Anyone in business has probably heard the popular baseball-themed proverb, “Progress always involves risk; you can’t steal second base and keep your foot on first.” Taking intelligent chances can absolutely yield big rewards in business, but when you are dealing with a multi-billion dollar global company, risk becomes, well, a lot riskier.
The potential of digital health is not in question — new technology offers the promise of a future where healthcare is personalized and convenient. In theory, patient education and compliance will increase, and the pharmaceutical industry will see greater effectiveness with its treatments.
But before they invest millions in digital technology, the pharmaceutical industry wants proof — facts, research and, perhaps most appropriately, clinical trial evidence.
David Shaywitz wrote a great piece for Forbes discussing the not-too-surprising observation that the historically conservative pharmaceutical industry is hesitant to fully embrace the digital health space. His thoughts are that the pharmaceutical industry is waiting it out — letting other industries sort through the risk of digital technology — and when the situation is less risky (and more expensive), pharma will enter the scene.
Think of it in terms of baseball. In 1978, the Orioles signed an 18-year-old prospect named Cal Ripken Jr. for $20,000 (the average signing bonus was around $68,000 at the time, so, quite a deal). They sent Ripken to the minors, tried him out in several positions, and spent years nurturing him as a player. The result being that the Orioles took a chance on a young prospect, and ended up with one of the best shortstops and third-basemen in baseball history.
But the Yankees took a different approach to getting one of the best shortstops/third-basemen. In 2007, the Yankees signed Alex Rodriguez to a 10-year, $275 million contract. What they wanted was a pre-packaged, already proven asset that would yield immediate results. But that kind of secure investment came at an extremely high price.
What is apparent is that no matter the commercial enterprise, there will always be risk associated with innovation — but the conundrum here is that there are also inherent risks associated with avoiding risk. Historically, the pharmaceutical industry has taken the Yankee/Rodriguez approach — and one can assume that changing the culture of an entire industry is not an easy task. But in an effort to avoid financial risk and the short-term displeasure of shareholders, are pharma companies putting their reputations, operations and financial health at even greater risk?
Perhaps the real payoff pitch is being tossed to the digital health startups — the first ones to step up to the plate with concise, refined offerings that address clear pharmaceutical industry needs will definitely reap the benefits of a transitional environment.
Rightfully so, the true winners will be the patients who are hopefully only a few steps away from convenient, highly personalized care.