Disruption In The Health And Pharmaceutical Industry

If you’re after a textbook example of how disruption can rewire an industry, look no further than the health sector

“Doctors… prescribe medicine of which they know little, to cure diseases of which they know less, in human beings of which they know nothing,” French philosopher Voltaire allegedly wrote almost three centuries ago. Since then, scientific research, state provision and the industrialisation of medicine by pharma has helped more people lead better, healthier and longer lives.

From the development of modern medicine in the enlightenment until this decade, not much changed in terms of how health was delivered in the developed world.

With increased centralisation and medicine’s professional commitment to “do no harm,” by the end of the 20th Century health was becoming bloated, averse to risk-taking and innovation, and increasingly unaffordable for the whole population. A combination of protected markets, wasteful legacy practices and unmet needs made it a classic target for disruption, in much the way that financial services were ripe for a shake up several years before.

Eric Topol’s landmark book The Creative Destruction of Medicine in 2012 correctly predicted the disruption heading the way of the legacy health model, and also the speed at which new technologies, business models and mindsets would unbundle that model.

A perfect storm of disruption – the C-words are coming

The angels of Topol’s apocalypse included; Collaboration and Crowdsourcing, Constant Connectivity, Customised Consumption and Cloud Computing. Right now these C-words are at work changing the face of health in the late 2010s…  

The UK’s clinical trial recruitment company Antidote claims it is saving 6 months in crowdsourcing clinical trials, using technology and business models from the airline industry to connect patients with relevant trial programmes.

Connectivity is revolutionising the most costly health problems. The US Food and Drug Administration is preparing to give scale clearances for digital devices after years of limiting the number of applications. Middleware players such as Validic are exploiting WiFi, 4G and – soon – 5G connectivity, to liberate data from connected insulin pumps, mobile phones and wearables. They are able to expose them to both health professionals and algorithms which can help diagnose and manage chronic conditions such as diabetes, respiratory conditions and high blood pressure.

One of the fundamental aspects of 21st Century health is customised consumption.  Techniques developed from media, advertising and leisure categories such as sports tech are now being used to deliver personalised experiences. Customer data (think location and activity) from mobiles, wearables and connected devices such as scales can come together in services such as Omada Health and Livongo to deliver actionable health insights and deliver proven health benefits, while digitally-native health insurer Oscar manages customised, tailored risk.  

Cloud computing and the availability of affordable, consumable AI is having one of the most powerful and visible impacts on health. Whether it’s Google Deepmind correctly identifying cardiovascular risk, Ada or Babylon providing AI-based triage for your headache, or your pharmacy app reminding you to order prescriptions, the resource-constrained health industry is rapidly making use of disruptive tech. China, which does not have the legacy infrastructure seen in the US and Europe is moving straight to new models, with Ningbo cloud hospital removing the need for a physical treatment location.

Consumers, used to dealing with personalisation and automation in other walks of life, are proving themselves to be ahead of the risk-averse health system by embracing them. In April, Amazon’s Alexa announced six skills which are compliant with the stringent HIPAA rules on data transfer, paving the way for consumer services.

How to survive the storm? The 3 D-words

After decades of slow change, digital disruption is rapidly transforming health from a mass, industrial era ‘one size fits all’ model to an ‘n=1’ model.

This means that incumbent players – the public and private insurers, hospitals, practitioners and key suppliers such as pharma and medical device manufacturers – are stuck between a digital rock and a hard place.

On one side is the digital ‘rock’ – GAFA (Google, Amazon, Facebook and Apple) plus tech giants such as IBM and Microsoft – who have business models which are based on hardware sales, data or attention. Health is just one industry they’re targeting.

Over in the digital ‘hard place’ there are VC-funded startups harnessing lean startup techniques to break off single problems in healthcare and solve them one by one, faster than health systems can move.

Responses to this squeeze include denial, defence and deception.

Early years of health disruption were characterised by denial, a refusal to believe that the ‘toys’ –  wearable devices and smartphones – could ever play a part in ‘real’ healthcare.

Then came defence – a traditional M&A response. Classic examples are Roche’s acquisition of Austrian diabetes service mySugr, or medical devices giant RedMed’s purchase of connected inhaler Propeller Health. In the US, insurer Aetna merged with retail pharmacy CVS as a horizontal integration hedge against disruption.

The third response is deception – pretending that you’re capable of innovating. DIY projects, labs and accelerators now proliferate in pharma, much of it about show and ‘taming’ innovation rather than alignment to strategic goals.

Another solution – the fully digital model

Time will tell whether these prove to be successful – but a more 21st century response looks like Anglo-Swedish pharma giant AstraZeneca’s recent commitment to a fully digital model. Its CEO Pascal Soriot recently said that it needs to integrate fully with health providers such as hospitals and clinics, health payers such as private and public insurers, and a host of digital players with expertise.  

In doing so, its strategy is moving from a ‘silver bullet’ single deal approach to one of future-proofing its ability to plug into hundreds, if not thousands of potential partners.

At the health delivery frontline, it may look as if doctors are still, as Voltaire claimed, prescribing to patients about whom they know nothing. Yet the cocktail of mobile tech, connectivity, data science and machine learning is rapidly enabling the patient and the health professional to know more about themselves than ever.

And that has to be healthy for everyone.

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