The four levels of innovation partnership between pharma and tech – and how to build a win-win collaboration and integrate the end product into your pharma ecosystem.
Digital innovation in pharma: the new frontier
Pharma is no stranger to innovation. New ideas are its lifeblood – it’s an industry built on the discovery and commercialization of new molecules and therapies.
But the definition of innovation in pharma is changing.
Specifically, innovation is expanding from traditional drug development to encompass the entire pharma ecosystem, across both science and technology. A dazzling array of technology-driven therapies, treatments, products and services promise to support clinicians, empower patients, and unlock a new model of proactive, personalized, predictive and participatory healthcare – the so-called ‘Four Ps’ of precision medicine.
As pharma firms embark on more innovation led by digital technology, their partnerships with tech collaborators will be a critical determinant of their success. Get it right, and you’ll be in an excellent position to accelerate. Get it wrong, and you could sink time and money into a relationship that simply never delivers value.
In this blog, we’re going to dig into four levels of tech partnership – corporate strategy, project, and start-up, plus intermediary-guided – and explore some of the key factors to consider when you’re setting up and managing each one, and integrating the resulting products and projects into your pharma ecosystem.
We’ll also explore some of the more prominent tech-pharma partnerships the industry has seen to date.
But first, let’s take a quick detour to look at why tech partnerships can be complex.
Look before you leap
Tech companies are all too aware of the possibilities that digital innovation in pharma offers, and they’re keen to find partners for their technologies. But it is not as simple as ‘pharma + tech = digital innovation’.
The established model of pharma innovation will persist. The challenge isn’t to rip and replace the past, but to reconcile it with new tech possibilities.
This integration of old and new is where the challenge lies. Digital innovation in pharma and tech are different by nature. Not every aspect of your R&D process can be improved through tech – and not every new technology will find a happy home in pharma ecosystems, either.
We’re already seeing how AI can help support clinical trials, reducing cycle times and cutting costs. For pharma firms, that’s a win/win.
But digital innovation in pharma is not always this straightforward. The principles of tech innovation (agile development, fail fast, minimum viable products) aren’t a natural fit where patient health is at stake.
The ideal approach is to leverage the best of what tech-driven solutions offer – but without abandoning the expertise that allows you to create safe, known outcomes.
As you learn how to be a tech innovator ‘in-flight’, you may be pushed outside your comfort zone. But while there are certainly risks, the rewards are well worth it.
Solutions seeking problems
Some tech startups offer solutions in search of a problem. So you need to be sure that your problem is a good fit for their solution – or, alternatively, that by adopting their solution, you could change the problem more quickly.
Your prospective tech partner may have exciting capabilities and killer IP – but that doesn’t mean they’ll be a good fit for your product portfolio, your development pipeline or your corporate culture.
Whatever you do, you’ll do it in a fast-changing regulatory landscape. Policymakers and legislators are still in the process of defining how to empower tech to deliver better patient outcomes. So wherever you’re going, you need to agree on the route before you set off – together.
There’s no single model for tech partnerships. Every company has different needs. However, there are four types of partnership we’ve seen emerge over the last few years. Below, we outline their key features, and what to look out for in each one.
1. Corporate strategy partnerships
Corporate strategy partnerships are the largest pharma tech partnerships in the market today: big, multinational, billion-dollar endeavours in which industry giants come together and commit to a shared journey to digital innovation and new market opportunities.
A recent example is the alliance between Novartis and Microsoft. Announced in 2019, this multi-year alliance leverages data and AI to transform the way medicines are discovered, developed and commercialized. Novartis has also established an AI Innovation Lab to drive the use of AI across its business.
Corporate strategy partnerships are major undertakings that require alignment from the top. CEOs and CDOs are in the driving seat, and they need to set out a shared vision and make sure it’s disseminated throughout the organization. They also need to guide the process of selecting ideal partners.
There will be a lot of alignment and integration to do. You’ll both need to work hard to understand each other’s offerings and limitations – across technologies, data, workflows, legal obligations and so on. Many different functional teams will have a part to play, and setting up task forces around specific high-value areas will help.
Crucially, corporate strategy partnerships don’t always work out. In 2016, Sanofi created Onduo, a partnership with Verily Life Sciences (a Google spin-off) to manage diabetes with a combination of software, professional coaches and connected health devices. Both firms were serious enough to invest $500m between them. However, just three years later, incoming CEO Paul Hudson pulled the plug on Onduo, claiming Sanofi had ‘over-invested’ and needed to focus on its core business.
The reasons why corporate strategy alliances fall short are complex, and these high-profile reversals show how hard it can be to get them right. But one thing’s for sure: despite the failures, we’re sure to be seeing a lot more strategic partnerships in the years to come as opportunities for digital innovation in pharma/tech continue to arise.
