Online Travel Industry: Stats & Business Opportunities

The Future for Online Travel Startups is Growth Oriented #InfographicYou can also find more infographics at Visualistan

KPCB Meeker Internet Research Dec 2012 *Updated

A Coming Storm: FDA Regulation of Mobile Medical Applications ..

By Ryan Minarovich

I recently had the great fortune of attending Health 2.0 in San Francisco. The conference was abuzz with new medical technologies that are harnessing the power of innovation to solve healthcare problems including many new mobile medical application companies showcasing their potential. As I walked and talked around the exhibit floor, one thing caught my ear, or I should say one thing didn’t catch my ear. Among the chatter about these products, the concern about FDA regulation of this product segment, or even FDA regulation in general was noticeably absent. While many of the application developers are well aware of potential FDA involvement, most would be hard-pressed to outline the impact this would have on their companies and products.

Being labeled a medical device, which is the direction the FDA is leaning, could have a significant impact on business model organization, top-line revenue, and product deployment. For unprepared start-ups, FDA regulation could signal an end for their company. This is in stark contrast to well informed developers who are preparing themselves for the change and would most likely be able to leverage these regulations to their advantage.

USA Today recently published an article detailing the exponential rise in the mobile medical application (MMA) market which is expected to reach $1.4 billion by the end of this year. According to the same article there are about 40,000 MMAs currently available for download on the iOS and Android platforms. While that might come across as a lot, a recent Health Data Management report expects the industry to grow 23% annually for the next five years.

The FDA, always the keen observer, with help from an Institute of Medicine study, has decided that this is their time to shine. The agency is tasked with protecting patient safety and according to the FDA, this sudden yet massive rise in the number of unregulated MMAs has the potential to adversely affect their core constituency: the patient. In July of last year, the FDA released draft guidance on MMAs and stated their intention to regulate those applications that have the ability to turn a mobile platform, like a smart phone or tablet, into a medical device. While they haven’t yet promulgated final rules regarding MMAs, one thing is all but certain: the market needs to brace for impact.

Setting aside the highly controversial and polarizing debate that is federal regulation, the apparent lack of concern is a concern in and of itself. Many industry insiders are well aware of the effects of being labeled a medical device but that knowledge is not trickling down to the target audience, the developers and entrepreneurs looking to capitalize on the extreme MMA growth. Being a medical device has some positive benefits like being able to label a product as FDA approved and ensuring that the product is safe for patients to use, thus decreasing potential product liability. Yet this label comes at a lofty price.

In order to get FDA approval a company must first submit a premarket notification, or 510(k), which allows the agency to determine if any substantially similar device has already been approved, thus allowing the product to “piggy-back” on the previous device’s approval. A 510(k) application is no laughing matter, costing $2,500 just to submit, provided an exception doesn’t apply. And that’s just the tip of the iceberg. In 2010 an independent study conducted by a multitude of parties including the Medical Device Manufactures Association, the National Venture Capital Association and Stanford University medical professors, among others, concluded that “the average total cost for participants to bring a low-to-moderate-risk 510(k) product from conception to clearance was approximately $31 million, with $24 million spent on FDA dependent and/or related activities.” The study also found that the average approval time for a 510(k) application was 31 months from the first communication to the FDA and 10 months from the first filing for clearance. This is by no means an assertion of the actual cost an MMA developer would incur and while the study’s findings are still being hotly contested, the message is clear: The FDA’s 510(k) approval process is cumbersome, costly, and time consuming, all of which come together to create the perfect storm of regulatory hurdles that could stifle medical device innovation.

Yet the MMA market is thriving despite the looming threat of potentially having to spend millions to get FDA approval. It is my belief that the cause of this apathy is not entirely one of willful ignorance but instead rests mostly on the lack of information being supplied to developers. For them the immediate concerns about creating a profitable product are at the forefront while the thought of regulatory problems are pushed to the back. This makes sense if you think about it. Since the FDA hasn’t promulgated final regulations regarding MMAs, the potential for regulation is just that, a potential, albeit a real one. So expending precious resources to gather information about the FDA is just not as important as focusing on immediate profits.

