“Part of our competitors are not only the Novartis of the world and the other pharmas, but really the Amazons and Googles,” Yitzhak Peterburg, the former CEO of pharmaceutical giant Teva, said a year ago, adding that the global healthcare sector is facing a “huge disruption” by tech giants which start competing with traditional players in the market. A year on, and big tech’s healthcare push is gathering strong momentum.
While companies such as General Electric, Philips and Siemens already have an established presence in this sphere, we are encountering the names of Amazon, Apple, Facebook, Google, Microsoft and even Uber in a healthcare context more and more often. Having already entered industries such as finance and media, tech heavyweights are eyeing the lucrative health sector, where global spending is expected to reach $8.7 trillion by 2020.
An EY study found that between 2013 and 2017, Alphabet (Google’s parent company) filed 186 health-related patents, Microsoft – 73 and Apple – 54, which is a 38% increase in the number of such patents by these three companies every two years. EY noted that such a competition poses a new challenge to pharma, and argued that health companies should capitalise on the data they gather to create digital solutions helping patients with their health in a way that Airbnb helps tourists with cheap rooms.
The medical profession is becoming more and more familiar with services such as electronic health records (EHR), picture archiving and communication systems (PACS), vendor-neutral archive (VNA), image editing (IE) software, and their value is projected to grow from $19 billion today to $24 billion in 2021. And AI has wide applications in areas spanning drug and medical protocol development, diagnosing and patient monitoring.
The emerging competition between big tech and traditional healthcare providers is also starting to play out on the media front. Although tech giants already have well-established brands, entering a new market requires fresh PR efforts, not least because the tech industry is facing reputation challenges amid growing privacy concerns, fake news issues and regulatory hits.
Big tech means big disruption
We tried to dissect the new trend while it is still in its infancy. Using our tools, we identified the main topics in the coverage of big tech’s healthcare invasion.
The publications analysing this issue are predominantly of a commercial character, so the hottest topic for them is market disruption, or disruptive innovation – the most important phenomenon in modern business, according to the Economist. The term denotes the process in which traditional market leaders are displaced by innovative players – a good example for this is the way fintech firms are interfering in the financial services industry (for more on that topic, read our piece on the digital dawn of finance).
Most of the articles strive to explain the reasons why the healthcare market is ripe for disruption, and often cite rising costs, administrative inefficiencies, customer dissatisfaction and the growing need for medical care against a backdrop of staff shortages. As a result, the healthcare industry in this coverage suffers from a negative reputation, which is naturally dangerous for the established companies in this field. In the US, the country most articles refer to, the pharma industry experienced a reputational decline since last year, which has had a negative impact on consumer confidence. The Reputational Institute has calculated that the decline is -3.7pts and pointed out that consumers are less likely to give pharma companies the benefit of the doubt or to trust them to do the right thing.
Publications have also explored the impact on the €1.4tn-a-year global healthcare insurance market. The Financial Times, for example, quoted Thomas Buberl, chief executive of multinational insurer Axa, who said that tech companies would “mostly attack us in health”: “If we do nothing then in five years they’ll run us over. They will break down the barriers between pharma and device companies, and between doctors, hospitals and patients.”
We found only one article to be more sceptical about big tech’s ability to succeed in healthcare. It argued that tech approaches health as a computing problem, while there are many issues relating to privacy, patient records, ethics, semantics and relationships with the clinical community.
Articles concentrating on novel AI solutions offered by big tech discuss mobile coaching, real-time data collection, personalised medical care, natural language processing, cloud systems and drug discovery. Most of these solutions also come up in articles about digital health, but the focus there is on apps and gadgets. This is closely related to issues around costs and patient convenience, which have been pointed out as the main factors for big tech’s success in healthcare.
Ethical issues under discussion revolve around standards for data collection and tech’s eventual monopoly in the market. Philip Hedges, the Chairman Trustee of health charity White Swan, published a piece on the Financial Times arguing that non-profit organisations should produce digital health solutions, without involving commercial interests and shareholders. He added: “There is huge scope for accelerating research and patient well-being by addressing data banks and social media conversations to uncover key trends and information.”
