Measuring Digital Health Maturity: Review of Top 10 Pharma Activity Over the last 5 Years
- Digital Health investments represent 13.8% of overall pharma investments.
- 60% of the top 10 pharma have re-invested in the same digital health companies over the past 5 years.
- Novartis has the most digital health partnerships publicly announced since 2014
- Only 5 of the top 10 pharma companies have appointed a Chief Digital Officer, with 4 of these 5 having been hired from the consumer and retail world
It perhaps comes at an opportune time, with the Sandoz- Pear Therapeutics breakup announced this week, to assess how big pharma have been engaging with technologies in recent years, what this means for the health industry, and if money is following the patient.
As pharmaceutical companies begin to explore the true value and potential of technology, it is difficult to ascertain to what extent these companies are actually engaging with digital to drive change to the status quo either by increasing revenue/ market share, diversifying their product portfolio, or speeding up drugs’ time to market.
This quarter, we assessed the digital health maturity of the Top 10 pharmaceutical companies (by revenue) over the past 5 years in the following four areas - investment, acquisition, partnerships, and hiring initiatives.
Digital Health Investments: from spray and pray to strategic
It’s no secret that pharma have been increasingly investing in digital health solutions. According to our findings, since 2014, the top 10 pharma companies have contributed to 129 digital health investments and 8 acquisitions of digital health companies, accounting for over 13% of their shared investment activity during that period. While we identified investment activity in 8 of the 10 pharma companies, only 2 (Roche and Merck) have doubled down on their investments, and converted them into acquisitions in the digital health space.
While the total number of investments appear to be decreasing, the amount of capital being invested is increasing, with the exception of 2017 which was offset by the mammoth GRAIL investment of $1.2B. Is this a sign of investors knowing better what they're looking for instead of adopting a spray and pray approach? We think so.
Using Roche as an example (shown below), data from the HealthXL platform gives us an inkling as to what each organisation’s digital health investment and acquisition strategy may be.
Roche exhibits a pattern of multiple repeat investments precluding an acquisition. We have seen this with the MySugr investment in 2015 and subsequent acquisition in 2017, again with the Flatiron investment in 2016 and subsequent acquisition in 2018 and finally with Viewics investment in 2016 and acquisition in 2017. Whether or not this tells us where the next Roche move will be remains unknown, however these emerging patterns across the 10 profiled pharma companies may provide a nod towards some of the internal investment and acquisitions taking place.
Digital Health Partnerships: R&D is too time consuming and capital intensive
Our data revealed that partnerships are on a steady increase, with digital health related partnership activity increasing almost 3 fold since 2014. Among the top 10 pharma, Novartis have announced the most partnerships since 2014. Pfizer and Merck were the pioneers of early (2014) partnership activity, while Roche and Sanofi have become more active going into 2019. We investigated the types of digital health companies the top 10 pharma are partnering with and found that most companies pharma chose to partner with work in cardio-metabolic disease and specifically help in remotely monitoring patients through digital means.
Partnerships were formed to either augment R&D capabilities, or support commercial arms of the business. We discovered that the top 10 pharma displayed a preference for commercial partnerships over research partnerships. In fact, commercial partnerships accounted for 73% of all digital health related partnership activity. Interestingly, Sanofi emerged as the only organisation to have more research partnerships than commercial, with all of their 2019 partnership activities having a research focus. We reckon big pharma are placing bets on commercial partnerships because they are faster to market.
So, what next?
Data = Understanding. We’ve laid out the facts. For pharma, this report shows how you stack up in the digital journey against other pharmaceutical companies. For start-ups, it could tell you how to position yourself as attractive to large pharmaceutical companies. For other healthcare professionals, this will give you a data-driven overview of the activity in digital health because it’s kind of important these days.
We have the data, we want your opinions! This is only the beginning of much more to come. If you work in the pharmaceutical industry, and would like to provide us with your feedback or participate in our post-report survey, give us a shout!
Non- HealthXL Member? you can purchase the report HERE
Authors: Chandana Fitzgerald, Hanna Phelan, Sophie Madden and Tess Huss