Sanofi announced a major strategy shift today that will end the pharma’s diabetes and cardiovascular R&D efforts in favor of a reinvigorated focus on growing its immunology and vaccine businesses.
Among the fallout of this new game plan is Onduo, the pharma’s diabetes management joint venture with Verily that the two companies invested $500 million into back in 2016, according to the company’s online slide presentation.
Sanofi said it would be restructuring its role in the project, but would stay on as a financial backer. However, those listening reported that new CEO Paul Hudson said his company had “over-invested” in the joint venture.
Based in Cambridge, Massachusetts, Onduo’s virtual clinic approach combined software, professional coaches and connected health devices from companies such as Orpyx Medical Technologies and Dexcom to tackle Type 2 diabetes management.
WHY IT MATTERS
Onduo represented one of the more substantial alignments of pharma and big tech, and certainly commanded a price tag that was nothing to sneeze at. It wasn’t too long ago that Sanofi’s executives were touting the arrangement as a prime illustration of its commitment to innovation.
It’s possible that the project was simply swept up alongside the other exploratory diabetes and cardiovascular projects the Sanofi has decided to move away from, although Hudson’s comment regarding the pharma’s initial investment could suggest that Sanofi’s leadership is no longer all-in on digital health projects like these.
And it’s not as if Onduo had nothing to show for its efforts. The virtual clinic has been notching a few big-name partnerships with companies like John Hancock, and reinforced its collaboration with Dexcom in a deal that yielded $250 million in upfront common stock payment from the latter. What’s more, the joint venture published preliminary data just the other week that found significant six-month HbA1c improvements among a cohort of 740 patients.
THE LARGER TREND
Sanofi’s decision is the third instance this season of a pharmaceutical company diminishing its involvement in a highly publicized digital health collaboration.
The first came back in October when Novartis’ Sandoz division announced that it would be handing sole responsibility for the commercialization of novel prescription digital therapeutics back to Pear Therapeutics, a year and a half after first signing the deal. Similar to today’s news, Novartis decision fell under the umbrella of a broader strategy shift at Sandoz, with the companies still maintaining some level of a relationship thanks to a separate R&D agreement.
This was followed by news this weekend that Proteus was forced to furlough the majority of its staff after its pharma partner Otsuka was unwilling to commit further funds to the digital pill maker. According to anonymous sources, this decision was based in part to weak uptake among patients provided the platform.
The particulars among each of these instances are unique, of course, but their close proximity and big names cast a long shadow over digital health companies looking to strike new deals with an established pharma partner.