Is Pharma Ready to Commit to the Startup World?

Healthcare is teeming with digital health innovations that harness familiar consumer technologies — smartphones, apps, games, social media, and, in some cases, specially developed sensors. These new solutions deliver care and information to patients, improving outcomes and efficiency and decreasing costs. As with many disruptive innovations, however, digital health requires the development of new models and alliances.

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Savvy pharma companies are beginning to explore a variety of digital health solutions for deployment throughout the healthcare ecosystem. Digital solutions, often combined with medications, offer benefits not only for patients, but also for payers and providers — and even pharma's bottom line.

By embracing digital health solutions, pharma organizations can:

Improve outcomes. Pairing drugs with digital health apps and services can drive better patient outcomes. For example, remotely monitoring weight changes in congestive heart failure patients can  reduce costly ER visits.

Build patient connections. With digital health tools, pharma companies can connect directly with patients. Real-world data from digital health solutions can give pharma deeper insights into patients' experiences, facilitating new and better therapeutics.

Create new business opportunities. Digital health solutions can themselves become new pharma product lines. They are lower-cost, highly scalable, and less heavily regulated than medications. Critically, they can also be developed in a fraction of the time.

Strengthen brands. Because digital solutions can make therapies more effective or more convenient, patients will likely choose combination drug-and-digital therapies over drugs alone. Comprehensive digital health solutions can thereby differentiate and enhance a brand.

Why should pharma court digital health startups? As with many disruptive innovations, digital health requires the development of novel business models and partnerships to succeed. The most effective way for pharmaceutical companies to achieve these benefits is to partner with multiple, compatible digital health start-ups, and to have these startups build innovative patient and provider-facing digital health solutions on behalf of their organizations.

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To begin with, tech-savvy, entrepreneurial startups with a consumer bent are better at developing the type of user experience consumers expect than are large, complex, process-oriented firms that develop and market drugs. Because of their small size and organizational simplicity, digital health startups can move more quickly than pharma, developing products in months rather than years. For example, the software prototype underlying Neuromotion's digital-health solution for emotional and behavioral regulation in kids only took a few weeks to develop.

Furthermore, startup entities are not encumbered by the ponderous processes, rules, and regulations that slow development initiatives in pharma. And, of course, they're not subject to the same degree of regulatory scrutiny. They can talk freely to doctors and patients — the parties who will end up using the digital-health products they develop.

Why should digital-health startups be receptive to pharma? When pharma comes courting, a savvy digital health startup should be receptive, because it can likely benefit enormously from the relationship. One of the biggest benefits: access to pharma's substantial sales and marketing networks. Selling products into the healthcare system can be extremely difficult because of the wide variety of physician practice models and healthcare procurement processes. Startups often lack the infrastructure needed to reach customers and, therefore, have trouble scaling up sales. Many fail as a result. Teaming with pharma and tapping into their extensive marketing infrastructures and distribution channels will help these organizations gain traction far faster than they could on their own.

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Digital-health startups also can benefit by leveraging and learning from pharma companies' well-established processes around healthcare-specific details, such as managing regulatory requirements, CPT coding, and government and payer reimbursement. There's no need for them to reinvent the wheel, is another way to put it. By working together, pharma companies and digital-health startups can leverage their complementary strengths and accomplish what neither can alone.

Which pharma companies will embrace these partnerships? Innovative organizations that commit to digital-health partnerships will realize first-to-market advantages and longer-term success. But such partnerships are still new to many; there's a substantial learning curve on both sides. The real question might be whether pharma companies will do more than flirt with these pilots or partnerships and, eventually, fully commit to exploiting all the potential digital health has to offer.


Naomi Fried is the CEO of Health Innovation Strategies. She was named one of MM&M's Top 40 Healthcare Transformers in 2016.