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Pharma does not need to make wearables. Instead, it needs to figure out how best to use the data that these technologies can provide, how to integrate wearables into product offerings and how to persuade payers to foot the bill. Investment in this field is increasing as the potential of mobile and wearable technologies to transform therapeutic development and healthcare delivery becomes clear.

wearable devices


As the commercial and scientific potential of wearable devices in medicine becomes clearer, not least to slow the competition-driven price slide typically seen in consumer tech, both established technology giants and start-ups are vying for some of the action. This presents pharma firms with new potential partners – and potential competitors – in the likes of Google, Apple, and Samsung as well as in smaller specialists like Empatica and AliveCor.



Device makers can be split into five broad categories, encompassing established medical devices players, large software and consumer technology firms, and a range of start-ups and specialists targeting the medical/healthcare market. Pharma does not need to make wearables. Instead, it needs to figure out how best to use the data that these technologies can provide, and how to integrate wearables into product offerings. “Our energy is spent more on making meaning out of the data that wearables are able to generate [rather than on building the tools themselves],” says Pfizer Inc.’s head of clinical innovation Craig Lipset.



Makers Of Wearables

Source: Datamonitor

Type of company


Established medical devices firms

Philips, Medtronic

Consumer technology giants

Apple, Samsung

IT/data companies

Google, Qualcomm, Microsoft, IBM

Medical technology specialists

Mega Electronics

Start-ups (healthcare/medical devices)

Vital Connect, Empatica, MC10

Start-ups (consumer technology)

Withings, Empatica


Since most wearable devices are freely available on the consumer market, “whatever we see out there, we buy and try it. We have a cupboard full of wearables. Sometimes I have four or five on together, to test them,” says Kristian Hart-Hansen, chief executive officer of LEO Innovation Lab. “We’re looking at how to incorporate them into our solutions and thinking, but I don’t think we’ll be the people developing them”.



A handful of pharma firms have acquired technology partners, preventing competitors from tapping the same technology or approach. In 2015, Teva Pharmaceutical Industries Ltd. bought smart inhaler firm Gecko Health Innovations, for example, following a similar move by diversified healthcare group Opko Health Inc. Also, AstraZeneca PLC made a small investment in New Zealand-based smart inhaler company Adherium Ltd during 2015, having shortly before announced a long-term commercialization agreement.



Pharma-Technology Partnerships

Indeed, partnerships are for now the most popular arrangement between biopharma companies and technology firms. Partnerships offer both sides flexibility and ensure that technological innovation can continue freely; in the case of larger tech groups, acquisition is generally not an option in any case.



Hence partnerships are proliferating as the potential of mobile and wearable technologies to transform therapeutic development and healthcare delivery becomes clear, and as both sides seek the other’s expertise to make that happen. Biogen has tied up with Google’s Verily, Novartis AG has deals with Microsoft and Qualcomm, and Pfizer has joined forces with IBM to use remote monitoring devices to investigate Parkinson’s disease. Meanwhile, other firms are experimenting in focused areas with smaller players like MC10 or Vital Connect (see table below).



Technology firms seeking to penetrate the healthcare market also require input from clinicians and drug developers. “We give device makers lots of feedback on what we think their products should be able to do,” says Mike Capone, chief operating officer at clinical trial solutions provider Medidata. “We have met with Apple extensively,” echoes Adriana Karaboutis, executive vice-president of technology and business solutions at Biogen. “They’re trying to understand our requirements for, as an example, what might be required for tremor or voice tests in Alzheimer’s or Parkinson’s. We’re working informally to help give them insights into what we’re looking for.”



Selected Wearables Partnerships

Partnership Type

Description/Therapy Area Focus

Biogen-Verily (Google)

Big biotech and tech giant

Using sensors and software to better understand the reasons why multiple sclerosis progresses so differently from one patient to the next


Big pharma and software giant

Using system similar to Microsoft Kinect (used with Xbox games console) to more consistently measure multiple sclerosis patients’ performance in tests and allow better assessment of disease progress


Big Pharma and IT giant

Device linked to respiratory medicine inhalers, tracking and reporting adherence and dosage


Big Pharma and tech giant

Sensors, mobile devices, and machines to deliver real-time symptom monitoring of Parkinson’s disease patients to clinicians and researchers


Mid-sized pharma and digital health start-up

Using MC-10’s tattoo-like wearable “stamp” to pursue new therapies for neurological diseases. The stamp tracks motion, heart rate, muscle potential, and so on

Fitbit-Dana-Farber Cancer Institute

Consumer health and research institute

Study to uncover the role of weight loss in preventing breast cancer recurrence


Payer and IT giant

Scheme allowing employees to earn monetary rewards for increasing daily activity, monitored by tracking device

