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Otsuka Pharmaceutical, a Japanese life sciences business, and Proteus Digital Health, a US-based partner, recently requested for regulatory clearance of an antidepressant medicine that includes an ingestible sensor. The sensor will track how well patients follow their prescriptions and the treatment’s results, with the information being sent to healthcare providers. If authorized, it will be the first time a ‘smart pill’ has been commercialized on a large scale, and it will be a significant expression of the promise of digital health.

This is just one of the many partnerships that are being formed between health and life sciences organizations and technology firms. Through collaboration, healthcare providers are becoming active participants in digital change. According to Telstra and The Economist Intelligence Unit’s global survey Connecting Companies: Strategic Partnerships from the Digital Age, 38 percent of industry leaders said their company has five or more digital partners. Nearly half (47%) think the digital networks, clusters, and ecosystems in which they participate are “important for their business.”

Technology is allowing the healthcare sector to find innovative solutions to address some of society’s most pressing issues, such as aging populations, chronic disease, and tight finances.

Partnerships that work

When Telstra launched its Telstra Health project, we relied heavily on our partners. For example, we formed Telstra ReadyCare in partnership with Medgate, a world-leading Swiss telemedicine company, to allow patients to communicate directly with doctors through video or phone for consultation, diagnosis, prescriptions, and referrals.

In the poll, industry executives state clearly what they aim to achieve from their digital relationships. The development of new capabilities or the enhancement of current ones, as well as obtaining access to new technologies, are at the top of the list.

Bayer, a multinational life sciences company, is taking this daring move into digital innovation a step further by sponsoring health technology start-ups through a number of accelerator-style initiatives. One is a collaboration between Singularity University in Silicon Valley and an innovation hub. Another is its own accelerator program, Grant4Apps, which began in Berlin in 2014 and has now expanded to Barcelona.

Pains of maturation

Cloud computing and data and analytics are the two technology sectors that the surveyed companies want to develop through their partnerships. These are characteristics that, for example, might allow pharmaceutical treatments to be priced based on patient outcomes rather of, or in addition to, prescriptions or usage. Analytics, as well as monitoring technologies—such as sensors implanted in medications or wearable heart rate monitors—are critical to bringing such drastic changes to healthcare models to fruition.

Such possibilities are appealing, but they are far from assured and come with some growing pains. The speed with which services and solutions are generated now is a noticeable contrast from traditional strategic alliances and JVs of the past. Finding the correct balance between cooperation and rivalry is at the top of the list when it comes to the most challenging issues to deal with in multi-company digital partnerships. Along with this, there’s the necessity to build enough trust with the other parties and safeguard intellectual property.

Jessica Federer, Bayer’s head of digital development, puts this notion into perspective, saying that making digital partnerships work is more of a people and management challenge than a technological one: “It’s about how people work together utilizing technology.”

Hybrids in the digital realm

It’s too soon to make a broad judgment on the performance of digital partnerships in healthcare and life sciences, but poll respondents say theirs is working. According to the survey, more than four out of ten people (44%) believe their digital partnership investments have already demonstrated their worth “beyond a shadow of a doubt.” Half of the study respondents expect their digital collaborations to result in a shift in business model in the long run.

New digital business models have made advances, but few, if any, have yet to dislodge existing market participants. Digital alliances might be seen as an effective way to deal with prospective disruptors’ issues. Entrepreneurs, venture capital firms, share investors, life sciences companies, care providers, and even governments are already investing in a hybrid digital health economy, which will undoubtedly grow as more resources are invested in it.

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