French drugmaker Sanofi SA (Paris) and Verily, the life sciences unit of Google parent Alphabet Inc. (Mountain View CA) on Monday said they would invest about $500 million in a joint venture (JV) combining devices with services to improve diabetes care, an example of growing ties between the pharma and tech sectors. Sanofi and Verily to invest $500 million in joint venture, Onduo, to fight diabetes Click To Tweet
According to a Reuters report, the venture, called Onduo, will develop comprehensive solutions that combine devices, software, medicine and professional care to treat diabetes patients more effectively. Onduo will initially focus on type II diabetes, the more common form of the disease. Sanofi said last year it was working on a partnership with Google in diabetes.
“The company will leverage Verily’s experience in miniaturized electronics, analytics, and consumer software development, with Sanofi’s clinical expertise and experience in bringing innovative treatments to people living with diabetes,” the two companies said in a statement.
Diabetes is one of the most lucrative avenues of health research because there’s a fortune to be made by the company who can develop a better blood glucose monitor. Rates of diabetes are rising, and 592 million people worldwide are expected to have the disease by 2035.
Sanofi is already one of the world’s biggest producers of diabetes drugs while Verily, owned by Google’s parent company, has more expertise in software and electronics development.
This isn’t the first time that Verily has partnered with big pharmaceutical companies. Just last month, Verily and British pharma giant GlaxoSmithKline created a new company called Galvani Bioelectronics to create electrical implants that can be used to treat diseases. The company is also known for its ambitious projects, which include a smart contact lens that is supposed to monitor blood sugar levels, and a FitBit-style wearable that aims to help with cancer detection.
Verily is also working on development of a smart contact lens in partnership with Swiss drugmaker Novartis that has an embedded glucose sensor to help monitor diabetes.
Diabetes is an illness that involves keeping track of blood sugar levels, diet, multiple medications and other health issues, noted Verily Chief Medical Officer Jessica Mega.
“It’s an area where we think new tools and sensors will be incredibly helpful,” Mega said in a telephone interview.
“The idea is creating best-in-class biocompatible small sensors” that could, for example, monitor blood glucose, she said.
“We want to … figure out the right mechanisms to get information to patients. Over time we hope to get information to people that is actionable,” Mega said.
Nearly 400 million people worldwide have diabetes, with type 2 accounting for more than 90 percent of cases. Without proper treatment, it can lead to a wide variety of serious health complications.
The JV, called Onduo, “will initially focus on the type 2 diabetes community, specifically on developing solutions that could help people make better decisions about their day-to-day health, ranging from improved medication management to improved habits and goals,” the companies said.
A spokeswoman for Sanofi said products on sale would include connected objects such as insulin pens and online services.
She said Sanofi had invested $248 million in the joint venture, in which the French group controls a 50 percent stake.
Sanofi is working hard to revive declining sales in its diabetes division, hurt by sustained pricing pressure in the United States.
Steve’s Take: In November, 2015, The Carlyle Group reported that annual U.S. healthcare spending had reached $3 trillion, a sign that the healthcare industry is very strong and continues to grow. That’s hardly an earthshaking revelation.
And given the rapid changes in the healthcare industry over the last few years, it’s no surprise that we are starting to see more non-traditional healthcare partnerships, specifically with big tech companies. The Sanofi-Alphabet joint venture is just the latest collaboration and license opportunity between pharma and the tech industry.
Many observers believe this is just the beginning of a much longer timeline for the successful establishment of this recent trend. It looks good on paper, but will all parties benefit from these collaborations?
I view this recent foray into JV’s for both sides as a sort of pre-nuptial dance, and who knows if the engagement will turn into a happy marriage that lasts and benefits all sides. Or will it end horribly with divorce wars and lawsuits for patents, damages and all the rest of it?
That’s my take for an opening query that runs counter to just about everyone else’s take on this early dance between two gargantuan industries, each with its peculiar and distinct corporate culture. So far, the consensus is that the collaboration between the industries is bound to flourish.
Biotech and pharma companies are built around biology and science, billions of dollars of investment, and lengthy clinical trials. Tech behemoths, like Google, Apple and IBM, see this as an opportunity. Both tech and pharma companies can build off each other’s strengths.
Tech companies can digitize, better collect and analyze data. Biotech, research institutions, and pharma have the medical and regulatory knowledge to understand the biology and take a drug through the lengthy approval process. This collaboration could allow for companies to better understand diseases, in their origin and how to treat them. And in the process, earn handsome returns for their shareholders. Or will it?
Tracy Staton at Fiercepharma.com penned a cogent piece recently pointing out that pharma’s patent-cliff woes were staggering, drug development was in the doldrums and, facing budget constraints, single-source payers in in Europe, Canada and elsewhere were putting intense pressure on pharma prices.
The idea now is that drugmakers need to move beyond nifty marketing of products to delivering successful outcomes. Aha! Strikes me as the notion of value-based medicine. The future is finally now.
Staton goes on to say that pharma doesn’t yet have the technology to upend the status quo. But drugmakers are collaborating with major technology players like Google and IBM Watson Health–Novartis, Sanofi and Novo Nordisk among them–in deals that unite “Big Data” record-sifting with cutting-edge, patient-monitoring gadgetry, and that’s the kind of infrastructure necessary for big moves “beyond the pill.”
For instance, some drugmakers have been pushing new performance-based pricing deals with payers. Novartis, for instance, wants to strike deals on its heart failure drug Entresto, which reduced hospital visits for patients in clinical trials. Hospital visits are costly. So, Novartis wants to be paid more if Entresto keeps patients out of the hospital, and less if it fails to do so. That sort of payer deal requires a combination of patient-tracking tech and data analytics.
Fiercepharma.com says for us to expect more outcomes-oriented and technology-aided JV’s in 2016 as drugmakers bring new monitoring technology into clinical trials. Biogen used fitness trackers in a trial with multiple sclerosis patients, monitoring patients’ movements as a way to gauge the results from its treatments. AstraZeneca and GlaxoSmithKline have signed onto “smart” inhalers that track dosing and trigger reminders to help patients follow their prescribed regimens. The inhalers will first be used in trials, but there are obvious real-world advantages.
Pharma apparently has surmised, rightly or wrongly, that if it doesn’t join forces with the tech giants like Google, Apple, IBM and others, those companies will innovate right past them. Markets that always belonged to pharma might be siphoned off and even lost altogether.
I believe the fundamental differences in corporate cultures between pharma and high tech would seem to need considerable time to start working smoothly, constructively, profitably and on a wide-scale basis. There are enough examples in pharma companies alone where “cultural” conflicts have taken decades to function constructively and smoothly together. The mere clash in pharma between its “marketing” and “educational” functions is legendary and still being tested by the government with its attempt to separate the two.Steve's Take: Need more time to determine the long-run success of pharma/tech joint ventures Click To Tweet
I see the collaboration of Pharma and Tech as a worthy pursuit both in helping to advance the science of medicine and delivering an attractive ROI in the for-profit side of the industry. I believe it’s too early to predict whether the partnerships referenced herein will succeed. I’m hopeful, but waiting a while longer, for some more substantive data on these JV’s successes before investing in them.