Meeting of minds
Life sciences companies are approaching these types of business opportunities quite strategically and in a more innovative way these days.
Heather McDevitt, Global Pharmaceuticals and Healthcare Industry Group Leader, White & Case
When it comes to cross-sector partnerships, 82% of technology and 85% of life sciences companies worry about their potentially incompatible business cultures 52% of life sciences companies see technology companies as their main competitors in digital healthcare Only a quarter of technology companies see life sciences companies as their primary competition The majority of technology companies feel life sciences companies’ regulatory experience would be the most attractive aspect of a partnership For life sciences companies looking to partner with a technology rival, the most attractive aspects would be improving patient engagement and harnessing the technology sector’s data expertise
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Just as media and entertainment companies are often indistinguishable now, life sciences and technology companies could embrace convergence, join forces to pool their resources and explore the benefits that digital healthcare can bring them. For this sector to flourish, convergence and partnerships are not just desirable but fundamental.
The best of both worlds When looking at their own digital healthcare ambitions, survey respondents from both sectors viewed the complexity of their projects (52 percent) and regulatory barriers (37 percent) as the top obstacles to their success. However, it is exactly these challenges that can be best overcome by collaboration.
According to our survey, both sides can see how convergence would be beneficial in overcoming these hurdles. 43 percent of technology companies stated that existing regulatory expertise is the main factor that would attract them to partnering with life sciences companies to develop and commercialize digital healthcare projects. Meanwhile, life sciences companies saw three key attractions to partnering with technology companies: improving patient engagement, harnessing the technology sector’s data expertise and creating significant cost savings.
According to Leslie Morioka, the companies that know how to collaborate will produce the best results. “Companies may have to join forces if they want to succeed,” she says. “Similar integration models already exist in other industries such as media and entertainment.”
Suspicious minds
Despite the potential value to both of these sectors if they work together, our survey showed that lingering suspicion and hostility is impeding progress.
Interestingly, both technology (75 percent) and life sciences (52 percent) companies saw technology businesses as their biggest rivals in digital healthcare. In addition, nearly half of life sciences companies (44 percent) viewed technology companies’ entry into healthcare as a threat.
“The inroads being made into healthcare by the technology giants are certainly a threat for companies like us,” suggests one Digital Director at a US-based life sciences company. “Most of the companies in our industry are not yet dominant in digital healthcare, and the technology companies are entering this market aggressively and are offering quality products.”
When asked what might prevent them from partnering with a technology company, 85 percent of life sciences companies raised concerns about linking their business model with that of a technology company and possibly creating a “culture clash.” They also worried about an unclear return on investment in such a partnership (43 percent) and a lack of regulation in the technology sector (38 percent).
Technology companies were concerned about the risk of an incompatible business culture (82 percent) if they joined forces with a life sciences company. They also worried about the slow speed of decision-making in the life sciences sector (58 percent), reflecting a perceived risk of a clash in terms of strategic approach and culture.
Come together
From the perspective of both survey respondents and White & Case partners, this perceived incompatibility is something the major players in both sectors can overcome. White & Case Intellectual Property partner and Silicon Valley Office Executive Partner, Bijal Vakil, puts this succinctly. “We are on the edge of a huge long-term transformation of the healthcare landscape,” he says. “There is no question that, despite their different philosophies, technology and life sciences companies can come together.”
According to Heather McDevitt, the view of life sciences companies as notably slow to make decisions may be outdated. “In my view, they are approaching these types of business opportunities quite strategically and in a more innovative way these days, because everyone sees the growth potential in this sector.”
One of the keys to overcoming perceived cultural barriers, according to White & Case Intellectual Property partner Jeff Oelke, is to look for people within an organization who have worked in both sectors. “There are individuals who have spent time in both industries and already know how to work well together.” He adds that adaptability will also be crucial. “Some companies and people will be able to figure out how to work together, because they can adapt to changing and challenging circumstances,” he says.
Several companies are already proving their flexibility in digital healthcare. The global medical devices giant Medtronics has already joined forces with IBM and other major information technology players to transfer IBM’s data processing experience to the sensitive field of healthcare. The joint project will gather anonymized patient data and analyze it for clues to provide individualized healthcare, thus improving outcomes and cutting costs. It is evidence of the growing momentum behind efforts to release valuable information and business opportunities from the proprietary silos that are currently blocking advances in treatment and improved wellness.
As Oelke points out, “It is clear that, among the companies we surveyed in both sectors, there are people with the drive and vision to collaborate. The entire concept of digitizing healthcare services and products will require strengths from both sectors. They are going to need each other.”
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