While it might make sense, this myopic thinking is extremely dangerous for start-up developers. By not preparing for the cost of 510(k) approval, in addition to the added time for product deployment, these start-ups are ignoring a barrier that could ultimately cost them their company. I’m not saying that these companies need to secure millions in funding immediately; instead they simply need to inform themselves of the costs and build that additional information into their already existing business model. Not only will this allow them to not be blind-sided by regulation, but they will also become more appealing to venture capital firms who will be more than pleased to know that what they are spending their money on won’t whittle away under the weight of the FDA. Enterprising developers can implement the FDA mandated current good manufacturing practices (CGMP’s) so they don’t have to retrace their steps in the future in order to be in compliance, thus helping speed up the approval process. FDA regulations will be a barrier to entering the MMA market and taking the proactive steps of information gathering and preparation will increase the chance of being one of the first to be approved to market.

What’s the lesson in all of this? The answer is quite easy: information is power. And with that information, a budding MMA start-up can adequately prepare for the effects of regulation. Instead of discounting the future costs imposed by the FDA, companies need to embrace them and create a viable business model with the new information. So the next time I walk and talk around an exhibit floor I will hope to hear chatter about the latest and greatest MMAs while also catching some conversations about regulation. Then I will know that the market is ready for the great challenge that is the FDA.

Ryan Minarovich is Chief Executive Officer of The Tenzing Group, LLC, a regulatory coaching firm providing FDA and legislative guidance to mobile medical application start-ups and developers. He is a member of the AHLA, HIMSS, and serves on the HIMSS Legal Task Force. He is also in his last year of law school at Santa Clara University School of Law where he focuses on agency regulation, EHR legal policy, and NwHIN architectures. You can contact him at or by visiting

The Future of Pharma Marketing is Mobile, Unless…: …FDA’s “Enforcement Discretion” Remains Unclear

The Future of Pharma Marketing is Mobile, Unless…
…FDA’s “Enforcement Discretion” Remains Unclear
By John Mack

You don’t need a crystal ball to know that the future of media is mobile.

A recent story in the Wall Street Journal recounted how a Comcast cable customer wanted to jettison TV service and keep just the Internet connection plus phone. Presumably such people prefer to get their TV via their smartphones.

This is the future — where we will access all our media through our smartphones and mobile tablets. Unfortunately, companies like Comcast are trying to thwart this natural progression by bundling services and charging extra for unbundling. In the case cited in the WSJ, the consumer would pay $20 extra a month if she just wanted Internet without the TV.

“We live in a world where one of the most pervasive and fastest growing channels by which we consume health content is mobile,” said Mark Bard, co-founder of the Digital Health Coalition (DHC). “Pharma has to get to a world where we see branded drug ads on these mobile devices that have become part of our lives.” Bard made these comments during a Pharma Marketing Talk LIVE podcast where he discussed some of the key findings of the DHC 2012 Executive Landscape Study (listen to the podcast here).

While pharmaceutical companies may not yet be advertising on mobile devices as they do on TV, websites, and magazines, they are developing health “apps” that run on Droid smartphones, iPhones and iPads. According to a recent presentation by the FDA to the Regulatory Affairs Professional Society there are now 17,828 health and fitness apps and 14,558 medical apps (see The FDA and Medical Apps: Where Are We?).

All this has tremendous implications for the pharmaceutical industry. which is trying not to be caught flatfooted when it comes to mobile marketing. Unfortunately, a majority of respondents to the DHC survey feels that the pharma industry lags behind other industries as far as having a mobile strategy is concerned (see figure below).

FDA’s Looming Regulation of “Mobile Medical Apps”
One of the factors that may be holding back pharma in its pursuit of a mobile strategy is the “loomimg” sepecter of FDA regulations. The agency issued draft guidelines on July 21, 2011 (see here). It accepted public comments through October 19, 2011 and has of yet not issued final guidance.

