Investors and buyers say pharma-related technologies are piquing their interest even within a tumultuous economy.
While the digital health ecosystem is anticipating a massive reset in 2023, pharmaceutical companies are willing to invest in clinical trial technology and digital therapeutics. Also, retail companies like CVS and Walgreens and payers are interested in pharma-related innovations. All this presents a potentially big opportunity for digital health investors and companies alike, experts say.
“One segment that is still eager to spend is pharma, particularly on the clinical trials sector” said Dr. Sunny Kumar, a partner at the venture capital firm GSR Ventures. There were 17 deals for digital health companies developing clinical trial technology totaling nearly $300 million in 2022, according to Digital Health Business & Technology’s database.
GSR’s portfolio companies include Medable, one of the industry’s biggest decentralized trial technology companies that received $304 million in funding last October. Kumar said companies like this have a tightly aligned incentive structure. “No one is truly recession proof, but companies in that space are still getting [interest] because they’re bringing a certain value proposition to the table. They’re decreasing clinical trial time and bringing drugs to market faster,” he said.”
Dr. Justin Norden, also a partner at GSR Ventures, said he prefers companies that sell to the pharma sector.
“Pharma makes decisions faster for bigger contracts with research and development focused on a return of investment,” Norden said. “If you’re a digital health company that’s going to monetize with pharma, it’s going to be a faster and easier path.”
Scott Barclay, managing director at venture capital firm Insight Partners, has invested in Trialjectory, an AI based trial matching platform that uses self-reported clinical information to facilitate clinical trial search, matching and enrollment. The company raised $20 million in a Series A round in February.
“We need to bring software and appropriate data liquidity to trials,” Barclay said. “Trials need to be better, faster, more expansive and more inclusive.”
Digital therapeutics is another area of potential investment for pharma companies, particularly as payers are increasingly willing to cover them. At the HLTH conference held last week in Las Vegas, Teva Pharmaceuticals said it was partnering with HealthSnap, a virtual care management company, to expand its digital health platform. Manny Montalvo, head of digital health and innovation at Teva, said technology partnership is vital to its overall strategy on digital.
“We’re always looking to collaborate whether it’s plugging into an [electronic medical record] system, directly ordering online or something else,” Montalvo said. “If someone has better software than we do, we’re always looking to build off the platform that we have.”
Disruption in pharma is also coming from the retail side, experts say. Both CVS Health and Walgreens are investing in different technologies to create more efficient operations, including entering the de-centralized clinical trial space. Rina Shah, Walgreens’ vice president of the pharmacy of the future, said the company is also using technology to improve fulfillment, prescription renewals and medication adherence.
“Technology and analytics really drive the core infrastructure of how we deliver care all the way,” Shah said. “Our micro fulfillment center is primarily driven by technology and automation. We’re able to fulfill hundreds of thousands of prescriptions with the oversight of a pharmacist and technician onsite.”
It also has invested heavily in technology in terms of how it engages with patients. Shah said it works with both payers and providers to use “behind the scenes data” that helps the retail company better understand the patients needs.
In the area of improved pharma operations, Paul Markovich, CEO of Blue Shield of California, said the health insurance company aims to use technology to improve the pharmacy value chain. The pharma value chain is the process in which medications go to market. Companies like Blue Shield of California play an integral role as the ones who reimburse for these medications.
“We’ve laid out a vision for what a more efficient, consumer-centered pharma value chain will look like, but you’ve got to do it at scale,” Markovich said. “We've gone through a request for proposal but we're still in the middle of trying to figure out which vendors could fit with our vision.”
Correction: An earlier version of this article had undercounted the number of clinical trial technology deals.