This year was quite a journey for global healthcare. Almost every sector experienced strong growth in the past 12 months but there is a difference between simple growth and a major shift. Pharma is not just growing – it is actually performing a turnaround from folders and papers to the cloud and smartphones.
1. Return on investment for drug R&D took a deep dive. Over 80% in the past decade! This causes pharma to do some major pivots towards new strategies. One of them: partnering with big tech companies like Google, Microsoft, Amazon, and Apple to improve drug discovery, enable faster clinical trials, and improve distribution models.
2. Real-world-evidence went through the roof! Available patient data is increasing year-over-year more than 50%. Big tech is using this data to identify drug targets, predict real-time medication demand, and build patient monitoring and health records technologies.
3. Pharma is finally going digital. Mobile communications and telehealth, the cloud, artificial intelligence, IoT and big data are all disrupting an industry that is taking quite some time to transform. Big tech is now having a say as well in global healthcare activities.
Pharma equity deals where at least 1 big tech company participated (CB Insights):
Surely there was a lot more going on in healthcare – but we will focus on the most important developments today.
Real-world-evidence (RWE) and patient-insight data are terms that got a lot of attention in the past years, and for a good reason. There is a lot of value in medical data for big pharma. With the help of RWE-data, pharma companies can conduct studies without having to use real participants and instead use validated data and artificial intelligence to run drug surveys. This is a big cost-saver! Big tech is also using RWE to identify drug targets, predict real-time medication demand, and build patient monitoring and health records technology.
“The quantity of patient data housed in clinical systems grew nearly 500% from 2016 to 2020.“ (CB Insights)
Behind the scenes, the tech companies that we all know are very active in the field of healthcare already. We are about to experience big tech entering the healthcare sector more aggressively very soon!
Apple is using its hardware and user base to its advantage as it aims to build a secure and centralized location for patient health data. Apple is collecting patient data with hardware and is also building a developer ecosystem like we’re familiar with already from the iPhone or the App Store.
Microsoft is running a healthcare SaaS (software as a service) solution and entering the pharma market through partnerships.
Google is collecting data through their devices and then storing the data into secure patient health records. Google is also building in-house drug R&D capabilities by leveraging AI – this is highly interesting for all of big pharma.
Amazon is building the pharmacy of the future since they already know how to do e-commerce successfully.
What is obvious is, that all of the big tech companies are staying in their territory: Apple is building ecosystems, Microsoft is doing SaaS, Google is processing big data and Amazon is building an online shop – smart move.
Big tech is active on several fronts of the healthcare sector. While Amazon is focusing on running a digital pharmacy, reducing drug prices through existing supply chains, and using their IoT solutions like Alexa to facilitate remote patient monitoring, Microsoft on the other hand is tackling healthcare from a different angle. Microsoft has doubled down on healthcare SaaS offerings through product launches, partnerships, and acquisitions and is also well-positioned for a potential upcoming AI Drug Discovery business unit. Then there is Apple: we expect Apple to focus on wearable devices for capturing health data while also increasing their digital health ecosystem through developers that are using their open-sourced software designed for healthcare to build apps and solutions on it. Lastly, Google will continue integrating clinical trial enrollment in their consumer-facing digital solutions to reach higher patient participation. Moreover, Google is sitting on a true treasure trove of data: Google may integrate health records data with consumer search and behavioral data to get high-value real-world-evidence data in a cost-effective manner. Google’s subsidiaries and partnerships are also pointing towards launching drug candidates as part of a larger AI Drug Discovery unit similar to Microsoft.
Growth, the potential for big margins, and exploitation of new markets. Healthcare is without a doubt a sector with a bright future – more and more humans are living on this planet and more and more of them are getting older and older while simultaneously being exposed to more and more harmful environments. This combination is creating a market that is growing unstoppably. On top of that, the governments are mostly overloaded with all the work proper healthcare requires and this gives private companies the chance to solve problems – and with solving problems there is always another thing coming along: making money.
Our world is already to a very high degree happening in the digital world. Still, there are some sectors that still have the potential for more digitalization. Healthcare is one of them! Big tech involving themselves in healthcare will lead to the same effect that big tech had on the production industry, social networks, or financial markets: exponential growth and network effects. We are feeling big chances in the air.