“While there have been many headlines and big tech has been poised to change the face of healthcare, so far there have mostly been failed expectations and pivots. Pharma companies have decades of experience in clinical research and the ability to innovate and drive better efficiencies in drug discovery and clinical research. While Big Tech has the technical know-how, niche players may offer better value and enable pharma to innovate faster.” – Stephanie Bova, Head of Digital Strategy and Innovation @BDIndustry reports predict that the global health care budget is estimated to rise to 15 Trillion by the year 2030. With increasing consumerization of healthcare, the future of the multi-trillion market will consist of new hybrid care models driven by tech savvy users with a focus on prevention and user experience. There is no doubt that there is a huge opportunity to digitally disrupt healthcare.
It's easy to see why Big Tech would be drawn to the industry when it has had immense success in addressing equally complex issues in broader consumer and business markets. To continue to grow their market cap, it makes sense that these companies would venture into an industry that is ripe with innovation opportunities and is big enough to impact their revenues. Many companies are confident they can apply similar principles to fix these inefficiencies in healthcare.
In this blog post we explore 3 questions from our community about big tech and their activity in healthcare. (1) How is Big Tech getting into healthcare? (2) What are the implications for the Life sciences industry? (3) How successful can Big Tech be in healthcare?
Big Tech: Routes into Healthcare
Given the complexity of healthcare, any meaningful change will take time. First attempts to disrupt this industry may have humbled these tech giants, but tech firms are accustomed to big failures. They have the cash, the resources and the ambition to learn from their failures, and find a different approach to succeed in healthcare. We evaluated the digital health activity of the Big Tech players from Jan 2019 to March 2022.
Strategic Partnerships: With 78% of Big Tech’s activity in digital health being strategic partnerships with niche players, this was the most common deal type from Jan 2019 to March 2022. To navigate the complexity of the healthcare industry, Big Tech players are focusing on the pursuit of partnerships with digital health players who are already making strides in the space, allowing them quicker access to their areas of interest.
Investments: Investments into digital health companies by Big Tech are less common. Due to the dominance of partnerships, it seems that the preferred approach is a more hands on partnership and active involvement in the solution’s design and implementation, rather than funding from the sidelines. Investment deals by Big Tech into digital health took a downturn in 2021. This may have been due to the initial rush spurred by Covid calming down and the promises of what digital health could do for healthcare reformation not being fully realised (as seen with the telemedicine slump).
Acquisitions: There have only been a handful of acquisitions in the digital health space since 2019 which strengthens the theory that so far, Big Tech is still learning to navigate healthcare. As the tech giants get a better understanding of the healthcare industry, they may seek to acquire assets and solutions that can be combined with their own expertise to address pressing problems in healthcare. Though less of a focus in comparison to strategic partnerships and investments, it is worth noting that all of the Big Tech companies profiled have been involved in at least one digital health related acquisition in recent years. Alphabet was the most active here with two acquisitions recorded. This includes the 2020 acquisition of Fitbit, valued at $2.1B and a 2021 acquisition of clinical trial management system SignalPath.
Implication for Pharma/MedTech organizations
Wearables are increasingly being utilized to track and monitor individual health. Most recently, with its new cloud platform, Google aims to enable hospitals and other healthcare organizations to use Fitbit devices for patient monitoring in medical settings. Both Big Tech and Pharma/Med Tech giants are already competing for access to patient data and the ability to benefit from it. Individual health record data has applications across the pharma value chain and partnering with big tech can help both pharma and medtech organizations disrupt patient journeys and unlock new value.
With increasing pressure to reduce R&D costs and to improve the efficiencies as well as the overall experience of healthcare, Big Tech companies are leveraging their expertise in AI, supply chain and consumer experience to capitalize on opportunities across the pharma value chain.
Collaboration vs Competition: Both big pharma and Big Tech have a lot to gain from working together. Big Tech’s expertise with AI/ML, cloud computing, interoperability can enable siloed and unstructured data to be translated to insights and big pharma has the ability to utilize these insights and focus research efforts on treatment and prevention. There is opportunity for impactful collaborations that can unlock greater potential and value from healthcare.
“Big Tech can empower patients/consumers to connect efficiently with caregivers/providers, driving access to the right self-care solutions at the right time. Ultimately, this means bringing better products to those who need them - faster. In terms of what impacts our strategy – the needs of our patients/consumers/HCPs are absolutely at the centre of everything we do. This is key to ensure we continue to support and expand access to the healthcare system, to improve and promote global wellbeing.” – Bailu, R&D External Innovation & Partnering @ Bayer Consumer Health.
Big Tech vs niche players: Niche start-ups with dedicated areas of expertise can offer flexibility for pharma to experiment and innovate across the value chain. However, to scale solutions globally Big Tech definitely offers a unique advantage. Depending on the need and stage of innovation, there may be an opportunity for pharma to choose a niche player, Big Tech or both.
“While there have been many headlines and big tech has been poised to change the face of healthcare, so far there have mostly been failed expectations and pivots. Pharma companies have decades of experience in clinical research and the ability to innovate and drive better efficiencies in drug discovery and clinical research. While Big Tech has the technical know-how, niche players may offer better value and enable pharma to innovate faster.” – Stephanie Bova, Head of Digital Strategy and Innovation @BD
How successful can Big Tech be in healthcare?
The inefficiencies of disorganized data, privacy considerations surrounding patient information, and interoperability challenges between stakeholders in healthcare require a significant investment of time, money and resources, as well as the right domain expertise to transform the industry.
Breakthrough innovation may continue to come from niche players deeply entrenched in the space, bringing domain expertise and purpose-built innovation. On the other hand, Big Tech has the time, money and resources for broader disruption. Armed with a lot of capital and talent, almost all Big Tech firms will continue to invest, acquire or partner with smaller innovative solutions with access to customer networks, domain expertise and the necessary infrastructure to increase their foothold in this industry.
While there have been siloed successes, the only way for Big Tech to disrupt and transform healthcare would be to integrate and connect fragmented networks and innovative solutions to drive outcomes for stakeholders. We may see some benefits in the near future from Big Tech’s push into this space. However, disruptive transformation may take time and will require commitment from, and collaboration of, entities beyond Big Tech to improve the standard of care.
HealthXL Community members can access the full report from our platform here.