2. Product-level partnerships
These are mid-level partnerships that tend to emerge around specific technologies or clinical outcomes that pharma companies are driving towards.
The partnership could be aimed at any outcome, from accelerating an individual stage of drug development using a specific technology right through to developing new supportive digital-first treatments and offerings around digital therapeutics.
The hallmark of a great partnership at this level is a sharp focus on patient value or outcome. Engineers and development teams are often drawn to solving crunchy technical problems – without necessarily thinking about the business case. Avoid getting carried away by emergent possibilities and insights that diverge from the outcomes you initially set out to achieve.
For example, say there’s an exciting new tech partner with a capability that could unlock an innovative new treatment in rare diseases. That sound great at first. But does it really make sense when you put it beside the rest of your portfolio? Sometimes, the only way to safeguard your success is to say no.
To make smart decisions about your partnership, think carefully about what’s right for your business, and for your end users. No-one else in the partnership will speak up for clinicians and patients, on their journey – so you must be their voice. Instead of asking ‘What could we do?’, stay focused on ‘What should we do?’
The first step to mutual understanding is a shared language. At Zühlke, we advise our clients to use visual imagery and share real-life experiences to give their tech partners a window on their world. That can be a lot more productive than experts from two professional domains talking jargon at each other, and telling themselves they’ve reached consensus when in fact they haven’t.
This issue is encapsulated by the acronym “API”: to pharma executives, it’s an Active Pharmaceutical Ingredient – but to tech folk, it’s an Application Programming Interface.
When you do say yes to a project, ensure the momentum of success doesn’t build into an avalanche that buries your original intention. Some tech-enabled pharma innovations carry hypothetical wider value outside of their core remit – but your partnership will move too quickly for you to capitalize on any hypothetical value. Don’t let the pursuit of potential success undercut the value that’s staring you in the face.
3. Start-up partnerships
Pharma-start-up partnerships represent the fastest-moving model of pharma-tech partnership – and often the most ephemeral too.
Start-up partnerships can be highly beneficial for pharma companies who want to road test some new approaches that they can’t pursue in-house. For example, a new AI technology could help you select the right antibody for further research.
The potential downsides of start-up partnerships relate to uncertainty and risk. Start-ups may be complete newcomers to the industry, with no previous experience to drawn on. So there’s a risk that the start-up never gets off the ground at all. You may also have more limited access to data and IP rights, or find that your respective cultures are so different that collaboration becomes a challenge.
One example of a start-up partnership creating digital innovation in pharma is that between Roche and mySugr. Founded in 2012, mySugr is an open diabetes ecosystem centered around an app designed to, in the words of the founders, ‘make diabetes suck less’.
The app simplifies the daily chores of living with diabetes and integrates fitness and medical devices from elsewhere in the pharma ecosystem. The two firms began collaborating in 2014, and Roche acquired mySugr outright in 2017 for a rumoured $75–100m.
Through the alliance, mySugr has been empowered to focus on growth and new research, and offering the best possible product experience. However, the mySugr team remains independent and autonomous within Roche, and is free to integrate any and all devices – including those that may compete with Roche itself.
Johnson & Johnson have taken a different approach. The JLABS initiative is a global network of open innovation ecosystems, enabling pharma and health-tech innovators to come together and collaborate. It’s a no-strings-attached arrangement where start-ups can develop their own technologies in J&J facilities in return for a small fee—so start-ups maintain their autonomy, while J&J are first in line when new technologies emerge.
According to a 2019 study by R2G, the top three reasons why partnerships fail are lack of partnership strategy (no KPIs, no budget, no guidance), unrealistic expectations and taking too long over decisions.
If you’re considering a start-up partnership, think carefully about what you need – and what you’re prepared to give. Tech companies will see the partnership as a route into the healthcare market. For your part, you get to access data, and data-processing capability, that you could never otherwise have. Beyond that, you’ll need to decide how money, IP and stock options might enter the picture. For many partnerships, non-financial incentives, including market know-how and market access, can be just as important as financial ones.
As with the other types of partnership, look at what’s interesting, but stay focused on what’s valuable. Whatever deal you agree, it has to advance your commercial strategy, support your existing projects and help your target users. Firm up on your most likely future use cases, and get clear on what you need from the technology itself and from the partnership that will deliver it.
Start-up partnership stories
The start-up partnership field is moving fast. We’re seeing multiple partnerships between corporates and start-ups – and many of them hold important lessons for the future.
Novartis and Pear: DTx for substance abuse
Pear Therapeutics is a pioneer in prescription digital therapeutics (‘DTx’) for treating serious disease, and a trailblazer in successful partnerships with big pharma.
