Korea’s DTx market launched in earnest with the domestic approval of two cognitive-based treatment (CBT) digital therapeutics (DTx) for treating insomnia -- Aimmed’s Somzz and Welt’s Pillowbot in February and April, respectively.

According to a report released on Tuesday by the Korea Innovative Medicines Consortium (KOMIC), the number of clinical trial plan approvals for DTx devices in Korea has also steadily increased from just six in 2018 to 49 in 2022. 

Among them, 25 clinical trials are underway in Korea as of January this year with nine receiving approval to conduct confirmatory studies.

The report also highlighted different partnerships and successful business models to follow to continue growing the domestic DTx industry.

Domestic investment trends in DTx industry

In the U.S. market, central nervous system (CNS) DTx devices seem to be dominating the market while CBT-based DTx devices occupy the majority of devices in the clinical pipeline and approved products with others for addiction and cognitive impairments. 

As DTx collaborations are multidisciplinary, they can involve pharmaceutical, IT, and medical device companies as the devices require clinical evidence collection, software technology, regulatory strategy, and marketing.

Accordingly, the report noted that domestic pharmaceutical companies are not directly involved in the development of DTx, but rather in the marketing of new drugs to promote sales, and collaborate mainly in the form of equity investment. 

An example is the collaboration between Welt and Handok where Handok invested 3 billion won ($2.3 million) in Welt. Handok possesses experience in the insomnia market with its sleeping pill, Stilnox, and has experience in marketing new drugs.

Likewise, Smilegate's experience selling software in the gaming industry can help with the marketing of VR-based DTx devices. 

Besides equity investment, collaboration is increasing in the form of mergers and acquisitions (M&As), joint ventures, and business agreements. 

Hanmi Pharmaceutical has entered into a joint venture with KT and Digital Pharm, a company specializing in electronic medicine. 

GC Biopharma is showing active steps in the digital healthcare business through active M&As with its subsidiary, GC Care acquired UB Care, an electronic medical record (EMR) solution company.

Daewoong Pharmaceutical also signed a business agreement with HD Junction to enter Southeast Asia.

SK Biopharmaceuticals, Samjin Pharmaceutical, and Ankook Pharmaceutical have also invested in DTx companies in the form of strategic investments, business agreements, and collaborations, the report went on to say.

Global investment trends in DTx industry 

The report also outlined that the global digital therapeutics market is expected to reach $17.3 billion by 2030, with a CAGR of 20.5 percent from 2022. 

As DTx devices offer benefits of 40 percent less development time and 90 percent less development cost compared to conventional drugs, global pharma companies are actively collaborating on DTx, and global VC investment in digital therapeutics has more than quadrupled over the past five years.

Analyzing the types of partnerships driving the global DTx market, joint development and commercialization agreements occupied 80 percent while the remaining 20 percent were attributed to collaborations in the form of pilot projects to test early-stage technologies from DTx startups on existing medicines. 

Successful collaboration models that were noted included the investment of Big Pharma in the development of products that can be used in combination with existing medicines such as the partnership between Sanofi and Happify to reduce anxiety and depression, in conjunction with Sanofi's multiple sclerosis drug. This allows the creation of an additional advantage for the drug in a competitive market while utilizing existing distribution and market strategies. 

Another investment strategy is via standalone products that can create entirely new businesses. For example, Click Therapeutics and Boehringer Ingelheim are partnering to help support and treat people living with neuropsychiatric diseases through the DTx platform. While this creates new business, it also comes with greater uncertainty about insurance coverage.