Apple has the potential to make big waves in health care

Apple has made some bold moves into health care, a market worth trillions globally. Most recently, it announced a blood oxygen sensor on the Apple Watch Series 6 and a partnership with the Singaporean government to incentivize Apple Watch users to be more healthy. But the company’s strategy is a bit elusive as it walks the fine line between wellness and medicine.

Apple has three areas of focus when it comes to health: hardware, like the Apple Watch, software, like the Health App and ResearchKit, and services, like Fitness+, Apple’s newest subscription service. 

Most of these devices and services revolve around the iPhone ecosystem. While iPhone sales are still the majority of Apple’s revenue, wearables and services are quickly picking up steam. iPhone sales have increased an average of about 4% quarter-over-quarter, and about 2% year-over-year since 2017. Services have increased an average of about 4.5% quarter-over-quarter, and about 22% year-over-year since 2017. Apple doesn’t break out revenue for the Apple Watch but its “wearables, home and accessories” business, which includes AirPods, Apple Watch and other accessories, has grown the most by far, increasing at an average of almost 9% quarter over quarter, and nearly 35% year-over-year since 2017. The segment earned $6.45 billion in revenue during the third quarter of 2020.

With these products and services creeping closer and closer to medicine and medical devices, Apple has had to meet new regulations from the Food and Drug Administration. The FDA oversees the clearance and approval of medical devices for safety and standards.

Apple has found creative ways to get FDA approval without declaring itself as a medical device manufacturer. The Apple Watch has a De Novo classification under the FDA for its ECG feature, meaning it is the first of its kind, and therefore cannot be compared to anything else on the market regarding standards. Apple may continue to add new health-monitoring features. It has discussed adding a blood glucose monitor, for example.

And Apple has made some big deals with health-care institutions, health records companies, and even governments. The company announced it would partner with the Singaporean government to give resident Apple Watch users up to $380 Singapore dollars if they engage in healthy behaviors like exercise or meditation.

It has also entered a new battleground through health initiatives, in some cases, is already participating in the same markets as Peloton, Abbott and medical record software-maker Epic.