Pharma in the Spotlight
The bulk of articles discuss not only healthcare in general but focus on pharma – a sector not generally known for technical ingenuity and innovation. The coverage notes that in the face of new competition from tech heavyweights, pharma companies have started exploring cutting-edge digital solutions. The areas which are most often being mentioned in the media as undergoing AI innovation are gene analysis and clinical trials.
Commentators also refer to individual companies – for instance, Marco Anelli M.D., head of pharmacovigilance and the medical affairs advisory services practice at ProductLife Group, said: “Companies such as GlaxoSmithKline, Novartis, and Pfizer — the biggest players — can afford an internal data science group, which will deal with AI and machine learning in the fields of drug technology and pharmacology.”
Surveying the coverage, we managed to find out which pharma companies were mentioned most often in the context of big tech’s invasion of their market.
Pfizer has been perceived as cautious, as it concentrates not so much on radical innovation but on more valuable and efficient solutions as part of its established practices. Commentators highlight the company’s efforts to digitise its supply chain and the partnership with IBM Watson, aimed at accelerating immuno-oncology research. It also invests in the exploration of real-world data, analytics-enabled services, personal and point of care diagnostics, healthcare decision-support tools and open innovation platforms.
At the beginning of July, Novartis announced that it is stepping up its analytics credentials by launching Nerve Live, which aims to capitalise on the company’s huge data pool. Dr Luca Finelli, head of the Predictive Analytics & Design group within Global Drug Development, said: “In reality, we are a data company. We are used to generating and working with huge amounts of data, analysing it, and using this knowledge to research and develop new therapies. If we are able to bring our data into one place and tap into the latest computing technologies, we can generate new insights that in the past were difficult to obtain because our data was locked in silos.”
The venture was covered in business media such as Life Sciences Intellectual Property Review and Forbes, which also quoted CEO Vasant Narasimhan’s opinion that AI, telemedicine, automation and quantum computing will change the pharma business. But the launch was not mentioned in articles about big tech’s healthcare ambitions. What journalists mentioned instead was Novartis’ partnership with Verily Life Sciences, Alphabet’s life sciences company, with which the pharma giant will work on sensors in contact lenses capable of detecting glucose levels for diabetics.
Similarly, not everything happening with Roche on the technology front was documented in this context – for instance, the recent deal with biotechnology company Foundation Medicine, which strives to enhance genomic profiling in oncology, was left out. The commentator did mention the acquisition of health-tech firm Flatiron for $1.9 billion and even called it “one of the largest M&A deals in artificial intelligence”, and the partnership with GE Healthcare, whose focus will be the development of a digital diagnostics platform to improve oncology and critical care treatment.
Johnson & Johnson has been keen to promote itself as a big player in the industry’s digital transformation: it formed a dedicated innovation division to generate new ideas and explore new partnerships. The company takes part in a Food and Drug Administration program for digital health applications and has started a Health Partner platform for digitally-enabled care.
Also in a push for innovation leadership, Bayer has launched its “Grants4Apps” digital program in the US after proving its popularity in Europe. The program selected 16 startups for a paid partnership within self-care. Apart from that, Bayer Chief Marketing Officer, Sebastian Guth, was quoted saying that pharma is perfectly placed to embrace technology: “My personal view is that we – as an industry and us at Bayer – not only have a right to play but an obligation to play in the new digital health environment. Big tech companies have a role to play and a contribution to make; they are coming to market with disruptive business models and deep expertise in areas in where we are still building expertise as an industry.”
Sanofi signed an agreement for cooperation with Chinese tech conglomerate Alibaba to work on health services, disease management and patient education, and also to dive into blockchain’s application in candidate recruitment for clinical trials. This was the information in the big tech coverage, and again something was missed out – Sanofi’s Tech for Health lab where it connects with startups to develop new digital health solutions and services.
Since its 2013 restructuring, AbbVie has been positioning itself as a company which prioritises patients and innovation, and it is now known as one of the medical innovation leaders. The media refers to it as a good model for modern pharma companies because it demonstrates ingenuity in converting products into services bolstering patient-centricity. Commentators gave an example with its drug Humira which utilises mobile health applications and Internet of Things for continuing support throughout the treatment cycle.