In 2018, Pear signed a development deal with Sandoz, part of Novartis, which had previously invested in the company. The partnership was intended to help Pear market its DTx for substance abuse (reSET) and opioid dependence (reSET-O).
However, in 2019, Sandoz handed the two therapies back to Pear, stating that the company had the resources to market them alone. Sandoz would focus on its core business while retaining its stake in Pear.
Although some observers saw this as a worrying sign for DTx deals with big pharma, others put it down to internal changes at Sandoz, and maintained that the market – and investor appetite – for DTx is still strong.
Akili and Pfizer: DTx for Alzheimer’s and ADHD
The Pear deal was the first developmental partnership between a pharma company and a digital therapeutic. However, as far back as 2014, Akili Labs partnered with Pfizer for clinical trials of its technique to use a videogame, Project Evo, to detect the first signs of Alzheimer’s in healthy individuals through the collection of digital biomarkers.
The game eventually appeared in a different guise as Endeavor, aimed at children with ADHD who were housebound during the COVID-19 pandemic and available without prescription.
Kaiku Health and Roche/Novartis: DPMM for cancer therapies
Following some pilot projects in 2019, Kaiku and Roche decided to expand their collaboration into a feasibility program.
Under this deal, Kaiku will co-develop three new novel digital patient monitoring and management (DPMM) modules specific to Roche medicines, with a focus on cancer immunotherapy and other personalized cancer therapies, and test them in partnership with Roche. The DPMM modules are aimed at improving patients’ quality of life, making better use of resources, improving clinical workflows and generating real-world evidence.
More recently, Kaiku also inked a deal with Novartis for melanoma monitoring and support. Together, the firms will develop a new tool to track the symptoms of patients taking a specific drug combination, providing guidance to patients and alerts to caregivers if their condition worsens.
Sanofi and Voluntis: Digital insulin management
In 2017, Voluntis signed a non-exclusive agreement with Sanofi to launch its Insulia and Diabeo digital insulin management systems for Type II diabetes, with pilots planned for the U.S. and several European countries. This formalised a longstanding alliance dating back to 2011.
However, when Voluntis published its new strategic roadmap in 2020, it revealed that the Insulia deal would be scaled back to France only, while the deal for Diabeo – which had been developed with Sanofi – would not be renewed.
Click and various pharma companies: Digital treatments and financing
Click is a Software as a Medical Device (SaMD)-focused healthtech company that caters to currently unmet patient needs.
Click’s $500m deal with Boehringer Ingelheim supports a collaboration on a prescription digital therapeutic for patients with schizophrenia. Click also works with Otsuka and Verily on digital treatments for depression. In 2018, the firm raised $17m through a financing round led by Sanofi.
4. Intermediary-guided partnerships
We’ve looked at three key types of pharma-tech partnership. However, there’s also a fourth type, which can add value to any of the others.
It’s when you partner with an expert intermediary, who brokers the arrangement between you and your tech partner. Someone who knows both pharma ecosystems and digital innovation in pharma/tech, and has proven ability in bringing the two together.
Working with an intermediary brings you a host of benefits.
First, you don’t have to put management time and effort into researching tech firms, or finding your way around the tech landscape. With an expert ‘scout’ on your side, you can be confident that you won’t miss out on the right opportunity – and you’re not confined to the firms and technologies you already know about.
For example, we’ve helped our pharma clients on both strategic and operative levels to explore areas such as medical software development, developing medical AI, medical device connectivity, early concept and prototype development, manufacturing process automation, digital health business models and creating an innovation lab.
Second, you have an effective vector for dealing with cold approaches from tech firms. Instead of sitting and wondering whether this unknown firm could be a good partner, you simply pass the opportunity over to your intermediary for analysis.
Third, with an intermediary on your side, you’re far more agile and responsive to tech trends while realizing your own ideas and vision – which means you get to market sooner.
At Zühlke, we understand digital innovation in pharma, and we also know how to translate pharma ambitions into technological solutions that deliver high-value outcomes for pharma ecosystems. Whatever level of tech partnership you’re considering, we can help you make it work.
Blaise holds a Master in Microtechnology Engineering with Biomedical specialization from the EPFL as well as an Executive MBA in General Management and Finance. He joined Zühlke at the end of 2020 as Principal Business Consultant and combines 15+ years of experience in Life Sciences (Pharmaceuticals, Medtech & Healthtech) in consulting, professional services and as an entrepreneur. He tackled multiple projects in the context of digital, cultural & workforce transformation, and took part in various startup acceleration programs as a jury member in the selection committee or as a mentor.