Tom Homer, Telstra, looks at the maturing market of digital health and partnerships between life science and technology companies
Otsuka Pharmaceutical, a Japanese life sciences company, and its US-based partner Proteus Digital Health recently applied for regulatory approval of an anti-depressant drug incorporating an ingestible sensor. The sensor will measure how patients keep to their prescriptions, and the treatment’s effects, the data being transmitted to care providers. If approved, it will mark the first mass-market commercialisation of a ‘smart pill’, and will be an important manifestation of the promise of digital health.
This is just one example of the numerous alliances being forged between health and life sciences organisations and technology companies. Healthcare providers are emerging as active practitioners of digital transformation through partnering. According to Connecting Companies: Strategic partnerships from the digital age, a global survey conducted by Telstra and The Economist Intelligence Unit, 38% of industry executives report that their organisation has five or more digital partners. Nearly half (47%) say the digital networks, clusters and ecosystems they are involved in are “significant for their business”.
Technology is opening up news ways for the healthcare sector to tackle the critical challenges currently facing society, like ageing populations, chronic disease and stretched budgets.
Smart partnerships
Partners played an important role for Telstra when we established our Telstra Health initiative. For example, we established Telstra ReadyCare as a joint venture with world-leading Swiss based telemedicine company Medgate, to let patients talk directly to doctors over video or phone to receive advice, diagnosis, prescriptions, and referrals.
Industry executives make clear in the survey what specifically they hope to gain from their digital partnerships. Top of the list come the development of new, or augmentation of existing, capabilities, and gaining access to new technology.
Taking this bold move into digital innovation one step further, Bayer, a global life sciences firm, is funding health technology start-ups in multiple accelerator-type initiatives. One is an innovation hub formed in concert with Silicon Valley-based Singularity University. Another is its own accelerator programme, Grant4Apps, launched in 2014 in Berlin and since replicated in Barcelona.
Growing pains
The technology areas the surveyed organisations are looking to develop through their partnerships are primarily cloud computing and data and analytics. These are capabilities of which result could offer the potential, for example, to price pharmaceutical treatments based on patient outcomes rather than, or in addition to, prescriptions or usage. Analytics, along with monitoring technologies—based on sensors embedded in pills or wearable heart rate monitors, for example—are integral to realising such far-reaching change in healthcare models.
Such potential outcomes are attractive but are by no means guaranteed and come with some growing pains. One notable difference from the traditional strategic alliances and JVs of old is the speed with which services and solutions are developed today. When asked about the most difficult issues to deal with in multi-company digital partnerships, top of the list is finding the right balance between co-operation and competition. Alongside this is the need to develop sufficient trust with the other parties, and protecting intellectual property.
This point issues are put into context by Jessica Federer, head of digital development at Bayer, who says partners must realise that making digital partnerships work is a people and management challenge more than a technology one: “It’s about how people work together using technology.”
Digital hybrids
It is too early to provide a sweeping verdict on the success of digital partnerships in healthcare and life sciences, but survey respondents believe theirs are bearing fruit. According to the survey, more than four in ten (44%) insist their investments in digital partnerships have already proven their value ‘beyond doubt’. In the longer term, half of the survey respondents are expecting their digital partnerships to lead to a change in the business model.
New entrants with digital business models have made inroads, but few, if any, have yet displaced established market players. Digital partnerships can be viewed as an effective means of meeting the challenges of potential disruptors. A hybrid digital health industry exists already today; it is certain to expand as entrepreneurs, venture capital firms, share investors, life sciences companies, care providers and even governments plough more resources into it.
About the Study
In June 2015, The Economist Intelligence Unit conducted a global survey of 1,045 senior business leaders, one-half (51%) of whom are C-level executives or board members. A total of 20 industries are represented in the survey with 117 respondents coming from the healthcare and life sciences industry.