Augmented Reality (AR) & Virtual Reality (VR) in Healthcare Market Analysis By Component (Hardware, Software, and Service), By Technology (Augmented Reality, Virtual Reality), And Segment Forecasts, 2018 - 2025

Industry Insights

The global Augmented Reality (AR) & Virtual Reality (VR) in healthcare market size was valued at USD 568.7 million in 2016 and is projected to grow at a CAGR of 29.1% during the forecast period. The growing integration of technology & digitalization in healthcare, increasing healthcare expenditure & focus on delivery of efficient health services, and its significance in training healthcare professionals are some of the key factors driving the increasing adoption of AR and VR technologies.

North America augmented reality & virtual reality in healthcare market, by technology, 2014 - 2025 (USD Million)

These technologies have revolutionized the healthcare industry with their adoption in virtual training of surgeons for difficult surgeries, 3D operating room simulations, phobia buster in mental health treatment, and chronic pain management. VR technology has also played a significant role in Eye Movement Desensitization and Reprocessing (EMDR) therapy that enables to reframe traumatic memories through certain eye movements. In addition, this technology offers benefits in various areas of care management: autism & depression therapy, cancer therapy, and assisted living. VR-based organ models have played a crucial part in preparing surgeons for delicate and complicated operations that demand greater precision, less complications, & reduced trauma.

In addition, AR is a tool useful for training and education. AR-based apps are used to provide improved care to patients. For instance, Vein Visualization technology, developed by AccuVein, Inc. is a handheld scanner that helps doctors & nurses locate veins & valves successfully at the first go and reduces pain & time required. These apps are also used in aftercare of patients and assist elderly people to manage their medications. The rise in adoption of such innovative technologies that provide revolutionary solutions for better care management and real-time care services is expected to boost growth of the market in the coming years. In addition, the growing significance of medical visualization, preventive medicines, surgical robots, and various health apps is contributing to the growing penetration of these advanced technologies in healthcare sector.

The market is also expected to expand due to rising private investments and funding. The market is witnessing a significant rise in the number of investors, with increased funding in these technologies. The Swiss-based start-up, MindMaze, has raised USD 100 million from the multinational conglomerate, Hinduja Group, for the development of VR hardware and software that intends to provide clinical treatments for stroke patients. Another example is LENSAR system, developed by LENSAR, Inc., that is an AR featured laser technology used for performing precise and accurate cataract surgeries. The company raised around USD 75.1 million from investors such as Aisling Capital, Florida Growth Fund, Florida Opportunity Fund, Oxford Finance Corporation, and PDL Biopharma.

In addition, various government funding programs are expected to boost adoption of these technologies in healthcare. Innovate UK (UK’s innovation agency) decided to invest £210,000 (USD 269,367) in VR and AR technologies to encourage innovation. The U.S. government is also making significant investments in these technologies to achieve the objective of cost saving and provide start-ups & small enterprises with business opportunities in this industry. The market is further anticipated to expand due to increased government funding and investments.

Component Insights

In 2016, the hardware segment held majority of the revenue share of 67.9%. Hardware devices such as desktops, head-mounted display, and other display devices are of particular importance while using these technologies. Display devices are of great significance since audio-visual simulation is a key component to create virtual and augmented reality. Head-mounted displays are gaining importance due to their applications in education, simulation, visualized data, video recording, telemedicine, telemonitoring, and many others.

Hardware devices such as smart glasses are experiencing a rise in adoption as this wearable technology improves clinical outcomes and provides improved care. Google Glass is one of the most widely known smart glasses and is used during surgeries for data visualization and video recording. These smart glasses help clinicians discuss a live case in teleconference mode, transfer photos or videos, and retrieve medical information. Advancing technologies and high demand to minimize healthcare complexity & increase efficiency are resulting in rising implementation of these devices & technologies in care services. However, services segment is expected to emerge as the fastest growing segment during the forecast period with a lucrative CAGR of 29.4%.

Global augmented reality & virtual reality in healthcare market, by component, 2016 (%)

Technology Insights

AR was the dominating technology segment in 2016. It has wide applications and has brought significant changes to the healthcare industry. It provides assistance in surgeries, helps in medical training & education, patient care & management, and medical imaging with the assistance of head-mounted displays. In addition, this technology plays a significant role in fitness management. Various AR-based wellness and fitness apps are revolutionizing the fitness regime. In case of AR, users do not lose contact with the real world and it puts the information into the eyesight as fast as possible. This is expected to make AR a driving force in the future of medicine.

