumer-facing (C-end) out-of-hospital market for digital therapeutics.
“We have just begun our foray into the consumer market. One model involves prescribing medications through internet hospitals, enabling patients to undergo rehabilitation treatment at home. We have already obtained an internet hospital license, and our products are now available on the internet hospital platforms of affiliated hospitals such as the Affiliated Hospital of Zhejiang Chinese Medical University and the Affiliated Hospital of Hangzhou Normal University. The other model focuses on consumer-grade products, and we are beginning to explore e-commerce platforms such as Douyin, Xiaohongshu, and Taobao,” Cao Qun introduced to VCBeat.
“The C-end business model has just been proven viable. In the foreseeable future, the C-end market is poised to achieve results several times greater than those of the B-end,” he added.
Shuyao Intelligence, which also boasts robust evidence-based support, is fully committed to exploring commercialization pathways. In January this year, Shuyao Intelligence partnered with Shanghai Pharma Cardinal Health Roda and delivered its first batch of digital therapeutics for pediatric ADHD, marking the commencement of Shuyao Intelligence’s commercialization efforts. This milestone represents a significant innovation in the distribution of digital therapeutic products through pharmaceutical and medical device channels. In March, Shuyao Intelligence further collaborated with Shanghai Aike Baifa Biopharmaceutical Technology Co., Ltd. to jointly promote combination treatment regimens integrating traditional ADHD medications with digital therapeutics.
Li Wenyu, CEO of Shuyao Intelligence, also shared updates on the company’s commercialization progress: “We believe that healthcare is a sector requiring refined and specialized services, which is why we have opted to advance our market penetration through distributors. Currently, we are primarily adopting a provincial distributor model, and in less than a year, we have established distribution partnerships in 18 provinces. At present, our products are mainly being introduced into private hospitals. For public hospitals, we are currently operating through out-of-hospital channels while actively working to facilitate formal hospital admissions.”
According to VCBeat’s understanding of parents of children with ADHD, hospitals currently predominantly adopt pharmacological treatment for pediatric ADHD. However, medications still carry side effects that can adversely affect children’s learning and daily life. Moreover, given that children are still in their growth and development phase, most parents are reluctant to accept long-term medication use and hope for alternative non-pharmacological interventions. In this context, with increasing parental awareness of the disorder, the prospects for digital therapeutics for ADHD are promising.
While the allure of the consumer (C-end) market is undeniable, the demanding requirements for consumer-facing promotion often deter resource-constrained startups. Partnering with industry giants that possess strong consumer capabilities is a prudent strategy; Nanda Feite, for instance, chose to collaborate with a leading health checkup provider that brings its own substantial user traffic.
Over the past decade, Nanda Fit has partnered with 50 Grade-A tertiary hospitals in regions such as Guangdong, Jiangsu, and Shanghai to establish obesity clinics and sub-specialties for type 2 diabetes reversal. Through its digital lifestyle intervention solutions, the company has provided services to over 30,000 patients with overweight/obesity and type 2 diabetes, achieving significant outcomes in medical weight management (an average weight loss of 11.19 kg after 90 days of intervention) and diabetes management (a comprehensive blood glucose target achievement rate of 81.9%, with more than 6,000 patients achieving diabetes reversal), resulting in sales revenue exceeding RMB 200 million.
However, its initial attempts to further expand in the consumer (C-end) market were not smooth. Yin Hui, founder and CEO of Nanda Feite, told VCBeat that its team of nutritionists once numbered as many as 140, with losses exceeding RMB 5 million at one point. After adopting a new approach, the nutritionist team has been reduced to fewer than 40 members, productivity per employee has tripled, and the company has been profitable for three consecutive years.
This innovative approach leverages the currently popular large language models. Drawing on years of expertise accumulated in the field of disease management, Nanda Feite has developed “Tangdou,” an AI agent that empowers dynamic glucose monitoring and health management workflows. By integrating scientifically formulated functional nutrients, it delivers personalized, “one-person-one-policy” glucose management plans for each user, encompassing medication guidance, dietary adjustments, and exercise recommendations.
Through continuous training, AI agents have largely achieved the service capabilities of professional dietitians in tertiary hospitals, enabling them to assist medical institutions with tasks such as patient data collection, dynamic health record management, patient education and intervention management, and regular follow-ups. This also addresses the shortages in manpower and availability among professionals, as well as the lack of standardization in service delivery.
