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Healthcare digital disruption

18 April 2018

The article at a glance

Corporations should team up with more flexible startups to drive digital transformation of healthcare, says new paper stemming from collaboration between Cambridge …

Corporations should team up with more flexible startups to drive digital transformation of healthcare, says new paper stemming from collaboration between Cambridge Judge Business School, University Witten/Herdecke and Bayer AG in Germany.

Corporations should seek collaborations with nimble startups to take advantage of digital transformational opportunities in healthcare, says a new research paper published in the Journal of Medical Internet Research that stemmed from a collaborative project between Cambridge Judge Business School, the private University of Witten/Herdecke and the pharmaceutical branch of Bayer AG.

“Startups with their agile culture and established technology or life science corporations with their regulatory knowledge might join strategic forces,” the study concludes. “By engaging into collaborative efforts, corporations can keep the costs at bay, while addressing all patient needs and claiming the investments off their balance sheet.”

The paper identified 400 projects and collaborations involving 100 leading technology, life science and startup firms in the healthcare sector, and an expert panel then identified 60 highest-ranked projects (20 each per group of companies) – based on criteria including customer value, key resources, key processes, and profit formula.

Among the highest-ranked projects are those by Proteus Digital Health, which seeks to increase adherence through an ingestible sensor and mobile application; the Jawbone and Fitbit fitness trackers; and Dexcom with its glucose-monitoring app.

This kind of collaboration combining academic research and its practical application to business is part of the “deep engagement” strategy at Cambridge Judge that uses research to tackle real-world problems through deep collaboration with companies and other organisations.

The paper was co-authored by Maximilian Herrmann, Philip Boehme, Thomas Mondritzki and Hubert Truebel of Bayer and Witten/Herdecke University in Germany, Jan Pl Ehlers of Witten/Herdecke University, and Stelios Kavadias, Margaret Thatcher Professor of Enterprise Studies in Innovation & Growth and Director of the Entrepreneurship Centre at Cambridge Judge.

Stylianos Kavadias
Professor Stylianos Kavadias

Professor Stelios Kavadias and corresponding author Hubert Truebel, who specialises in Cardiovascular Research at Bayer, jointly discuss some details in the new paper’s findings:

There is an unequal distribution of the type of projects being undertaken by different types of companies. Projects relating to new services seem to be launched only by startups and life science companies, while technology companies are engaged in the platform field. Hardware seems evenly distributed among the different types of firms. This suggests that the three groups have been following different strategies so far – which features in our conclusion that greater collaboration would be beneficial in digitally disrupting the healthcare sector.

Startups have a distinctly different focus. We also focused on six customer needs – adherence, diagnostic, lifestyle, patient engagement, prevention and treatment – and found that startup projects encompass all these patient needs consistently. In contrast, the life science and tech sectors mostly look at adherence and treatment, with scant involvement in lifestyle-focused categories.

It’s interesting that technology and life science corporations seem to address similar customer needs. This may reflect a lack of creativity by tech firms in addressing digital challenges, or – a very different conclusion – that technology companies were in fact creative early on but life science companies have quickly caught up. Whatever the answer, the endeavours of startups are statistically significantly different.

Incumbent pharma companies tend to work on drug effectiveness rather than patient interaction that may provide more additional offerings. Their projects may offer digitally enhanced outputs, but the innovations are usually incremental and adhere closely to traditional market strategies. In contrast, startups like Fitbit and Jawbone are moving beyond their initial consumer focus to compete more directly with healthcare companies.

There is plenty to play for. As the paper concludes:

It remains to be shown whether the future market leaders of a transformed healthcare sector will continue to be the existing corporations, and current market leaders, or new players that are going to emerge from the ranks of today’s startups.