The growing adoption of this technology with its increasing penetration in various areas of medical field and associated advantages contribute to the large share of this segment. The growing number of AR apps being developed for creating patient awareness, providing essential information to surgeons, and conducting medical training are expected to aid in growth of the market. Some examples of these apps include the EyeDecide app developed by OrcaMD that educates patients on conditions such as cataracts & Age-related Macular Degeneration (AMD), MedicAR, a Google Glass app launched by Droiders that provides surgeons with necessary instructions & data during surgeries, and mARble, a training app for medical students developed by the Hannover School of Medicine.

VR may witness rapid growth over the coming years and is projected to grow with a CAGR of 30.3%. Virtual training and education is one of the significant advantages with the integration of this technology in healthcare. Furthermore, use of VR in pain therapy sessions, telesurgery, visualization of anatomy, 3D-Stereovision, & exposure therapy are gaining importance and are expected to drive growth of the segment. In addition, use of VR in diagnostics is quite convenient & less time consuming and is expected to drive the growing adoption of the technology.

AR by Application

AR has an application in various areas such as surgeries, rehabilitation, training, and medical education. The surgical applications segment held majority of the revenue share in 2016. Increasing number of diseases and technological advancements in healthcare IT are the key reasons for increasing penetration of this technology in surgeries. AR uses various technologies such as sensors, simulators, and transparent displays to improve quality of communication between a patient and surgeon, thus enhancing surgical processes.

However, AR in training and medical education is anticipated to emerge as the fastest growing segment with a lucrative growth rate. Training surgeons and specialists on surgical procedures is expensive and difficult. AR-based devices help doctors perform complicated surgeries with instructions and guidance for avoiding human errors. The growing interest of technology-driven companies in developing apps and devices for training medical professionals is one of the driving force for the growth of this segment. For instance, Touch Surgery is an app developed by Kinosis Ltd. (UK) for surgery simulations through AR. It provides training to surgeons on several procedures using an overlay of a digital patient and provides an immersive experience with an AR headgear.

VR by Application

VR has applications in various areas like simulation, diagnostics, exposure therapy, rehabilitation, and pain distraction. VR-based simulation held the largest revenue share in 2016 in the application segment. VR simulation has gained momentum as it provides greater hands-on experience in medical education. Many medical schools and institutions are taking advantage of this opportunity around the globe. For instance, in California, the Western University of Health Sciences has transformed anatomy study with the development of a VR lab that provides students with virtual experience of the human body. Furthermore, VR in diagnostics segment is expected to emerge as the fastest growing application segment as it enables effective visualization of human anatomy and also prevents need of surgery or invasion.

North America VR in healthcare market by application, 2014 - 2025 (USD Million)

Regional Insights

North America dominated the market in 2016 with a revenue share of 43%, which can be attributed to constant technological advancement of related products, prevalence of neurological & psychological disorders, increased adoption of such advanced technologies, and presence of a sophisticated healthcare infrastructure. Furthermore, growing technological advancements in information technology and government support for integration of these technologies in medical field contribute to the large share of the market.

Extensive R&D activities in the region and presence of various market players also contribute to the large share of the region. The U.S. is the largest market in the region due to higher adoption level, high healthcare expenditure, and rising government initiatives & investment. The Medical Virtual Reality (MedVR) group present at the University of Southern California Institute for Creative Technologies is sponsored by the U.S. Army and focuses primarily on four areas of VR in medical field that include mental & rehabilitation health, neurocognitive assessment & training, game-based rehabilitation, and virtual human beings.

Asia Pacific is predicted to register fastest growth over the coming years. Factors responsible for faster emergence are high prevalence of chronic diseases and tremendous increase in internet & smartphone users using AR apps. The growing healthcare expenditure and rising government initiatives for adoption of digital & advanced technologies for better outcomes are expected to further lead to market growth.

Competitive Insights

Major contributing players present in the market include Intuitive Surgical; CAE HEALTHCARE; 3D Systems, Inc.; Hologic Inc.; and Laerdal Medical. A huge funding for R&D coupled with new product launches are the important strategies of leading companies to capture a larger share of the global market. In addition, corporate strategies such as mergers and acquisitions by existing players are used as a tool to surmount competition.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth and provides an analysis on the industry trends in each of the sub segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the augmented reality & virtual reality in healthcare market on the basis of component, technology and region:

• Component Outlook (Revenue, USD Million; 2014 - 2025)

  • Hardware

  • Software

  • Services

• Technology Outlook (Revenue, USD Million; 2014 - 2025)

  • Augmented Reality

    • Surgical Application

    • Rehabilitation

    • Training & Medical Education

  • Virtual Reality

    • Simulation

    • Diagnostics

    • Virtual Reality Exposure Therapy

    • Rehabilitation

    • Pain Distraction

• Regional Outlook (Revenue, USD Million; 2014 - 2025)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • UK

  • Asia Pacific

    • Japan

    • China

  • Latin America

    • Brazil

    • Mexico

  • MEA

    • South Africa