PhRMA, the drug industry trade group, cited (here) a Washington Times op-ed piece that suggested the FDA guidance will require apps such as medication prescription renewal reminders and blood glucose level tracking functions to be regulated as medical devices. In a report, Deloitte said: “Given the additional monetary costs and time associated with designing implementing and maintaining an FDA-compliant quality system, regulating these applications could undermine the advancement of the technology, and thus, limit the benefit to the public” (see “Regulatory implications of mobile applications in the life science industry“).

Recently, I debated this issue as part of a pharmaHOTSPOT topic: “Should Pharma reconsider its mobile application approach with FDA guidance looming?” My point of view is that the pharmaceutical industry has to police itself with regard to development of medical apps regardless of what the FDA does (view video below).

A “counterpoint” was offered by Dr. Chetan Vijayvergia, PhD, Director of Medical Strategy, Ignite Health. Dr. Vijayvergia’s point was “The apps that are currently being created in the Pharma space don’t have a predicate in the FDA database. Pharma needs to reconsider the mobile approach to actively help the FDA shape industry guidance” (see here).

Vijayvergia contends that the current FDA draft guidance for MMAs “casts a very wide net” and if pharma app developers are not careful, their apps can get “dinged as an MMA [mobile medical application]” and be subject to regulation as a medical device.

What Is and Is Not an “MMA”?
The fear that FDA is casting too “wide a net” over health apps is a major concern. It is important, therefore, to understand the FDA’s perspective on what is and what is not an MMA.

FDA has co-opted the term “mobile medical app” to refer to health apps requiring regulation as medical devices. Unfortunately, this confuses the discussion, which up until now used MMA to describe any health-related app that a physician or patient might use. This may be why PhRMA and other drug industry spokespeople are so fearful of FDA regulations hampering innovation within the “mobile health app” arena (see, for example, “Mobile Regulatory Fears“).

In an attempt to clarify what is and what is not an MMA, FDA uses a schematic “Mobile medical apps Proposed Scope for Oversight” pyramid divided into three parts:

DrugWonk Peter Pitts summarized FDA’s description of these parts of the pyramid (here) :

  1. The top of the pyramid includes mobile medical apps that are traditional medical devices or a part or an extension of a traditional medical device. Clearly within the scope of being regulated as medical devices.
  2. The middle section includes patient self-management apps and simple tracking or trending apps not intended for treating/adjusting medication. This is the area, as defined by CDRH, for enforcement discretion
  3. The bottom section are devices that are not deemed “mobile medical apps” and, as such, have no regulatory requirements.

As always with FDA regulation, there’s a substantial gray area devoted to “Enforcement Discretion.” This is why experts such as Dr. Vijayvergia suggest that pharma “help the FDA shape industry guidance” to narrow the discretionary gray area. The following are some comments submitted to the FDA that addresses the industry’s general concerns about FDA’s intentions and specifically about which types of health apps the FDA should and should not regulate. You can access all the comments on the site here.

Risk of “Squashing” the Startup Mobile Medical Industry
A few commentators, including Qualcomm, a wireless technology company, expressed fear that FDA regulations might have a negative impact on the nascent mobile app industry and innovation. “Many apps are developed by garage entrepreneurs,” said Qualcomm, “including individual doctors or clinicians, that work from their home.” Qualcomm estimates that nearly two-thirds of “all mobile apps” are developed by individuals (30%) or small companies (34%). An anonymous commentator put it this way: “The FDA risks squashing the startup mobile medical industry if they require full investigative study for each mobile application.”
The Focus Should Be Solely on Apps that Involve Significant Risk to Patients
Another recurring theme in comments submitted to the FDA was that final guidance should be narrowly-tailored to focus solely on those intended uses that involve significant risk to patients. Roche Diagnostics commented that “in determining classification of software that provides clinical decision support functionality, FDA should consider the extent of control, level of risk associated with a wrong decision, and the degree to which the software drives the decision… If the risk associated with a wrong decision is high,” said Roche, “and the level of control the software has over that decision is high, then the software would be considered high risk.”

