Digital Therapeutics Makes Historic Inclusion in Provincial Plan: Hainan Leverages Unique Advantages for Industry Breakthrough
On January 30, the Hainan Provincial Health Commission (hereinafter referred to as the Hainan Health Commission) announced“14th Five-Year” Development Plan for Digital Health in Hainan Province(hereinafter referred to as the Plan), wherein"Inclusion of 'Pilot Trials for Digital Therapeutics' as one of the key tasks in Hainan Province’s 14th Five-Year Plan for Digital Health Development." This marks the first time digital therapeutics have been incorporated into a provincial-level plan., having garnered attention and impetus at the provincial level, it will usher in a new phase of further rapid development.
Screenshot from the official website of the Hainan Provincial Health Commission
Why Has Hainan Included Digital Therapeutics in Its Planning, What Actions Will It Take in This Field, and How Will Digital Therapeutics Empower the Development of Hainan’s Healthcare Sector? VCBeat (WeChat ID: Vcbeat) promptly interviewed relevant leaders from the Hainan Provincial Health Commission.
The Plan proposes to “cultivate new business models integrating emerging information technologies with healthcare,” with specific measures mainly including “strengthening pilot applications of medical artificial intelligence and blockchain technologies,” “promoting the integrated application of 5G technology,” and “exploring the pioneering trial use of digital therapeutics.”From the planning perspective, digital therapeutics are mentioned alongside artificial intelligence, blockchain, and 5G technologies—this clearly demonstrates Hainan Province’s emphasis on digital therapeutics.
So, why does Hainan Province place such high importance on digital therapeutics and take the lead in incorporating them into its national planning? Zhou Changqiang, Director of the Hainan Provincial Health Commission, stated that this is closely related to the target requirements for health development in Hainan and the current state of its healthcare sector. During the 13th Five-Year Plan period, Hainan made significant progress in health informatization across the province. However, when measured against the standards required for building the Hainan Free Trade Port and a Healthy Hainan, as well as compared with advanced regions domestically, there remain many shortcomings and substantial gaps.
With the establishment of a pilot free trade zone and a Chinese-characteristic free trade port across Hainan Island, and in accordance with the people-centered development principle, building a “Health Island” has become a key goal for Hainan’s development, with the medical and health industry designated as a pillar industry of the province. By vigorously promoting the coordinated development of medical and health services and industries through a dual-drive approach, Hainan aims to further enhance the health and well-being of its residents, which is also one of the pioneering objectives of the free trade port. The development of digital therapeutics in Hainan aligns with the central government’s requirements for innovation and high-quality development in Hainan, meets the needs of building a Healthy Hainan, and corresponds to the new positioning of the comprehensive deepening reform pilot zone.
“During the 14th Five-Year Plan period, we have set high-standard goals for the development of healthcare services. Aiming to make health management in Hainan Province more scientific, operations more intelligent, and residents better served, we will leverage new digital health infrastructure and fully utilize various emerging information technologies to reshape pharmaceutical and medical management and service models. This will enable us to build a digital health service system with the distinctive characteristics of the Hainan Free Trade Port, thereby achieving ‘overtaking on a bend’ in digital health development and striving to rank among the forefront nationwide,” added Zhou Changqiang.
Zhou Changqiang stated that during the 14th Five-Year Plan period, Hainan set a goal to increase average life expectancy by two years. Achieving this highly challenging target requires support from “new growth drivers” such as digital therapeutics: “Digital therapeutics combine the latest advances in life sciences and information technology, offering innovative treatment pathways for certain conditions, including mental disorders and autism spectrum disorder. They can be integrated with pharmaceuticals and medical devices to improve medication adherence and therapeutic rehabilitation outcomes, such as significantly enhancing the effective control rate of chronic diseases like diabetes. Meanwhile, digital therapeutics also play a role in disease screening and prevention. Furthermore, by incorporating evidence-based medical technologies and protocols, digital therapeutics can help improve key healthcare reform initiatives, including the quality of family doctor contract services and the continuity of care within and outside hospital settings.”
Furthermore, Hainan has achieved an initial clustering of internet healthcare services, yet certain challenges hindering its development remain to be addressed. In an interview, Zhou Changqiang stated that the inherent characteristics of digital therapeutics align naturally with internet healthcare: “We believe that a dual-core drive of ‘internet healthcare + digital therapeutics,’ centered on disease treatment and health management, can catalyze the aggregation and restructuring of a trillion-yuan digital healthcare industry.”
“Digital therapeutics leverage data as a key production factor and employ information technology and big data algorithms as production tools. By effectively integrating with the regulatory access policies for real-world data application pilots in the Boao Lecheng International Medical Tourism Pilot Zone, as well as with internet healthcare industry clusters such as the Hainan Eco-Software Park in Chengmai and Fuxing City, digital therapeutics can capitalize on Hainan’s advantages in institutional integrated innovation, rapidly establish a policy highland, and drive industrial development and leapfrog growth.”
