Mobile powerhouse Qualcomm (NASDAQ:QCOM) plans to change the face of health care, and the company is doing it globally, massively, and bringing as many partners as possible along with them.
Investors who have done the math are taking note. Mobile health (often called mHealth) is today's fastest-growing market in health care. The revenue from mobile health applications and devices last year was $6.2 billion. By 2018, it could be over $23.5 billion.
In the United States, mHealth is on track with the major shift in health economics mandated by Obamacare. But it's a mistake to see it purely as a U.S. phenomenon. The goal of mHealth is to solve the most vexing challenge in the worldwide health care industry--how to improve patient care while cutting costs.
While not a replacement for a trained professional, mHealth provides information via mobile devices that can be kept at the fingertips of patients and clinicians. Qualcomm has enabled the use of these devices through a universally interoperable cloud-based biomedical network called the 2net Platform. Recently, the company announced a software module that would enable mobile computing devices, such as smartphones and tablets, to serve as gateways.
To drive traffic to 2net, Qualcomm Life has sponsored over a hundred various wireless services and links. Devices now being tested range from simple blood pressure monitors to wireless "robotic" pills patients swallow that send data to mobile phone apps via electrical impulse.
How big is the market? According to the Deloitte Center for Health Solutions, efficiency improvements of this type should eventually cut $305 billion in American health care costs. Globally, an estimated 500 million people will be using health care mobile applications in 2015, according to a recent mHealth Developer Economics survey.
As often proves the case, creating the technology has been the easy part. While Qualcomm's 2net Platform is FDA listed as a Class 1 Medical Device Data System (meaning it aligns with requirements of U.S. and international agencies in the health care industry), that's just the beginning.
Getting involved in transmission of medical information internationally requires going head to head with regulatory bodies on multiple continents. Of course, knotty problems and threats of fines from regulatory bodies are not new to Qualcomm. Recently, the threat of a $1 billion dollar fine based on anti-monopoly claims from China put some pressure on the stock.
Thus far, Qualcomm seems undaunted by the risk that its dive into the shark-infested waters of international health care data protection could be costly. But should investors be worried?
Probably not. Whatever happens to 2net, mobile health is here to stay. Travel to sub-Saharan Africa, and you'll see smartphones in the hands of community health care workers sending patient data to regional hospitals. Expand that worldwide and Qualcomm's strategy becomes clear. Even if Qualcomm's 2net Platform isn't successful, the company will profit from the attention they've brought to the mobile health industry.
Qualcomm's once-impressive revenue growth slumped last quarter (up only about 4% year-over-year), which many analysts blamed on the smartphone's penetration in wealthy markets being so high. Qualcomm's focus is shifting to developing countries, where applications like mobile health will require the increased use of smartphones.
As mobile health and various other smartphone app utilization expands worldwide, I believe Qualcomm will see its revenues from selling processors and wireless communication chips to handset makers ramp up again. They'll also profit from licensing patents for CDMA technology.
Qualcomm's plan to change the face of health care with data-driven, real-time information is an important component of what will hopefully be medicine's future. And Qualcomm is doing everything it can to make that future happen sooner, rather than later.