Bolstered by private capital, modern healthcare marketing firms have looked to fill out service offerings in order to acquire market share. Their next big target could be real-world data expertise.
Since bursting onto the pharma services scene several years back, private equity firms have catalyzed a new cohort of commercialization platforms, whose agency acquisition binges and remonetization deals have enabled scale.
During this highly acquisitive period, their most sought-after subsegment has probably been the market access agency. With most of the payer-oriented shops accounted for — either having been scooped up by a PE-backed entity or one of the traditional strategics — RWD is emerging as a critical piece as the commercialization platforms seek to come to market in a more competitive way.
The parallels between those two disciplines haven’t been lost on Elaine Riddell, managing director at investment bank Oaklins Desilva+Phillips. “At the end of the day, if you don’t have market access, you don’t have revenue; it’s a key area of expertise,” she explained.
Similarly, she added, RWD “supports everything. Increasingly, every single area of decision-making is figuring out how to leverage real-world evidence, real-world data and taking advantage of artificial intelligence.”
Indeed, RWD has application along the whole continuum, from molecule to market, and the potential to help marketers establish differentiation and competitive advantage. The marketing team needs it to direct campaigns, sales to direct their field force, and market access to prove value and set value-based care arrangements.
As such, Riddell predicts that a larger number of the new strategics will consider moves to acquire it.
“It’s kind of an interesting time, because we’ve got all of these firms and they would benefit from being able to service the full continuum,” she observed.
The RWD landscape encompasses everything from traditional pharmacy and claims data to unstructured data stemming from electronic health records and wearable devices. Tempus, Komodo Health and Concert AI are the three top private RWD providers by valuation, according to estimates by CB Insights. All have double-digit valuations, supported by the quality of their data as well as their predictive analytics/AI and knack for applying their data to the widest range of commercial uses possible.
Some platforms have begun striking partnerships with these players. Trinity Life Sciences, for one, has alliances with Komodo and Symphony Health, and buys several pieces of data from other providers across the industry. Once a life science-focused boutique strategy firm, Trinity has reshaped itself into a full pharma-commercialization platform the last few years via a combination of M&A, partnerships and investment.
“Our perspective on RWD is that we will continue to collect and harvest it,” said Trinity CEO Leslie Orne. “Our real spot in the ecosystem is to help unlock that data for our clients.”
Partnering may not provide quite as much of a “market moat” as is possible through owning a company outright. That said, RWD companies’ multi-billion-dollar premiums may put them out of reach for all but the most well-heeled PE-backed companies.
At least the private ones, that is. The public RWD companies — namely Health Catalyst, Veradigm and Definitive Healthcare — are all trading at lower valuations.
“We’ve thought about whether we should own data,” added Orne, whose company is supported by PE firm Kohlberg & Co. “In a lot of ways, data is becoming commoditized. If we found the right, truly unique and differentiating data asset, would we be willing to own an RWD property? Maybe. But at this point, our best position is really to stay agnostic to the data source and use the right data for the right question that our clients bring to us.
“But we do think that this is the way the market will move,” Orne continued. “This is how commercialization will modernize itself. And we want to be on the front end of driving that revolution with data.”
The RWD market is fragmented and pharma buyers are evaluating different vendors for different therapeutic areas, Riddell noted. Integration with a pharma organization’s internal data is a key requirement. Her research also points to an unmet need for oncology real-world datasets.
Meanwhile, RWD firms aren’t standing still. VC-backed Komodo, for one, acquired market access software company Breakaway Partners in 2021. That’s a sign that firms of its ilk may be treading the same buy-and-build path, or at least moving into a bigger marketplace.
Of course, it’s anyone’s guess as to how all of this figures in the way the pharma services sector unfolds. Could more VC-funded groups become acquirers? Notwithstanding the price tag, could PE look to buy a RWD provider?
More RWD companies could come together with market access companies, marrying patient data with information on formulary changes and coverage decisions. Some AOR-type agencies have also forged ties with RWD firms.
High-science consulting and access businesses — think Ipsos, Cerner Enviza or ClearView Healthcare Partners — could align with high-science medcomms firms, like Inizio or Lumanity. Trinity, for its part, has partnered with Havas Health to bring the medical communications piece.
But data is very expensive, whether it’s being bought as a client or as a partner. And especially as generative AI continues to evolve in the industry, some observers envision one of the larger platforms making a move to purchase a large data business.
The Inflation Reduction Act, which for the first time authorizes Medicare to negotiate the price of drugs, seems to push RWD in support of pricing negotiations even more to the forefront. As does the realization that the shotgun approach of direct-to-consumer advertising — think Super Bowl spots — isn’t very cost-effective, and pharma clients are looking to make their marketing dollars work smarter through data.
So as many of the modern marketing organizations now find themselves with a basket of point solutions, driving value requires ensuring that they’re greater than the sum of their parts. With the new strategics pushing to offer a single-entity view of the world, even the traditional holding companies are sensing the need to go to market in a more comprehensive way.
“It seems like there’s a next frontier,” Riddell said.