“Who is the judge?”, asked Michael Kremliovsky, Chief Software Architect at Hospira, on the Digital Health LinkedIn discussion group. “FDA favors approach based on risk analysis and mitigation. This approach sounds like very reasonable with one caveat: who is the judge? It is always a convenient position that allows Agency to declare that a risk is underestimated.”

Whatever! Generally, the Coalition for 21st Century Medicine — which includes “some of the world’s most innovative diagnostic technology companies, clinical laboratories, venture capital companies, and patient groups” — said that the “focus of oversight for software that support medical devices, mobile or not, should be based upon the manufacturer’s intended use of the product.”

Who’s Responsible for Recalls?
The FDA draft guidance states that “mobile medical app manufacturers are required to report to FDA any corrections made to a mobile medical app to reduce a risk to health posed by the mobile medical app.” Roche, however, requested more guidance on working with Applications distributors [e.g., the Apple iTunes/App Store] regardig recalls. “We appreciate FDA’s concern regarding distributor cooperation in recalls,” said Roche. “Roche believes, as a practical matter, that this will be very difficult to enforce unless FDA holds distributors accountable… Applications distributors have standard terms and conditions in on-line form agreements that a designer acknowledges to access the development platform. These usually are not open to negotiation.”
Depends on What FDA Means by “Health and Wellness”
“The term ‘Health and Wellness’,” said the Coalition for 21st Century Medicine, “lacks clarity and may be too limiting. Patient accessible tools, mobile apps, and websites that exist to help guide patients to ask appropriate questions to their physician, encourage them to see a physician, describe various treatment options, or identify potentially appropriate clinical trials are important patient education tools and support patient-centered health care. Because these applications often include patient-specific inputs, it is critical that FDA clarify that they should not be considered FDA regulated devices/medical applications.”
Mobile Apps Based on Websites
According to Novo Nordisk, “the guidance does not address websites that provide applications that are the same as or similar to some mobile apps. We recommend that the Agency consider situations where a mobile app has been developed that directly parallels materials on a website (e.g. identical diagnostic information, interactive algorithms, calculator for standard parameters) and state if the mobile app and website require FDA approval. Should the mobile app and website be submitted simultaneously for premarket clearance to FDA?”
Clarify the Scope of FDA’s “Enforcement Discretion”
Merck believes that the FDA should take following actions to “clarify the scope of its enforcement discretion: (1) provide more specific categories and examples of apps for which it intends to exercise enforcement discretion; (2) specify the factors and/or guiding principles it plans to consider in determining whether certain apps qualify for enforcement discretion; and (3) clarify the circumstances under which it may choose not to exercise enforcement discretion with respect to these apps.” For example, enforcement discretion is appropriate for health and wellness apps that allow patients to log, track, and graph specific health goals and provide patients reminders or alarms based on generally accepted and established medical standards or parameters. In addition, Merck suggests that “drug dose calculator apps that use an algorithm to automate dosing rules based on the approved labeling for a specific drug are subject to enforcement discretion. Merck believes that enforcement discretion is appropriate for such apps. To the extent that FDA’s statements elsewhere in the guidance create uncertainty regarding the regulatory status of such products, we encourage FDA to clarify this point.

4 Mobile Trends To Watch For In 2013

4 Mobile Trends To Watch For In 2013

by Mark Simpson , Oct 29, 2012, 6:27 AM
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We’ve all known about the “power of mobile” for quite some time now. Smartphones already have a big impact on the travel industry, and with the steady increase of mobile adoption, they will continue to heavily influence the way consumers make travel plans.

By the end of 2012, roughly 36 million Americans will have used a smartphone to research travel. And eMarketer forecasts that by 2016, the number of people who will actually book travel by smartphone will jump from 15.8 million to 36.3 million annually.

Clearly, mobile is a channel with huge potential for the travel industry. Unfortunately, however, mobile booking experiences have yet to reach their potential. Mobile-optimized—or even mobile-specific—digital assets are certainly must-haves, but for the travel industry, especially, it can’t end there. You have a mobile-friendly site? Great, start testing and optimizing it. You have a new strategy for targeted offers and promotions? Wonderful, make sure you’re using personalization to get them right. And don’t forget about tablet users—a mobile site and tablet site are similar, but they offer different experiences.

