International law firm Simmons & Simmons has conducted a global survey to gain a better understanding of how digital health will shape the future of collaborations and investments in healthcare.
In Q4 2018, the firm surveyed 441 decision makers and investors across the UK, the rest of Western Europe, North America, the Middle East and Asia-Pacific. Respondents worked for TMT companies, Healthcare and Life Sciences (HLS) companies and payors or were active investors in the sector.
The convergence of digital technology and healthcare – digital health – has become a key driver of change for healthcare systems globally, with the mass adoption of digital technologies set to revolutionise healthcare and patient wellbeing. Payors and HLS companies must learn from the mistakes made in other sectors – and find ways to become the disruptors, not the disrupted.
64% of respondents said digital health was a strategic priority (including over half of the investors we surveyed), with 63% planning to invest more in the future. The survey indicates collaborations (such as consortiums and corporate joint ventures) are seen as the most important way of unlocking digital health opportunities in the next 12 months (with 83% of respondents regarding them as important), followed by minority investments (79%) and M&A transactions (78%).
Collaborations are seen as vital to seizing digital health opportunities but, as the report suggests, only 34% of collaborations achieve their goals. The firm’s research shows that organisations not only struggle to find the right partners to work with, but also struggle to forge successful relationships. According to the survey, only 11% of collaboration and investment proposals that cross organisations’ desks ever enter detailed due diligence, and only 4% are executed.
Jocelyn Ormond, corporate partner at Simmons & Simmons said: “This report has provided some very interesting and sometimes surprising insights into digital health and the challenges and opportunities associated with collaborations and investments in this space. While historically two thirds of digital health collaborations have failed, well prepared organisations and investors will be in a good position to execute successful and transformative transactions.”
The research shows that business leaders are exploring a range of options to embrace the opportunity created by digital health. Many are also thinking about how to enhance internal capabilities – whether by attracting staff with the right digital expertise or changing company policies or cultures.
While many elements contribute to ensuring companies are prepared for digital disruption, the firm’s report highlights, above all, the key challenges that must be overcome to execute successful collaborations and investments. Findings from the survey support the firm’s conclusions that addressing key questions in relation to regulatory matters, data protection and cyber security, product liability, intellectual property, cultural issues (particularly where TMT and HLS companies collaborate) and structuring and governance is critical to the success of collaborations. Anticipating these issues early will help deliver more successful collaborations and, more importantly, help companies survive the digital revolution and investors to secure healthy returns.
Michael Gavey, IP/regulatory partner added: “Our report highlights that cross-sector collaboration is driving the development and delivery of exciting new digital technologies which are challenging traditional business models and have the potential to transform healthcare globally.”