Shifts in pharma’s 2020 digital health landscape

Digital health innovation consultant Naomi Fried highlights trends to watch among pharmas interested in digital health technologies.
By Naomi Fried
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About the author: Naomi Fried, PhD, is the CEO of Health Innovation Strategies, which provides digital health strategy and innovation-program design and optimization consulting to healthcare stakeholders including pharma, payers and providers. Her previous positions include the first chief innovation officer at Boston Children’s Hospital, Biogen’s VP of innovation and external partnerships, and VP of innovation and advanced technology at Kaiser Permanente. Follow Naomi on Twitter @NaomiFried.

In 2019, a number of big pharma companies experienced growing pains around their engagement with digital health start-ups. What will 2020 and beyond bring for the digital health ecosystem? Expansion? Contraction? Below are my observations and predictions.

Closing Out the Decade

In 2019, we saw pharma pulling back from some of its digital health partnerships.

Sanofi announced a surprising decision to back out of its joint venture around diabetes with Verily and to stop funding Onduo. This high-profile, big investment partnership was originally touted as an example of Sanofi's commitment to innovation. Now that they are backing out, people wonder if Sanofi is losing interest in digital health.

Another significant announcement in the past six months was the decision from Novartis’ Sandoz to end its novel commercialization partnership with Pear Therapeutics. In Q3 2017, Pear garnered a lot of attention for receiving US FDA approval as a "digiceutical" (digital therapy) for addiction treatment. In March 2018, the company signed a joint venture deal with Novartis. But a year later, the deal was off.

Shortly thereafter, Proteus Digital Health's pharma partner Otsuka announced it would not commit to additional investment toward the ingestible sensor company, forcing Proteus to lay off most of its employees.

Where do these retreats leave early-stage digital health companies looking for the benefits of a big pharma partner? Are pharma companies going to turn their backs on digital health innovation in 2020? 

I don’t think so. Based on the trends I see, 2020 is going to be a banner year for pharma and digital health. Here are four trends that will drive further cooperation between digital health companies and pharma.

Pharma strategy focuses on therapeutic areas

Big pharma is beginning to realize that their digital health strategy should be tailored to specific therapeutic areas (e.g., lung cancer, MS, diabetes or breast cancer). In 2020, pharma will pursue more targeted digital health innovations, moving “beyond the pill” to extend the value they deliver to patients. In each therapeutic area, different mechanisms are effective for providing patient education, side effect management, medication compliance and improved outcomes.

Pharma's approach to digital health is maturing. They are moving away from their initial preoccupation with broad health and wellness apps. Pharma is now turning to clinical-grade digital health solutions which directly impact patient outcomes in specific therapeutic areas.

How does this focus on therapeutic-specific clinical-grade solutions broadly affect digital health startups? Clinical-grade digital health solutions rely on data to validate their solutions. This need for evidence will extend beyond just clinical grade startups. In 2020, digital health startups across the spectrum will be expected to quantify the impact of their digital health technologies in the therapeutic area they claim to impact. Clinical validation using data will become the new normal.

Pharma innovation challenges take off

Despite the unraveling of various pharma/digital health partnerships this year, pharma still understands that digital health will play a critical role in the future of healthcare. Innovation challenges have emerged as a great, low-risk way for pharma to initiate relationships with startups.

Innovation challenges help pharma cultivate successful engagements with startups in order to create digital solutions in specific therapeutic areas. In addition to exposing pharma to new ideas for solving unmet patient and provider needs, innovation challenges help pharma better connect with and serve targeted patient populations.

Over the past few years, big pharma companies like Novo Nordisk, Astellas, Merck and Johnson & Johnson have hosted innovation challenges. But now we are seeing pharma take a more active, hands-on approach to structuring, managing and judging innovation challenges. In 2019 Eli Lilly and Company’s open innovation challenge, Transforming IBD, sought to identify "pioneering digital health solutions" for inflammatory bowel disease (IBD) care. Unlike many other challenges, Lilly successfully engaged directly with clinicians, patients and innovators to build a community focused on IBD. This challenge demonstrated a new model for active pharma sponsorship. From the bold and creative ideas presented, Lilly selected Health Voyager, which creates a personalized, immersive educational experience for patients, as the winner. Health Voyager won both a prize of $50,000 and the opportunity to co-develop their solution with Lilly.  

In 2020, more big pharma companies will directly engage in open innovation challenges. We will see challenges that both build community and solve problems in specific therapeutic areas. These open innovation challenges will result in strategic, focused relationships between pharma and digital health startups.

Industry shifts focus to diagnostics

To date, digiceuticals have been the industry darlings. I believe the rise of personalized medicine and the novel application of artificial intelligence and machine learning will spawn a new era of digital diagnostics. Non-invasive, digital solutions will be used for disease diagnosis and tracking, as well as for the selection of individualized therapies. Digital diagnostic tools will become indispensable companions to drug therapy.

Many types of digital diagnostics are currently being developed. Examples include BiliScreen, which uses a cell phone camera to measure the bilirubin level in a person’s eyes for early diagnoses of pancreatic cancer. nQ Medical analyzes a person’s typing patterns to diagnose Parkinson’s disease and track the effect of medication. ResApp Health uses a cell phone microphone to analyze coughing sounds to accurately diagnose pneumonia and other upper respiratory diseases. Prevent Biometrics' mouth guard instantly detects an athlete’s concussion and notifies the coach. These types of technologies are changing the patient experience with access to quick, early and accurate disease diagnosis.

In 2020, digital health diagnostic tools will take center stage.

More startups seek regulatory approval

Digital health startups have historically been shy about seeking FDA clearance. However, since Pear Therapeutics and Proteus successfully ran the FDA “gauntlet,” I expect we will see a larger wave of early stage companies applying for FDA clearance in the coming year.  And this will be good for startups since FDA clearance immediately adds credibility to their products.

Other forces are also coalescing to encourage digital health startups to seek regulatory approval. Investors are showing greater interest in digital solutions that deliver clinical impact. Furthermore, regulatory approval is generally required for digital health solutions seeking payer reimbursement.

Even with the 2019 departure of visionary FDA Commissioner Dr. Scott Gottlieb, it appears the FDA is continuing to champion digital health solutions. In fact, the FDA implemented new rules in 2019 to create an easier, potentially accelerated approval process for digital health developers. I anticipate in 2020, many digital health companies will seek and receive FDA approval. 

Looking to 2020 and beyond, pharma will embrace digital health in new ways, building closer partnerships with startups. Engaging through innovation challenges, pharma will have better access to technology-enabled solutions in specific therapeutic areas. There will be more focus on digital diagnostic tools and interest in regulatory approval. These trends will benefit everyone: pharma, digital health companies, providers, payers and, most importantly, patients. Stay tuned!

Naomi Fried will be speaking about these and other topics pertaining to digital health and pharmaceutical partnerships at the Pharma Forcum HIMSS20 Preconference Event on Monday, March 9.

Digital health developments in 2020 and beyond

The next decade is sure to be a test of digital health technologies — but it will also test traditional health systems. In January, MobiHealthNews will be looking at the possibilities for digital health in 2020 and beyond.