Getting the Most Out of Pharma’s Digital Assets
How the “backward” nature of digital assets requires a different approach to that of drug assets.
In pharma, the word “asset” nearly always refers to a molecule with intellectual property (IP) protection. Pharma companies focus on transforming these assets into products they can bring to market with the best clinical and commercial story attached. After a rigorous development process, the value of a molecular asset is well-defined at launch.
Digital Health solutions however, have a much simpler path to market but their value potential is not fully known when they come to market. In addition, if regulated at all, Digital Health solutions are considered medical devices where they simply have to perform according to intended use and not be reasonably likely to cause harm. This is a much lower bar than for a drug. Most evidence generation and product development for a solution happens after the product is on the market. Claim-building and development for a digital health product can, in fact, be viewed as backwards compared to that of the front-loaded drug development process.
Welldoc is an example of how a digital health solution established evidence before and after FDA approval. This allowed them to both evolve their product and achieve third party reimbursement. Their competitive edge did not come from IP and exclusivity or even regulatory approval but from growing the value of their product over time. At conception, the company knew they wanted to make a change in how diabetes was treated in between doctor visits but the exact form of the intervention and business model wasn’t complete. From a technical perspective, they have moved from phone-based support (pre-app store) through a number of different app iterations and most recently integration with wearables.
This development was done with a focus on:
1. User-centric development (i.e., drug product-agnostic); A core concept that was refined until it delivered real clinical value—behavior change that resulted in improved outcomes
2. Generation of solid clinical evidence of the above
3. A first mover advantage that allowed development of value-building algorithms (that’s the IP!) that deliver real-time guidance to users based on their blood glucose and medication data and cannot be easily or quickly replicated
They have also worked with providers, payers, patients, hospitals and regulators to test what worked and what didn’t in all aspects of the business model. They started with employer and disease management organizations and have expanded to distributing the product through direct prescription, enabling physicians to determine which type 2 diabetes patients were most appropriate for this new type of product.
“As a first mover in diabetes self-management, not only has our product evolved since commercialization, but our business model has as well, as we have adjusted to the changing healthcare landscape in the US,” says Kevin McRaith, CEO of WellDoc, Inc.
So that’s one example of how a digital health asset’s value can be established. But how should pharma be thinking about how to really grow the value of their digital health assets?
The most impressive growth of digital assets in recent years has come from the "Unicorns" of Silicon Valley, privately held digital companies valued at >$US1billion. They include companies like Uber, Snapchat, Dropbox, Spotify, Stripe, Shazam plus the healthcare disruptors, Zocdoc, Proteus and 23andMe. What these companies have in common is that they are able to grow value as more people use their product. For these companies, IP may exist but it is secondary in a world where momentum and execution are key to success.
Uber is the world’s largest taxi company but it owns no taxis and has only digital assets. The company’s success in providing reliable, safe, lower cost taxi rides is based on the development of algorithms that enable better service, which draws more customers, which attracts more drivers, who offer more rides, which generates more data that yields better algorithms, which draws more customers, which attracts more drivers, etc. Value is created through action in the market with real customers. This pattern, with variations, is repeated down the list of digital unicorns.
Welldoc and the Unicorns show us that the value story doesn’t end at launch. Pharma now have the opportunity to take their existing efforts in digital health and build upon them in a way that is relevant and engaging for their users. This should also not just be about more users but also prolonged activation of existing users. This is especially important in chronic conditions such as diabetes, COPD and heart failure, where sustained behavior change is critical to improving outcomes.
This approach will mean that product management is more than just having budget to accommodate the next iOS update. It also means evolving the product and user experience to grow value over time. This will earn Pharma the right to build a virtuous cycle of enduring interaction with users that brings value to patients, healthcare professionals, payers and pharma themselves.
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