Otsuka-Proteus Digital Health

Mid Pharma and digital medicine start-up

Ingestible sensor to monitor schizophrenia drug adherence

Dexcom-Verily (Google)

Established medtech and tech giant

Mini wearable glucose monitor for diabetes patients

Apple-multiple users (research teams, individuals)

Consumer tech giant and multiple "partners" using Apple Watch open-source software

Multiple research studies gathering data via Apple Watch (including cardiovascular, epilepsy)


Source: Bloomberg; company website; press releases



Apple: An Emerging Healthcare Competitor

Apple’s ubiquitous iPhone and the newer Apple Watch are rapidly making this corporate giant a healthcare player in its own right. Apple has made no secret of its intention to break into the sector and become a centerpiece of mobile health data collection and presentation. Its HealthKit platform aggregates and presents consumers’ health data from across a variety of clinical apps and devices (including non-Apple ones). Additionally, ResearchKit, launched in March 2015, is an open-source software framework designed to enable scientists and medical researchers to build apps that can easily gather health data from Apple devices (and other gadgets connected via HealthKit) that may be spread nationwide or beyond. The newest software addition, CareKit, is smaller-scale: it allows developers to build healthcare apps that gather individual health data for personal use or for sharing with physicians or provider networks.



Apple is also building its relationships with key healthcare stakeholders: it is reported to have had regular talks with the US Food and Drug Administration (FDA) and other regulators, and has tied up with the likes of Epic, the largest vendor of electronic health records. The Apple Watch, launched in early 2015 and with an estimated 5–10 million quarterly sales, is Apple’s first wearable offering: the watch tracks heart rate, activity data (including whether you are standing or sitting), and collates information from a growing suite of other health and fitness apps and devices keen to be associated with the popular brand.



The watch also provides an attractively large, ready-made customer base for multiple health-related accessories, including many seeking clinical application. The Kardia Band, designed as a strap for the Apple Watch by San Francisco-based medtech start-up AliveCor Inc. provides an electrocardiogram reading from a thumb pad, and generates detailed heart rhythm data that can be used to help patients detect episodes of atrial fibrillation. The device is pending 510k FDA clearance. Other apps on the Apple Watch help you remember to drink enough water, move around, eat healthily, and take your medication properly.



Google has also joined the health wearables bandwagon. It has already licensed its blood glucose-testing contact lens technology to Novartis, and has developed a wristband to track heart rate, temperature, and other external variables like light and noise, which it intends to have licensed as a medical device for use in clinical trials or as part of physician-prescribed regimens.



Fostering And Funding Digital Health Innovation

Another way for pharma to embrace technology is by fostering entrepreneurial, innovative health-tech start-ups – just as several Big Pharma companies have done to ignite creative drug discovery. In 2015, Danish dermatology group Leo Pharma AS launched LEO Innovation Lab, a series of units across Europe and North America focused on developing apps, digital platforms, and other initiatives to better meet the needs of people living with chronic skin diseases. “Wearables…are driving a lot of innovation within the pharmaceutical-digital space,” enthuses Kristian Hart-Hansen. LEO Pharma is also, since January 2016, investing in health-tech focused start-ups seeking novel solutions for psoriasis sufferers, by way of the newly created LEO Ventures.



Pharmaceutical firms have long been investing in health technology: Merck & Co. Inc.’s $500m Global Health Innovation Fund has supported over 20 digital health companies since 2010, although few if any appear to be developing wearables. Bayer AG’s Grants4Apps program attracts digital health start-ups for funding, office space, and mentoring in exchange for innovative ideas across digital health, including wearables. “It’s a great way to bring digital expertise into the Bayer community,” says Bayer’s digital development head Jessica Federer about the program. One of the start-ups Bayer has chosen to support in its Grants4Apps Accelerator program is FabUlyzer, which is a wearable nano-sensor device that, when breathed or blown on, measures how much fat is burned during exercise. Bayer is also running one exploratory trial using a wearable sensor device in a chronic disease, according to a company spokesperson.



Digital Health Investments

Pharma’s foray into wearable technologies is happening as part of its broader drive to embrace digital technologies and patient-centricity. Most have brought on technology expertise to help both R&D and commercial teams understand and exploit new opportunities.



GlaxoSmithKline PLC recently formalized a multi-disciplinary innovation unit whose mission is to modernize clinical trials using digital technologies; the Clinical Innovation and Digital Platforms group has a dedicated team and budget to ensure that initiatives move beyond experimental pilots toward more widespread application.



Bayer’s digital development head Jessica Federer was appointed in July 2014 to take the entire organization digital, across all its divisions, thereby helping foster closer integration between the various segments (pharmaceuticals, crop sciences, and consumer) as well.