Stating that data is “the currency of healthcare”, Merck strives to combine new data solutions with the one it has in place to augment clinical trials and care standards as part of its digital transformation strategy. It has also bet on a portfolio of startups through its Merck Global Health Innovation Fund and launched its fourth health innovation hub in Austin, Texas, which will unite startups with academics in search for new solutions. Partnerships with biotechnology firms such as Atomwise and Numerate foster the company’s exploration of AI platforms for drug design.
GSK has also partnered with Alibaba to work on an adult vaccination service system through China’s Amazon, Taobao. Leslie Chang, VP and GM of vaccines at GSK China, said: “It started with a conversation around how we could partner and leverage GSK’s wealth of information around a disease. In this case, it was related to cervical cancer prevention.” The company also has a strong interest in developing digital health solutions relating to medication adherence, health and symptom tracking, diagnosis and treatment.
In other China news, the only mention of Eli Lilly was of its diabetes-management joined venture with physician social network Ding Xiang Yuan and tech conglomerate Tencent, the developer of mobile messenger WeChat. The collaboration gives patients blood-glucose testing devices, educational tools and care services, while medical practitioners have access to real time data.
Because they were the topic of the coverage, tech giants were mentioned way more often in the articles – here are the top 10:
Amazon was often discussed in relation to its partnership with JPMorgan Chase and Berkshire Hathaway, which aims to reduce healthcare costs for employees. It also acquired online pharmacy retailer PillPack, invested in cancer detection start-up Grail and is looking to transform its virtual assistant smart speaker Amazon Echo into a home healthcare tool.
Being more data-focused, Google’s parent company Alphabet bought app developer Senosis Health, which uses smartphone sensors as healthcare services. And Verily was reported as plotting an expansion into the managed care space, in addition to its numerous studies spanning telemedicine and age-related diseases.
Apple focuses more on consumer healthcare products – for instance, it acquired sleep-tracking firm Beddit. Other projects include its ResearchKit for healthcare professionals and health apps harnessing data and two California clinics for its own employees. Apple Health Records was recently launched among 39 hospitals.
Facebook also joined the race by offering hospitals to match the profiles on its network with healthcare data. The idea is on pause for now, but hospitals are using its virtual reality device Oculus to replicate pediatric emergencies for training purposes.
Microsoft launched a healthcare team to use its AI and cloud credentials for electronic health products, while IBM Watson got into interpreting genetic testing results. Chinese tech giants Alibaba, Intel, Tencent and Baidu were mentioned because of their partnerships with pharma companies entering the lucrative Chinese market, as we already pointed out.
Pharma should not sit back
The low number of mentions of pharma companies in this coverage exemplifies the pharma industry’s reputation for lagging behind with innovation. This is maybe due to the fact that the sector is generally perceived as conservative, burdened with many regulations and reluctant to take risks. As we saw in our brief review of their innovation activity, this is not the case – many technological advancements are taking place within the industry, it is just that they are not as well covered by the media as the tech sector’s efforts in this direction.
Here is where pharma PR professionals should step up their strategies. In the face of new competition, they should strive to change the image of the industry and present their companies as open to innovation and ready to explore new territories, just like the disruptors. They should underline the strategic growth opportunities in their sphere, be it by promoting more effectively their mergers and acquisitions or emphasising the value of their corporate ventures and partnerships with digital platforms. The public needs to understand that pharma is not struggling to keep pace with the latest changes in digital technology.
Analytics solutions can help with this task as well, for instance by identifying key pharma and tech influencers and designing influence-based marketing strategies reaching beyond healthcare professionals. Such an approach could effectively tie a brand to the notion of innovation. A more targeted PR plan would enhance the company’s image of being customer-centric and will take advantage of the current trend in the sector to shift from product-centricity to patient-centricity.
In this way, utilising analytics tools should become a priority not only for medical researchers but also for communications professionals who want their brands to stay ahead of the newly emerged competition.