Yin Hui stated, “Frankly speaking, even though Nanjing University is highly professional, the competence of its graduates remains uneven. This makes it difficult to deliver standardized services consistently, let alone expect a single individual to possess multidisciplinary expertise. AI can implement standardized SOPs, with full-process traceability and analytics. Furthermore, AI agents can address certain management challenges—the larger the workforce, the higher the likelihood of management issues. Additionally, personalized chronic disease management is mentally and physically demanding; sustained manual oversight inevitably leads to burnout over time. AI agents, being free from personal emotions, can provide continuous companionship, thereby significantly enhancing both the efficiency and quality of chronic disease management services.”
This aligns perfectly with the AI transformation journey of Meinian Onehealth, a giant in the physical examination industry, and the two parties quickly reached a cooperation agreement. In early September, Meinian Onehealth launched its “AI-Powered Innovative Blood Glucose Management Product,” which is powered by Nanda Feite’s solution.
“This will bring a massive influx of consumer traffic to Nanda Feite. According to Meinian Onehealth’s Blue Book, there are approximately 30 million health checkup visits annually. In 2023, the detection rate for diabetes was 11.9%, with an additional 20% of individuals identified as having prediabetes. Combined, this amounts to over 9 million people with diabetes or prediabetes,” Yin Hui explained to VCBeat.
“No company relying on manual labor can serve such a large population. Assume a dietitian manages 1,000 patients; if each patient submits a photo of their lunch to consult on what they can eat, manual processing would take at least two minutes per case, totaling 2,000 minutes for 1,000 patients. This would also result in long waiting times for patients, leading to a poor service experience. Only AI agents can deliver standardized services at scale,” he added.
According to reports, within less than a month since its launch, the product has attracted over 1,000 users to join the service, with positive prospects for its future trajectory.
Yin Hui stated that once the model proves successful, Nanda Feite’s AI agents will be rolled out across the entire industry: “Currently, many enterprises still rely on manual labor for chronic disease management. In the future, we can also empower them with AI to help reduce costs and improve efficiency, thereby jointly serving a larger population of patients with chronic diseases.”
In addition to its dominance in the health checkup sector, Nanda Feite’s other consumer-facing traffic channel is poised for growth. “We plan to launch service solutions synergistic with GLP-1 medications in October. Currently, there is no management model in China that combines such pharmacotherapy with lifestyle interventions, primarily due to insufficient medical service capacity. Therefore, having initially addressed the issue of service capacity, we will next roll out these synergistic service solutions.”
Regarding the challenges of commercializing the digital therapeutics industry, opinions vary within the sector, but support from relevant institutions is indispensable.
Li Yuhan stated that, as a nascent field, institutional support for the launch of digital therapeutics is particularly crucial: “Currently, there is no clear or mature business model for this sector in China, nor are there any precedents to follow. Without visible policy support, especially against the current macroeconomic backdrop, stakeholders may hesitate to take the first step even if they possess innovative ideas and capabilities. However, taking that initial step often reveals new opportunities, making the venture viable.”
Yin Hui also stated in the discussion that promoting digital therapeutics within hospitals requires three key elements. First, their efficacy and scientific validity must be demonstrated through rigorous clinical trials. Second, regulatory support is needed to establish reimbursement standards. Third, leadership and demonstration by leading experts are essential.
“Both surgical procedures and pharmaceutical treatments already have well-defined standard operating procedures (SOPs). Once certain qualifications are obtained, one can typically apply for pricing approval and reimbursement status almost immediately, with rapid approval. Even if digital therapeutics cannot directly undergo pricing approval immediately after obtaining medical device registration, it may be possible to draw on international practices by establishing a corresponding product catalog and providing certain facilitations in the review process.”
Cao Qun was the first in China to devote himself to digital therapeutics and has a profound understanding of the industry. He stated that although digital therapeutics have garnered global attention, the field remains in its infancy in China, facing challenges such as an imperfect theoretical foundation, insufficiently significant clinical outcomes, immature business models, inadequate patent protection, low physician acceptance, and underdeveloped infrastructure.
“Both the certification phase and the post-certification operational phase present numerous challenges. In fact, there are no relevant industry standards to regulate this sector. What exactly should these products look like? What qualifications are necessary to establish a foothold in the market? And what operational models are required to achieve profitability?”
“Many products in this field are exempt from clinical trials through equivalence comparisons with existing products. These products lack deep foundational development, insufficient R&D investment has been made, and they have not genuinely driven technological innovation within the industry. We believe that digital therapeutics still require rigorous clinical trials, and should further be incorporated into expert consensus statements or clinical practice guidelines. This is highly meaningful, as it not only ensures clinical efficacy but also provides physicians with a legal basis for their use,” he added.
During the process of commercial adoption in hospitals, digital therapeutics face numerous challenges. The most typical issue is how to charge for digital therapeutics within hospital settings. If they are not included in the official reimbursement catalog, hospitals cannot generate revenue by providing digital therapeutics, making it impossible for them to procure or use corresponding digital therapeutic products.
