Cross-Breeding Startups for Digital Success

I am saying nothing new if I point out that the healthcare sector is under tremendous pressure to provide solutions to the challenges we are facing. It is a highly regulated, conservative sector, accustomed to slow time-to-market periods, for obvious reasons.

However, there is growing pressure to incorporate innovation and technology, which, although we know they respond to many of the new demands and needs, require selection criteria, adaptation of processes and development of skills. That is no mean feat.

Some of the drivers that are fuelling this acceleration are:

To remain competitive and respond to market expectations, organizations in the healthcare industry must move from a commodity/product price-pressure commercial strategy, toward a service-oriented approach, while focusing this transformation around patient needs.

Technology already allows us to care for patients wherever they are; on many occasions, without the need for face-to-face care, the cost and effort of which is not always justified. This requires more than technology. A new culture is needed around prevention and the restructuring of healthcare services, including the associated business model.

The huge amount of information and real-world data generated by digital technology (wearables, well-being apps, digital therapeutics solutions) is going to have an enormous impact on patient outcomes, on the swiftness and effectiveness of decision-making, and on the speed to demonstrate results of new products. Data mining is a byproduct of digitization, and it is destined to become a sector in its own right.

And finally, we are seeing changes in consumer habits among patients, a tendency that has been observed in other sectors for years. We are going to see how sectors as seemingly distant as digital health and e-commerce are integrated to offer patients comprehensive, end-to-end services.

So, who can meet these challenges alone? Nobody (or virtually nobody).

That is not only because of the variety of skills and approaches, but also because of the speed at which products and services must be developed.

Large players, such as Amazon, Walmart and Apple, are entering the healthcare sector. They have size, functional diversity/competitiveness and speed. They were born into the “speed-digital-world.”

If we are not one of them, if we do not want to lose our position, and if we do not want health to also become hyper-centralized, then we need to develop strategies that combine robustness and agility, rigor and speed, safety and innovation — all at the same time.

One answer is the increasingly frequent alliance between large corporations and startups.

As digital health has the potential to transform the pharmaceutical industry and the patient experience, digital health startups and pharma are working together to create "beyond the pill solutions," to and provide the industry with significant innovation leverage.

But these alliances do not always work: most of the time, it is pure marketing, and others fail due to the divergent ways pharma and startups operate. Differences in size, speed, processes and culture make it challenging for pharma and startups to partner.

Some challenges and tips:

1. Bridge the gap in culture and work style between pharma and startups: Pharma companies are complex organizations that operate via never-ending, intricate, internal processes; startups are the exact opposite. They are small and nimble, and can focus on developing innovative solutions without inter-departmental politics or complex infrastructure.
2. Do not treat your partners like a simple supplier. Do not treat your partners like just a customer: Startups need to understand what drives pharma (beyond the project delivery) and pharma needs to understand the timing and funding pressures that many startups face.
3. Time matters: Pharma firms are robust and stable, often moving cautiously due to regulatory constraints, so their ability to change course is limited and takes time. Their project time frame considers years. On the other hand, startup life cycles are measured in months or weeks. That is why they can react to crazy market dynamics. Nonetheless, startups need to understand that safety and quality are non-negotiable.
4. Talent management: The impact of these alliances transcends the contractual relationship. Coming into contact with teams and ways of working outside the corporate environment entails difficulties and sometimes wear and tear within the organization; on the other hand, it has a positive impact on the culture and skills of the people who form part of the project. There is implicit training of the personnel assigned to these projects that the company must recognize, promote and take advantage of.
5. The involvement of senior management: as well as the commitment of middle management, is, therefore, essential. Strategic vision, an understanding of the difficulties, actions to overcome them and high doses of empathy on both sides, all need to be implemented with leadership and a strong awareness of the challenges and benefits involved.

There are many ways to accomplish the digital health transformation we face: (1) creating digital health solutions within the corporation; (2) partnering with specialist digital health companies; or (3) directly via acquisition.

In any scenario, a favorable context must be created for the strengths of the two worlds to operate synergistically. Pharma companies and digital health startups can leverage their complementary strengths and accomplish what neither can do alone.

It is difficult, but believe me, it is possible. Enjoy it.