During the Open Mic Next In Health Series – Digital Pharma Playbook hosted by DayOne, experts from the startup and pharma industries discussed the operating model for startup-pharma partnerships.
Scheduled for 2023, the Digital Pharma Playbook by DayOne will be a navigation tool for digital health startups to partner with pharma and big tech companies. The publication will address topics like the decision-makers landscape, scouting process, value creation, the role of tech companies, and financing of pilot projects, among others.
“The digital ecosystem is evolving, but the approach to collaboration between startups and pharma is still unstructured or unclear – global demands and expectations in healthcare change quickly. Thus, we need the Digitial Pharma Playbook to accelerate valuable partnerships in digital health,” said Dr. Jubin Shah, one of the authors of the Playbook.
Dr. Shah listed assumptions underlying the Playbook:
- The digital health ecosystem is growing toward maturity, and also partnerships should become more structured and plannable;
- Pharma companies are further developing the in-house capacity to scout based on their internal needs, while startups can offer game-changing outlooks;
- There is a lack of understanding of sustainable business models in the digital health ecosystem, including the co-creation and co-development of innovations;
- There is a difference in understanding partnering models between pharma and digital health startups. A common ground needs to be developed;
- Series A, MVP stage startups are the most interesting stages for pharma, while also early stage startups could contribute to innovation development;
- Collaborations are the key to the future of digital health success.
The publication will act as a guide through the stages of partnerships: mapping the target organization, identifying the business stakeholders, connecting and pitching to digital innovation teams, engaging with multiple teams, and executing pilot projects.
Pharma is not slow or conservative. Just careful
So, which actions could foster startup-pharma collaboration? During the Open Mic Next In Health Series – Digital Pharma Playbook, Lucas Scherdel, Director of DayOne Healthcare Innovation at Basel Area Business & Innovation, and his guests provided some practical tips.
According to Dr. Leslie Anne Fendt, Global Program Head in Digital Health at Roche, a shift from transactional healthcare to integrated health solutions for patients and physicians is at the heart of the digital transformation – co-created by all stakeholders. However, we are still learning to surf this new digital wave.
“Five years ago, we thought startups would be disrupting healthcare. Today we know that benefits for patients from digital can only arise from long-term co-creation,” said Fendt quoting an African proverb: If you want to go fast, go alone. If you want to go far, go together.
She also explained why pharma companies are selective when cooperating with startups. “First of all, we have to fulfill strict regulatory standards. It already inhibits agility that startups can afford. And yes, sometimes we are internally over-conservative. But for a good reason – we must ensure that solutions are safe for patients. Finally, we are a business of scaling, so we have to make sure the solution works for all markets,” Fendt added.
Agility supports creativity
Unlike pharma companies, startups operate in different regulatory and financial realities. Their most significant asset is the courage to try new things. “Each startup is like a mini-lab testing new ideas and hypotheses,” claimed Stefan Suter, Head of Europe at Holmusk, a company building a real-world evidence platform already fed by data from 28 hospitals.
Startups are less bureaucratic and agile; they move fast to achieve their goals and in the meantime, to please their investors or fit within the timeframe of the grants. “It took us two years to start partnering with a pharma company,” said Suter. But it was well-invested time since it’s impossible to move things in healthcare alone.
All startups knocking on the doors of pharma should thoroughly understand the potential partner, its values, and the market. For example, even the most exciting digital health solution still needs solid evidence.
Partnerships should multiply the sum of the strengths of partners
Collaboration in the healthcare ecosystem is an accelerator for progress. This is the theory. But does it work in practice? “Pharma makes up 6% of partnerships in digital health – it’s little compared to the market size,” said Dr. Sara Schmachtenberg, Head of Data and Analytics Europe & USA at Galen Growth. Moreover, 40% of these partnerships are in research, an area in which, paradoxically, digital health startups could help a lot. The gap between opportunities and reality is vast.
There are several reasons for this. First, digital health is still a young discipline, so transparent guidelines for startup-pharma collaboration are lacking. This is a task for the Digital Pharma Playbook. Second, the pharma industry seeks reliable partners for long-term collaboration. In other words – stable funding is essential.
“70% of European startups are funded with grants or government-based funding deals. And since grants have strict time constraints, the survival of startups can be at risk. So this is not the best rationale to start a long-term partnership,” concluded Dr. Schmachtenberg.
At the end of the debate, experts agreed that the best way to thrive in partnerships between pharma and startups is finding the right connector. That’s what DayOne was established for.
If you have missed the Open Mic Next in Health series – Digital Pharma Playbook, you can watch it here.