As the healthcare industry continues to undergo digital transformation, business strategies have also been subject to evolution. To make sense of how the current environment is shaping business models in digital health, we convened 80+ key decision-makers and experts - representing Pharma, Biotech, Medtech, Big Tech, start-ups, payers, providers and investors - at our Global Gathering in Chicago.
We are delighted to share our event recap and highlights from the expert discussions.
Here is what we learned from the movers and shakers in digital health:
- Choosing between co-development, licensing and joint ventures: there’s no rule book!
Significant advancements have been made in working out novel business models for digital health products, but implementing a successful go-to-market strategy and business model remain a tough challenge for all innovators. No rule of thumb has been defined, and each deal has to work out a partnership scheme that makes most sense to meet their outcomes.
- Define the outcome
From the outset, businesses need to quantify what they are trying to accomplish. Business strategies should be designed, and subsequently implemented, with a clear goal and exit strategy in mind, that is IPO, exit or merger. The deal or licensing structure should be a key driver of value.
- Alignment is key
Think of it as a prenuptial agreement - both parties should align on definitions up-front, using non-competitive language. Topics such as ownership, responsibilities, milestones, governance, incentives and economics need to be covered.
- Consider your relationships
Key relationships may vary depending on the relative size of the participating entities, with leadership changes especially common - and especially consequential - in large organizations. When working with a large corporation, the key sponsor is likely a middle man whose ambitions may easily be derailed. If the one and only executive sponsor leaves, this will have significant consequences for the startup.
- Customer-directed Healthcare
Business models should be designed with users in mind, with the process directed by the needs of the consumer. Ultimately, consumers are in charge.
Many of the benefits of partnering with pharma include access to their resources including marketing, regulatory knowledge, clinical trials expertise.
However, Pharma has not yet demonstrated talent in selling software. As a startup, therefore, besides knowing your user, you need to be very clear on how your product will generate revenue.
- Understand the history
Traditional licensing and equity deals in Pharma, Biopharma and Medtech are structured to focus on patents and registrable IP and are typically very high risk. This is different to the tech industry where deals focus on software and data, that is non-registrable IP. There are little to no comparable deals available to partners and they need to figure out how to get around these challenges and compromise to structure appropriate deals on a case by case basis.
To summarize the day's conversations and sentiment from the group - we need to partner!
Healthcare is a complicated global problem and is too difficult to tackle alone. We collectively need to solve it by building effective and collaborative ecosystems. There are many challenges and hurdles when it comes to partnering, especially if aimed at reconfiguring this very traditional industry - but there are also plenty of opportunities for innovators to make an impact. We need to persist and share our wins and losses along the way.
To access the full Global Gathering report, click here.