Here’s Why Nokia Is Increasing Focus On The Healthcare Segment

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Within a month of completing the acquisition of Withings, a digital health products company based in France, Nokia (NYSE:NOK)   recently announced a collaboration with HUS/Helsinki University Hospital and the University of Helsinki Faculty of Medicine both to create innovative solutions for outpatient care, and to foster mutual research and development. The first project under this collaboration will launch this quarter, with Nokia Technologies and HUS working to develop remote patient monitoring solutions. The collaboration is a first for Nokia Technologies, reflecting the company’s intent to enter the regulated healthcare space. According to a PWC report published in 2014, the $ 2.8 trillion U.S. Healthcare market will become a wide open health marketplace in the next decade, as the US transitions towards a “new health economy”. Nokia believes that the barrier between regulated healthcare and direct-to-consumer products is fading away.  The aim is to “put everyone in the driver’s seat of their own health”.  We believe Nokia is working towards establishing itself in this promising market.  The company’s focus on healthcare should drive revenue growth over the long term.

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Capturing The Potential Of “New Health Economy”

PWC believes that health sector’s center of gravity is shifting towards consumers and that within a decade, the health and wellness business will seem more like other consumer-oriented, technology-enabled industries, such as retail and banking.  Nokia is investing to capture this potentially large market. PWC estimates that Americans spend over $3 trillion a year on health,  of which $267 billion is spent on fitness and wellness products and services.  Nokia believes that the consumer and regulated healthcare markets will collide in two particular segments: a) prevention; and, b) chronic disease management.  The company sees opportunity in both segments. Consumer devices will play an important role in chronic disease management and devices with advanced features should see an increase in demand. This is a relatively new segment with huge potential opportunity for new players such as Nokia.

As Nokia tries to re-establish itself in the consumer segment, the digital health industry has the potential to give the company the necessary boost. Its acquisition of Withings seems well conceived as the latter has been getting FDA approvals on its products since its inception. Establishing itself in both the regulated and consumer digital healthcare segments will allow the company to explore the entire potential of the industry. While it is too early for the company to report revenues from this segment, we believe this has the potential to form a significant part of Nokia’s valuation in future.

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