The dust has settled after the successful IPO of Fitbit (NYSE: FIT), who can accurately be described as the world’s largest wearables maker. Fitbit raised approximately $732 million from a $20/share pricing (valuing the company at $4.1 billion) and investor demand was strong on day one of trading with a nearly 49% increase to close at $29.68/share (valuing the company at greater than $6 billion). This can attributed to nearly flawless execution by Fitbit in making a series of sleek wearable products, combined with facile mobile app interfaces that work extremely well with both Apple and Android products. Simply put, Fitbit has made products their customers want to use and are willing to pay for. Per Fitbit’s IPO prospectus, their success has translated into stellar user demand of 6.7 million active users as of 2014, nearly 11 million devices sold in 2014, revenue of nearly $746 million in 2014 and turning a profit to boot.
The success of Fitbit is phenomenal by any analysis. Now as a publicly traded company, Fitbit users, investors, Fitbit competitors, and the entire field of digital health will be keenly curious as to what Fitbit does next. While their IPO prospectus did not disclose anything regarding use of existing or new products for the improvement of medical conditions and chronic health conditions, it is obvious in this new era of medical care that this is a market ripe for development. Fitbit is uniquely positioned to take advantage of these dynamics and expand their already impressive growth arc into other markets, including those more focused on medical conditions.
While it hasn’t received much fanfare, Fitbit began to pursue in 2013 and finally received in 2014 FDA 510(k) clearance for their Aria Wifi Scale that syncs wirelessly with other Fitbit devices and tracks weight, body fat, and BMI. The Aria is a regulated medical device, which required Fitbit to register with the FDA to sell Aria in the United States. There were statements regarding Aria and other FDA regulatory issues in the Fitbit IPO prospectus that clearly demonstrate Fitbit recognizes the impact that the FDA has or may have on their existing and future business. To distill this further, Fitbit is clearly aware of what constraints the FDA can place over their ability to do business in arenas specific to medical conditions or chronic health conditions.
While the numbers of Aria sales and impact on their overall business were not disclosed, the fact that Fitbit has already made an entrance into the FDA regulated space is important. This shows a degree of commitment to leveraging the Fitbit platform to address health issues related to particular health conditions, even if it requires entering the FDA regulated space. The larger question going forward is this: will Fitbit continue to develop and market products in the United States that are regulated by the FDA? Or will Fitbit take advantage of FDA guidances published in early 2015 regarding mobile medical applications (MMA), medical device data systems (MDDS) and general wellness products (GWP) to develop products that are not regulated by the FDA?
The FDA guidances for MMAs and GWPs offer particular opportunities to develop and market wearable products and mobile medical applications that are not FDA regulated products, including those targeting chronic health conditions, which generate the greatest costs to our current medical infrastructure. There are benefits to any product manufacturer who can exit the requirement of FDA regulation, not the least of which is removing the compliance and documentation requirements that can severely delay initial product release while awaiting FDA clearance and delays to iterative improvements being deployed to users quickly. A great deal of credit is due to the FDA in recognizing that there is great consumer demand for products that are being developed by wearable and app developers such as Fitbit, but that the risks presented by these devices depending on how they are marketed does not necessarily warrant FDA oversight.
This is not to say that the process of discerning what receives non-FDA regulated status per MMA, GWP or MDDS guidances is a straight forward process. Navigating these FDA guidances and existing FDA regulations is nuanced and takes skilled regulatory assistance to get to the most positive outcome possible. In the case of Fitbit, coming off a massive cash raise in their IPO and even higher future expectations from investors, it is likely that some of Fitbit’s resources and effort will be turned towards addressing chronic health conditions through their platform of products, ideally in a non-FDA regulated way, so that they can release their best products quickly and with iterative improvement ease to a patient population that could likely see great benefit. This would be an all-around win for consumer health, the medical infrastructure, costs to society, and Fitbit investors.