EY: Are life sciences companies adapting their business models and partnership strategies fast enough to exploit digital technologies?
Lisa Suennen: Bio-pharma is relatively new to the digital party. Yet all the major pharmaceutical firms are now getting serious about digital, including at a very senior level.
There has been a huge uptick in interest over the last year or two, driven by cost pressures and the urgent need for product differentiation. The current focus is largely on how they can incorporate new digital technologies into clinical trials, and gather real world evidence. There is also work on consumer-facing digital technologies to augment drugs' value. With the exception of diabetes — where tens of thousands of users already benefit from integrated glucose monitors, insulin delivery systems and engagement apps — this product-focused side is still at an earlier stage.
Digital health and technology companies have also evolved. They used to try to avoid going anywhere near regulators such as Food and Drug Administration (FDA) in the US. Now they understand they won't get anywhere without having these agencies on their side. They realize they need to act like health care companies in order to play in the highly regulated health system. The cultural divide is narrowing, which makes partnerships easier.
Is pharma moving fast enough? Don't forget that all this [technology] is really new. We weren't having any of these discussions even five years ago; most technologies have been around just a few years, if that. Now we're talking about applying them in the context of human health and lives. So perhaps bio-pharma is not that late to the party after all.
EY: How clear is the business case for bio-pharma adopting new technologies?
Suennen: It's pretty clear. Digital technologies are about limiting the impact of price reductions, maintaining formulary positioning and generating competitive differentiation. Digital tools aren't a way to increase profits, in my view. Some pharmaceutical firms don't yet understand that: they are still asking themselves, "How can we make money from digital tools?" That's the wrong question.
But many pharmaceutical firms still lack the basic data infrastructure to properly exploit digital tools; they often don't have their own data scientists or people who know how to sell software. They mostly rely on partners for those skills. Pharma will have to expand their skill sets and become deeply familiar with the world of software, data and service to cross the divide.
EY: How do these dynamics influence GE Ventures' investment choices across digital health?
Suennen: Companies we invest in have to demonstrate two things. The first is revenues: we're not a seed-stage fund. We're taking risk less around the idea (there are plenty of other investors doing that) than around the scaling up of that idea. Our return time frames are five to six years. The second thing our investment companies in this area must demonstrate is that they combine the DNA of both pharma and digital technology groups.
EY: What does that pharma-digital DNA combination look like?
Suennen: You have to hear their [management's] words to know that they get it. They have to properly understand how pharmaceutical firms would think and act, and what concerns they would have over legal, regulatory and data privacy issues, for example. All this is far in excess of what start-ups usually think about. Health technology start-ups also need to understand the clinical impact of their product and show that they have taken the time and money to validate it in a legitimate way. Many start-ups until recently haven't done clinical studies [of their technology] and didn't see why they had to. They haven't been living in the same world as pharma. Yet they must, if they want to, partner with pharma.
A great example of a group effectively bridging the pharma-digital divide is GE Ventures’ portfolio company Evidation Health, San Mateo. California-based Evidation Health helps pharmaceutical firms leverage digitally captured data sets as part of clinical trials and outcomes data collection. It has a "captive population" of over 1.5 million willing to share digital data in the context of trials and registries. The approach will be core to enabling value-based pricing; generating evidence for digital intervention; and developing new, reliable and validated digital biomarkers.
New York-based HealthReveal offers a cloud-based solution that analyzes massive amounts of data from at-risk patients and turns this data into actionable recommendations for physicians. There are very few companies actually making data usable, rather than only generating, aggregating and analyzing it. Most digital data goes not to pharmaceutical companies, but to physicians; so making it relevant and meaningful to them is vital.A great example of a group effectively bridging the pharma-digital divide is GE Ventures’ portfolio company Evidation Health, San Mateo. California-based Evidation Health helps pharmaceutical firms leverage digitally captured data sets as part of clinical trials and outcomes data collection. It has a "captive population" of over 1.5 million willing to share digital data in the context of trials and registries. The approach will be core to enabling value-based pricing; generating evidence for digital intervention; and developing new, reliable and validated digital biomarkers.
HealthReveal's solution can be used to identify in near real time the particular patients that may be susceptible to adverse events, spot treatment omissions or medical errors, based on analyzing libraries of clinical guidelines from major medical centers. It could also be applied to studying particular drugs to determine their post-market impact on patients. But whatever the application, what it gives back to the doctor is very specific: "Patient X has this and might have that. You should consider this diagnostic, treatment or alteration in your action plan."
It's a bit like the credit cards we all carry around in our wallets: there is someone monitoring these all the time, tracking your purchasing patterns, and if something unusual happens, they call you. This is the same idea, except that it's about your health, not your credit cards.