Collaboration will drive digital disruption in healthcare

Cross-sector collaboration will drive the digital revolution in healthcare as investors look across the industry divide for new partners, according to new research from law firm Simmons & Simmons.

Speaking at LaingBuisson’s annual Investing in Healthcare conference last week, Joceyn Ormond, partner in the corporate group at Simmons & Simmons, said there was growing convergence between sectors and increasing possibilities for cooperation between players and investors in different industries in a bid to exploit digital opportunities in the healthcare space.

The company surveyed 441 C-Suites and conducted 12 qualitative interview across different sectors and geographies to get a sense of how digital disruption would impact on the healthcare landscape over the next three years.

Although digital technology is becoming an increasingly important asset class for investors, the survey results indicated a cautious approach, with 51% of investors viewing digital health as a strategic priority and 41% planning to increase investment in the sector over next three years.

Ormond told delegates that M&A activity in the sector remained relatively small but that minority investments and collaborations, ranging from joint ventures to strategic, long term commercial arrangements could drive growth provided challenges around due diligence and regulation are overcome.

‘One of the most striking things [we found] is that technology companies are focused on working with other technology companies to develop software and devices,’ he said. ‘There are cultural issues in terms of bringing together the very smart and nimble approach of technology companies with the more cautious regulation-obsessed approach of healthcare and life sciences companies. One of the things that flows down from that is that tech companies sometimes underestimate the regulatory requirements they need to comply with, and are less focused on the requirements of the patient and reimbursement, whereas healthcare companies could benefit from some of the agility that tech companies can bring to this area.’

However, he said poor quality information often hampered due diligence and that issues around Intellectual Property, data security and regulatory compliance had to be taken into account in contractual arrangements.

‘Some investors are only just waking up to the fact that even if you are producing and piloting a piece of software, if that software involves medical treatment then it is subject to the EU device regulation,’ he said.