Pharmaceutical Companies need to come out of Hibernation —
Health Start-ups might help!
Digital health, genomics, telehealth, e-prescription, e-pharmacies, MedTech, etc. are only a small sub-set of topics which are currently buzzing around in the healthcare market. Companies like Teladoc, Cara Care or Kaia Health are experiencing a tremendous hype due to their innovative & patient-centric solutions in healthcare and around people’s well-being.
To better understand the underlying importance of this hype, we are kicking-off a series of articles to introduce healthcare start-ups over the next months here on medium.
By illustrating the services & digital products that rising healthcare start-ups provide, we show how this will change patients’ life & how this will unravel new treatment opportunities to ease the life of stakeholders in healthcare. Besides that, we would like to show how beneficial start-up collaborations for pharmaceutical companies can be, while relying on key success factors and a standardized process that needs to be put in place.
Healthcare Start-ups on the Rise: Do Believe the Hype!
The investment hype into health start-ups is represented by vastly growing fundings in healthcare in 2020 — reaching from Q1 with 1,257 deals ($ 15,056 Million) to 1,575 deals ($22,345 Million). An increase by almost 50%.
These healthcare start-ups are not only interesting for patients since they develop easy-to-use & quick digital solutions. They might be even more interesting for a wider range of stakeholders in the health system such as payers, insurers, local authorities, or pharmaceutical companies. All these stakeholders invest in those start-ups to re-define and enhance their current (product-focused) business models.
Especially pharmaceutical companies use start-up potential to develop new revenue streams alongside the traditional product portfolio. Also, they have acknowledged that they can learn & benefit from these young and ambitious companies with their entrepreneurial spirit — not only regarding data & technology, but also regarding culture, ways of working, and patient centricity in its purest form.
This high degree of patient orientation of these start-ups and their proximity to patients help to drive change throughout the entire health system. Accordingly, the desire to increase patient experience is not only a lip service, but a guiding principle in every vein of their business. Concluding, start-ups are an accelerator to drive this change paradigm and shape the future of business in healthcare.
Key Issues in the Company & Start-up Relationship:
You need to meet at Eye-Level & Take it Serious!
However, although pharmaceutical companies are aware of the crucial role of start-ups in their industry, they still struggle to initiate and cultivate such collaborations alongside their daily business. A very common example here is that pharma companies are trying to develop an app with the support of a tech start-up. This can work — however, not without any further thinking and dedication from the company side.
Based on our experience in the healthcare industry there are four major issues that are constantly recurring and make pharma companies and start-up collaborations doomed to fail:
1. From a pharma perspective, start-up collaborations are mostly not consequently rooted in the current strategy. Accordingly, start-up projects are treated as side projects and deprioritized in favor of daily business tasks.
2. It is hard to find the right people to drive these start-up collaborations in the company, since this type of collaboration is something completely new for most of the employees, which are mostly stuck in their daily routines. True passion and a genuine interest for these young companies is an absolute necessary requirement to make a collaboration a success.
3. Further, there are no dedicated resources in the company that focus on start-up collaborations. Accordingly, alongside the daily business, these partnerships are then neglected, although they need proper cultivation to be fruitful. In most of the cases, there is no real responsibility and accordingly no accountability to measure success or failure of these start-up collaborations.
4. Additionally, there is no established process in place that helps to support these potential partnerships. Thus, eventually the highly motivated collaborations come to nothing, since clear rules, governance and defined steps are not explicitly stated.
From our understanding, especially the latter one is responsible for failure in pharma & start-up collaborations. Accordingly, we developed a straightforward six step approach to give guidance to pharmaceutical companies when and how a start-up collaboration makes sense. This end-to-end process allows to capture the most relevant to dos from scouting to start building a potential collaboration.
Start-up Scouting & Collaboration:
Six Easy Steps Towards Success
- Start-up scouting: Get inspired!
Where do interesting start-ups occur? - Definition of purpose & objective: Be clear on what you want!
What is your company objective and the purpose of the start-up collaboration? - Decision on collaboration type: Decide how far you go!
What kind of collaboration are you envisioning? - Start-up assessment: Define and stick to key criteria!
How do you evaluate the potential of the collaboration with the start-up? - Understanding of brand fit & target group: Align on brands & customers!
How do the current brand portfolio & the target groups match? - USP evaluation: Understand how unique the start-up is?
And of course — what makes the start-up special for your business?
Based on our long-term project history in healthcare, we collected and analyzed various start-up collaborations, had interviews with different stakeholders and conducted desk research to grasp the full picture of health start-ups in the German market and beyond.
With this series of articles, we will share our latest research insights on start-up collaborations and are happy to discuss these with you!
We hope you enjoy reading it and stay tuned!
Sources:
Teladoc (2020)
https://teladochealth.com
Cara Care (2020)
https://cara.care/de/
Kaiahealth (2020)
https://www.kaiahealth.com/de/
Statista (2020)
https://www.statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since-1960/
Healthtransformers (2020)
https://healthtransformer.co/startup-healths-2020-midyear-funding-report-shows-a-robust-diversified-health-innovation-market-8ecd7cfd968d
CB Insights:
https://www.cbinsights.com/research/report/healthcare-trends-q3-2020/
https://www.cbinsights.com/research/report/healthcare-trends-q4-2020/