In an interview with VCBeat, Li Wenyu stated that Shuyao Intelligence is evaluating the possibility of jointly applying for reimbursement codes with hospitals. However, he noted that this process is not easy for companies: “Our understanding is that the inclusion in the reimbursement catalog must be pursued separately in each province, meaning that promotion efforts in each region incur costs, which puts us in a rather awkward position.”
Given that digital therapeutics is an emerging cross-disciplinary field, with many companies entering from other industries, this situation is unexpected.
Under China’s current price review system, it is extremely difficult to add new billing codes. However, coastal regions with relatively stronger financial resources and higher acceptance rates are making corresponding attempts.
For instance, in November 2020, Jiangsu Province added “Virtual Reality Cognitive Behavioral Therapy (311503035)” to its catalog of priced medical service items. The specific description states: “Using a virtual reality cognitive behavioral therapy device, one or more patients are immersed in scenarios they fear or reject, allowing them to engage in natural interactions with these environments.” Although currently implemented as a new item under a trial period and classified as a Category C self-pay service, it represents a promising exploration.
Continuing to use the current billing codes has become a reluctant choice; however, as the saying goes, “if the name is not correct, the words will not ring true,” and this approach carries certain compliance risks, making it far from an ideal solution.
Some local governments are also actively exploring solutions to this issue. It is reported that Hainan Province is formulating guidance policies on pricing for digital therapeutics, which will play a positive role in promoting the development of this field.
To promote the development of digital therapeutics in China, it is necessary to strengthen policy support and market education, raise industry standards and regulatory transparency, encourage technological innovation and cross-sector collaboration, and enhance clinical trials and scientific research on digital therapeutic products. These measures will facilitate the healthy development of the digital therapeutics industry, ultimately empowering patients, healthcare providers, and the entire healthcare sector.
It must be acknowledged that, despite some modest commercialization achievements by digital therapeutics companies, the industry as a whole still faces numerous challenges. This is not surprising for an emerging sector, particularly in the heavily regulated healthcare field, where similar scenarios are commonplace. However, it would be overly pessimistic to conclude that the industry’s prospects are bleak. The now-booming new energy vehicle (NEV) sector was once mired in chaos and failure during its early commercialization stages just a few years ago. Yet, through patient internal development, enhanced competitiveness, and supportive policies, the industry ultimately broke through and achieved success.
In the discussion, Cao Qun emphasized that the digital therapeutics industry must also diligently lay a solid foundation, leveraging strengths while mitigating weaknesses: “It is undeniable that digital therapeutics, as a software-based medical supplement, represent the current overall development trend. At this stage, companies rely primarily on their products for survival; therefore, they must focus on building robust products by addressing clinical needs, driving R&D innovation, clarifying product positioning, and expanding business models. Ultimately, any enterprise boils down to seven words: ‘Build great products and sell them well.’”
Meanwhile, the healthcare industry differs significantly from other sectors, possessing unique characteristics that demand a high degree of patience and perseverance. In particular, digital therapeutics involve an exceptionally long value chain—from product development and clinical certification to business model exploration and the achievement of scalable revenue. This process requires substantial capital investment, extended timeframes, and, above all, patience.
Li Wenyu’s insights on patience are also worth referencing for the industry: “Compared to our previous experiences in the gaming sector, we view healthcare as a highly rigorous and traditional industry that requires gradual, steady progress. However, the ‘digital’ aspect of digital therapeutics demands staying at the forefront of the times, enabling people to feel the power of transformation and even the impact of blockbuster successes. Thus, this juxtaposition of ice and fire inevitably creates contradictions. In the past, such tensions could be reconciled through capital strength, but under the current circumstances, greater endurance is required. We must also believe that value will eventually shine through. The industry needs patience.”
In this process, the industry’s exploratory efforts toward commercialization, undertaken without any precedents to draw upon, are commendable. Both the successes and the setbacks offer valuable lessons for those who follow. We also hope that more individuals will come forward to share their experiences and insights from this journey, so that we may collectively complete this long march. As the saying goes, “For actually there were no paths on the ground; but when many people walk, a path is made.”
Requirements Alignment
Yidu Tech – Medical Institutions and Channel Partnerships
Xinjing Technology — Financing Needs, B2B Promotion Agency
Shuyao Intelligence — Financing Needs, Healthcare Institutions
Nanda Feite — A Labor-Intensive Chronic Disease Management Enterprise, Hospitals/Internet Hospitals, Chronic Disease Prevention and Control Institutions, and Collaborative Partnerships with Chronic Disease Pharmaceutical Companies/Medical Device Manufacturers