Regarding the development of digital therapeutics, Zhang Yuhui, Deputy Director of the Hainan Provincial Health Commission, stated: “The central government has emphasized that Hainan should ‘actively develop next-generation information technology industries and the digital economy,’ ‘develop digital service trade,’ and foster ‘modern service industries.’ Digital therapeutics represent the forefront of technological advancement and constitute a convergent field aligning with Hainan’s key development priorities, including the digital economy, modern service industries, high-tech industries, and digital service trade. They serve as an innovative pathway for building a Healthy Hainan and are a crucial instrument for Hainan to implement the new development philosophy and take a national lead in constructing a modernized economic system.”
So, how will Hainan Province specifically implement policies related to digital therapeutics? Zhang Yuhui stated that the overall considerations for exploring pilot programs of digital therapeutics have been outlined in the "Plan," and specific measures are being urgently studied and formulated in accordance with the requirements of the Provincial Party Committee and Provincial Government. Overall, the province aims to actively introduce digital therapeutic products already approved for market entry both domestically and internationally, promoting their use among eligible institutions and populations across the province to further meet the disease treatment and health management needs of Hainan residents. Meanwhile, leveraging the policy advantages and industrial foundation of the Hainan Free Trade Port, Hainan will advance province-wide demonstration applications of digital therapeutics in a stepwise manner, exploring the establishment of a supportive policy framework for digital therapeutics.
Furthermore, a multi-pronged approach will be adopted to strengthen investment promotion and business attraction, fostering the development of innovation hubs and industrial clusters for digital therapeutics. This initiative aims to establish Hainan as a global island of innovation in digital therapeutics, drive the integrated restructuring of “digital therapeutics + internet healthcare,” and create a new engine for the high-quality development of Hainan’s health sector.
“We aim to attract and aggregate innovative resources by leveraging the advantages of the Hainan Free Trade Port, such as zero tariffs, low tax rates, a simplified tax system, relaxed market access, and the development of high-level data platforms like electronic prescription centers. By combining these advantages with Hainan Province’s existing industrial foundation, we seek to establish several innovation hubs and industrial clusters, including the Boao Lecheng International Medical Tourism Pilot Zone, the Hainan Ecological Software Park in Chengmai, and the Haikou Fuxing City Internet Information Industrial Park,” stated Zhang Yuhui.
With the increasing ubiquity of mobile internet, growing demand for medical cost containment, rising incidence of chronic diseases and mental health disorders, and a substantial shift in public attitudes toward medical intervention software driven by the COVID-19 pandemic, the global digital therapeutics industry is accelerating into a phase of rapid development.
According to statistics, since 2019, there have been 210 publicly disclosed financing events in the international digital therapeutics sector, involving 144 companies across 21 countries and regions, with a total funding amount of $8.271 billion. Furthermore, the two major unicorns in digital therapeutics—Pear Therapeutics and Akili—have gone public in succession over the past six months. This underscores the significant market momentum behind digital therapeutics.
Meanwhile, digital therapeutics continue to achieve breakthroughs worldwide. Both the United States, where private commercial insurance serves as the primary payment channel, and Germany, where statutory health insurance is the main payer, are focusing on the efficacy of digital therapeutics and have incorporated them into their coverage scopes.
In the United States, there are many established cases of reimbursement for digital therapeutics. For example, Propeller Health has been included in the coverage of Anthem and Molina Healthcare, while Jogo Health is covered by Medicare. Furthermore, Pear Therapeutics, the first publicly traded company in the digital therapeutics sector, already has 15 commercial and public insurance payers within its coverage base of over 20 million individuals. These payers include, but are not limited to, self-insured employers, pharmacy benefit managers (PBMs), health plans, integrated delivery networks (IDNs), and Medicare.
In Germany, where statutory health insurance serves as the primary payment mechanism, a clear definition has been established specifically for digital therapeutics (DTx), along with an expedited approval process. Approved DTx products are included in a dedicated, publicly accessible DTx directory. Any DTx prescription issued by a physician that aligns with the corresponding indicated conditions is reimbursed by statutory health insurance. Currently, this directory comprises more than 20 approved DTx products, with the number continuing to grow.
In addition, major economic powers such as France, Japan, and South Korea are also paying close attention to this field and guiding industry development through approvals and guidelines.
As digital therapeutics (DTx) is in its early stages, it encompasses diverse forms and presentation modes, can be integrated with services and hardware, and has given rise to new categories of digital technologies such as gaming and virtual reality (VR). Coupled with the inherent flexibility and scalability of DTx itself, these factors have attracted attention and participation from multiple industries. Artificial intelligence, mixed reality, healthcare informatics, wearables, mental health, neuroscience and brain science, internet healthcare, and pharmaceutical and medical device companies are all closely monitoring this space and are poised to enter the DTx sector, underscoring its significant potential.
In terms of industrial clustering, digital therapeutics are beginning to form initial clusters. This distinctive form of economic organization within the global economy fosters interdependence, mutual assistance, cooperation, and mutual attraction among enterprises within the region. On one hand, industrial clustering helps reduce corporate operating costs, including labor, development, and raw material costs, thereby enhancing labor productivity and corporate competitiveness. On the other hand, the interactions among enterprises within the cluster can generate a synergistic effect where “the whole is greater than the sum of its parts,” ultimately boosting regional competitiveness and promoting regional innovation-driven development.