In 2013, we’ll see the travel industry leaders continue to expand their digital and mobile footprint. After all, if they want to claim their share of the 36.3 million customers booking by smartphone, they will have to. Here are some trends to watch for next year—and to consider planning for as well:

1. Mobile site testing and optimization.

Now that many brands have a mobile site or app in place, they are beginning to test its content’s performance for their audience. A/B and multivariate testing are now designed to perform specifically for mobile sites. It’s essential that everything from strategy to testing to optimization programs is in place to ensure that your mobile presence is helping you achieve desired business goals. When it comes to mobile content, if you aren’t testing, you’re guessing—and you certainly won’t be able to increase conversion rates without it.

Insight from testing will also give you a wealth of information about visitors—enabling you to devise a strategy for adapting and personalizing the mobile experience for each visitor, for integrating with other digital properties, and for connecting the mobile experience with the offline one—all while measuring the impact of your initiatives on engagement, revenue and customer loyalty.

2. Personalization of mobile content.
As mobile-rich sites and apps increasingly serve travelers better, faster and in new, creative ways, consumers are more frequently willing to give brands access to their information, such as sharing their locations, check-ins, demographics, pictures and activities. It also means that consumers are coming to expect an enhanced, personalized mobile experience, and the brands that keep pace with this changing landscape will dominate the market.

While travelers often have very definitive needs (How do I get from Point A to Point B? Where is my hotel? Where should I eat?), they’re also more open to the pleasures of relaxation, spontaneity and novelty than they are in their normal lives and routines. Real-time personalization in a mobile environment allows sites and apps to “think on their feet” for travelers, offering them content in real time, based on their current behavior, rather than on their accumulated data from past (and often no longer relevant) visits. For example, when visitors log into your site/app during a trip, you may choose to re-target them based on their recent search information—with promotions like tickets to a local attraction or a discounted hotel stay on an extra night. These types of promotions could entice them to buy anew from you or a partner, or even extend their trip.

3. Optimizing for tablets.

When it comes to strategy, e-commerce marketers tend to group tablets and smartphones into the same mobile category. But the reality is, the typical browsing and buying habits of a smartphone user are quite distinct from an average tablet user. In fact, a recent study from Econsultancy cited that the Average Order Values via tablet commerce were at least 1.5 times higher than those of smartphones.

Just as a traditional website does not work on a mobile screen, a mobile site is not necessarily right for a tablet experience. Expect to see different strategies developed for this in-between device as the leaders recognize its opportunities. For example, it’s worth considering the development of a parallel site that takes into account the different functionality and features of the tablet over the mobile phone—from larger screen size to keyboard usage, to pop-overs and CTAs. You have a bigger screen, yes, but the user is still engaging via “touch.” The decision will ultimately depend on the brand and the sophistication of the mobile offer, but it is an issue that requires consideration and planning.

4. Using mobile to extend personalized experiences across channels.

While you should get excited about the possibilities of mobile, it’s also important to remember that mobile should be treated as part of your marketing mix and should therefore provide a consistent experience. The personalized content people receive on their smartphone should work in conjunction with anything they find online or in other marketing channels. Mobile may be new, flashy and exciting, but you never want customers to feel that the mobile experience is somehow disconnected from their other experiences of your brand—or worse, to get the feeling that they are interacting with a different brand altogether!

Furthermore, browsing and buying behavioral data gained from mobile testing and personalization data will soon be used to enhance the customer experience across websites, email marketing, social media and even in person. Not only should your content and branding remain consistent, but the information customers receive across the mediums should reflect their real-time location in the booking journey.

In the end, some travel companies might not be confident or even fail in their attempts as they release mobile-specific sites or apps, but that’s why it’s all the more important as we continue to spiral into a tech-savvy consumer era that companies stay ahead of the curve. Being prepared to adapt and change via significant user testing and targeting will have you becoming a trendsetter in no time.