Apple’s opportunity in healthcare is huge, potentially generating tens of billions of dollars a year in annual revenue, according to a new report from Morgan Stanley.
Although it is a nascent space for the Cupertino-based company and it’s hard to predict how much money it will make from health services, the investment bank believes the healthcare business could bring $15 billion to Apple by 2021. What’s more, the figure could further grow from there potentially reaching up to $313 billion by 2027 — which is a particularly lofty figure since Apple’s total revenue last year was $266 billion.
“At the mid-point, Apple’s health efforts could result in ~$90B of annual revenue by 2027, roughly ~35% of its current revenue base,” Morgan Stanley’s report says.
Apple has a few key advantages over its technology rivals, including Alphabet and Microsoft, such as privacy and the huge base of iPhone and Apple Watch users. These things have helped the company recruit 400,000 people in less than a year for its Apple Watch heart health study with Stanford University, suggesting that people are willing to share their medical information with Apple.
Aside from direct device sales, Cook & Co. have started signing deals with health insurers who are willing to pay for some portion of the Apple Watch on behalf of their members. Apple has already inked that type of partnership with Aetna, and is currently in talks with private Medicare plans, which could mean increased access to the Apple Watch for seniors.
“Medicare has the most concentrated pools of money and is the least complicated to navigate,” the Morgan Stanley analysts wrote.
Furthermore, there is also the huge potential in the electronic medical records market, which Apple has already entered with its Health app that allows customers to pull together medical information from dozens of hospitals and clinics. In its current form, the feature is designed for consumers, because it is a huge challenge for people to aggregate their lab reports, immunization records and more.
The next step, Morgan Stanley speculates, could involve Apple pulling together data and selling reports to health systems, which in turn could use this data to gain insights into broad populations while protecting the data of individual patients.
And that’s not all — the investment bank has also listed other things Apple could do that would generate a lot of investor interest. These include the introduction of new medical wearables, adding medical-grade monitoring to its devices, make the Apple Watch more broadly available through insurance companies as a benefit that’s reimbursed, start its own employer joint venture or join a group like Haven (which currently consists of Amazon, J.P. Morgan and Berkshire Hathaway).
Also, with its vast pool of money, Apple could end-up acquiring an established healthcare company to reinvent the way healthcare is delivered. For what it matters, the company is already running its own employee medical clinics, dubbed AC Wellness.
Unsurprisingly, Apple declined to comment on the report.