Ferrer: Corporate venturing mechanisms to thrive in Digital Health
Pharma companies are increasingly including digital health innovation in their strategic plans as it is commonly acknowledged that digital health is not only key to drive enhanced clinical outcomes but is also a lever to develop new business models that allows corporations to transform their capabilities and strengths.
In order to grant market access to products and services in modern Value Based Health Care environments, pharma companies are stretching beyond safety/efficacy clinical trials and learning to use powerful IT systems. Datalakes that integrate clinical evidence with real-world evidence are analysed to drive actionable insights to support patients and, also medical professionals in the process of delivering care.
There is consensus on that multiple forms of digital health improve the patient’s clinical outcomes and treatment experience while making healthcare more accessible, integrated and sustainable.
Most pharma companies develop digital health solutions through open innovation programs with start-ups as the later hold more advanced technology knowledge, creativity and agility than large corporations.
There are many mechanisms available for corporate venturing that involve different levels of integration of the technology-based start-ups into the pharma corporations. The amount of capital required to develop the digital health solution depends on the maturity of the technology and the time desired to get results. Some examples of the mechanisms used by pharma companies to interact with start-ups include:
- Innovation labs
- Venture funds
- Venture client
Despite all these options to choose from, there is a remarkably low partnership success rate. Start-ups feel they waste their time on endless meetings and paperwork, and corporations struggle with the inherent operational risk carried by start-ups.
Collaborating to the success
Partnerships tend to fail due to the time consuming and cumbersome decision-making processes in corporations, or the unrealistic expectations of start-ups, or the lack of effective communication channels between both, or the mismatch of mindsets and working speed.
Partnerships tend to succeed when corporations have a well-defined operational model for partnership management, which includes a clear strategy with target KPIs and a written commitment if the pilot study for proof-of-value is successful.
It is key to have a transparent business case and enough involvement of corporate’s senior management.
This fosters the buy-in from all stakeholders and the alignment of processes, resources and capabilities required to scale fast.
It appears that “one size fits all” corporate open innovation models do not work out well. Instead, programs that are bespoke to each individual start-up tend to do better. The most successful corporate open innovation programs are flexible in time and form, they do not have pre-set training dates in batches that all start-ups must engage in, they do not offer CVC like investments preceded by heavy due diligence processes… Instead, the focus is put in the conduction of a short-term pilot, or the licensing of a technology, or the co-creation of a new market or business model, followed by the formalization of a commercial agreement between the start-up and the corporation.
Partnership management is an art that begins with drawing a well-defined partnership agreement.
With this agreement, pharma corporations gain the desired access to new technologies and improve the service layer around their drugs, while the start-ups get support in product/service development, access to knowledge, reach in specific therapeutic areas and, very importantly, a “paved” go to market through the corporation’s business networks and distribution channels.
Gemma Estrada, Director Digital Health & Technology, Ferrer.
Gemma Estrada leads the FERRER4FUTURE program, a collaborative initiative between emerging technology-based companies and Ferrer, which drives digital health as a means to build healthier and more sustainable societies.