Statistical analysis of the geographic locations of digital therapeutics (DTx) companies’ headquarters reveals that, despite being in its early stages, the industry has already formed a certain degree of industrial clustering. Preliminary statistics indicate that California is home to the largest number of DTx companies headquartered in the United States. This finding corroborates the strong correlation between digital therapeutics and internet and software technologies, given that Silicon Valley, globally renowned as a tech hub, is located in California. Additionally, many DTx companies are based in New York State and Massachusetts, with the vast majority concentrated in New York City and Boston.
Berlin, Germany; Greater London, United Kingdom; and the Seoul Special Metropolitan City, South Korea, are also home to a significant number of digital therapeutics companies. As their respective national capitals and economic hubs, these regions have gathered the essence of their local digital therapeutics industries, collectively forming the fundamental landscape of the global digital therapeutics sector.
In China, an initial clustering of digital therapeutics is also taking place. Beijing, Shanghai, Guangdong, and Zhejiang are undoubtedly the regions with the highest concentration of digital therapeutics companies.
As digital therapeutics in China are mostly approved as Class II medical devices, the approvals are handled by provincial medical product administrations. The varying levels of emphasis placed on digital therapeutics across different regions can also be seen from the 21 medical device certificates that meet the definition of digital therapeutics currently compiled by us. Hunan Province has approved the largest number of medical device certificates for “digital therapeutics,” with a total of six certificates, accounting for nearly one-third of the total.
Zhou Changqiang introduced to VCBeatHainan's Goals in Digital Therapeutics“We aim to transform Hainan into a global innovation hub for digital therapeutics through two to three years of effort during the 14th Five-Year Plan period, thereby establishing its position as a global center for digital therapeutics innovation. By building a national demonstration zone for digital therapeutics innovation, we will attract and aggregate global innovative resources in this field, create a concentrated area for innovation resources and an industrial highland, foster the emergence of digital therapeutics industry clusters, and generate a powerful new engine for the development of health undertakings and the health industry in Hainan Province.”
Zhou Changqiang particularly emphasized, “On this basis, we will promote the integrated restructuring of ‘Internet Healthcare + Digital Therapeutics,’ leveraging a dual-core drive to restructure Hainan Province’s Internet healthcare industrial ecosystem and foster substantive, connotative development of its business models, thereby catalyzing the formation of a trillion-yuan digital healthcare industry cluster. Meanwhile, using digital therapeutics as a strategic lever, we will amplify the effectiveness of prior infrastructure initiatives—such as enhancing primary healthcare service capabilities through 5G technology in Hainan and establishing the ‘Integrated Network for the Coordination of Medical Care, Health Insurance, and Pharmaceutical Services’—to build a smart health service system with distinctive features of the Hainan Free Trade Port that leads the nation, all centered on people’s health. This will realize transformative changes in the drivers, quality, and efficiency of Hainan’s health development in the new era,” he further added.
Zhang Yuhui stated that although other provinces have some first-mover advantages in digital therapeutics, Hainan also possesses its own unique strengths.
“Hainan enjoys the advantage of institutionally integrated innovation mandated by the central government, and is well-positioned to rapidly establish a policy support system for the development of the smart health industry, including digital therapeutics. This core advantage can facilitate the rapid implementation and application of digital therapeutics, covering clinical trials, market access, and even insurance coverage,” he stated.
“In the future, we will also explore the comprehensive integration of digital therapeutics into regional healthcare reform and development initiatives in select cities and counties, thereby creating a broad application landscape for digital therapeutics.” Zhang Yuhui believes that by leveraging these “combined measures,” Hainan is well-positioned to achieve overtaking on a curve in the fields of digital therapeutics and digital health.
As a media outlet in China that has consistently monitored and actively promoted the digital therapeutics industry,VCBeat believesHainan’s Inclusion of Digital Therapeutics in Provincial Planning for the First Time Holds Significant Implications for the Industry. Leveraging its comprehensive policy advantages, Hainan holds immense potential and promising prospects for achieving a "leapfrog development" in the future, thereby reshaping the landscape of the digital therapeutics and even the broader digital health industry.
In addition, in the article recently published by VCBeat,"What Will Digital Therapeutics Look Like in 2022? Here’s What 11 Industry Companies Say"Meanwhile, the digital therapeutics industry also holds high expectations for the future.As a pilot exploration zone, Hainan can leverage the international advantages of its Free Trade Zone to establish a domestic and international cooperation platform, thereby further advancing key elements of concern to China’s digital therapeutics industry, including frameworks, clinical applications, and regulatory oversight.
As an industry pioneer once stated, digital therapeutics represent an irreversible trend in the digital transformation of healthcare. It is our hope that this sector in China will avoid unnecessary detours and remain true to its original mission of delivering unique clinical value. To achieve this goal, each of us must uphold our convictions and strive diligently. VCBeat will continue to closely monitor industry developments, contributing its modest efforts to the sector’s growth.