Novartis has set up a digital medicines team to think about how to use beyond-the-pill technologies to improve outcomes, and has a digital development group within the team to look specifically at how to bring new technologies into the R&D organization. Many in the team are technologists with high scientific aptitude, often from the venture capitalist community. “We’re looking at how to absorb these technologies into regular operations, and to scale them up,” explains Vas Narasimhan, global head of drug development and chief medical officer at Novartis. “That’s how they can substantially improve the efficiency of the whole process.” He’s referring to technologies across the board, including software linking to searchable electronic health records to help identify trial patients, e-consent systems, and data entry, as well as telemedicine and wearables to allow virtual trials.



Integrating wearables systematically across an R&D organization requires not just testing the wearables themselves, but an entire infrastructure of people, process, and technology. “Over the last 2–3 years, we’ve made specific investments…to use these novel data capture instruments in a more consistent manner,” explains Pfizer's Craig Lipset. That includes making sure that they are understood by, and accessible to, all study teams, that they generate meaningful data that impact development, and that the data interfaces are optimized for the patient experience. It means ensuring compliant usage, and an understanding of patient preferences. It also means changing the approach to running trials and generating data. “It’s not just about strapping wearables on patients in [an] existing study setup. You need a different approach,” insists Lipset.



Neither Lipset nor Narasimhan, like most of their counterparts at other pharma companies, will quantify how much they are investing in digital technologies and related expertise. But Novartis’s Narasimhan is clear on the timeframe for returns. “We’ve bet ourselves that within five years we’ll see a step change in R&D efficacy,” he says, “though we’re still trying to dimensionalize it.” As the technologies scale up, he expects quality to improve first, with efficiency and cost gains coming later.



It is still too early to identify a common investment approach. Bayer’s Federer says only that the group’s digital transformation should not cost a lot of money, but instead take advantage of existing expertise. The Grants4Apps program, fostering and supporting innovative health-tech start-ups onsite to bring in creativity and opportunities for cross-pollination, is not a big-budget item: each group gets €50,000.



Footing The Bill

The hope among most drug developers and makers of wearables is that, ultimately, payers will fund wearables, either as part of a therapeutic solution or as a solution in themselves – assuming they are proven to improve outcomes and/or lower the costs of unnecessary treatment and poor adherence. In early 2016, the UK’s NHS announced a $6bn investment in digital health, including $1.1bn on remote care. It also unveiled a series of “test bed” trials within the NHS using remote monitoring technologies and app-based support services from the likes of Verily Life Sciences, IBM Life Sciences, Philips Healthcare, and AliveCor. By 2020, the NHS hopes that a quarter of patients with chronic conditions like hypertension and diabetes will be able to monitor their health remotely.



Investments like these, and the handful of examples of US payers engaging with wearable technologies, show that “payers are interested,” says Narasimhan. “But they’re also cautious. They want to make sure these technologies are simple, and offer real benefit to patients.” That benefit may be in preventing disease or hospitalizations, or from increased convenience, better adherence, or better outcomes from a more targeted treatment package. In any case, it will have to be supported by data.



Wearable technologies are not expensive relative to the costs of many drugs and of hospital care; furthermore, their cost is likely to fall, not rise. But sponsors cannot assume that wearables costs will simply be absorbed within existing payer structures. Device developers and their pharmaceutical partners will have to bear the costs of establishing evidence and evidence standards around wearables and their enabling more cost-effective outcomes. Most pharma companies are not expecting short-term profits as they experiment with wearables and digital health technologies more broadly, but understand that ultimately these will have to be paid for.



Importantly, wearables are likely to themselves enable outcomes data collection, thus supporting results-based reimbursement deals between payers and pharma firms that could, ultimately, mean higher reimbursement for pharma companies. This could pay back their investment in the technology, and justify their supporting its costs in the early stages. Over time, as certain technologies and data types become better recognized and trusted, pharma may be able to include technology costs within its overall product pricing.



In the longer term, patients may have to take more responsibility for their health, as the counterpart to being more informed and engaged. LEO Innovation Lab’s Kristian Hart-Hansen believes that, ultimately, health insurance premiums will be linked to treatment adherence and other healthy behaviors. “We’re not there yet. But in the long run, insurance companies have to start looking at how to incentivize people to live a better life. If not, it will ruin us [as a society],” he says.



There are still significant uncertainties around the business models that will realize the best return on investment for wearable technologies, but several options are starting to emerge. The figures below illustrate two possibilities. In the first, the majority of the return is realized through wearables’ support of higher therapy reimbursement, although this is likely to remain dependent on consistent and continued positive outcomes. In the second model, patients pay for the wearables out-of-pocket in order to achieve (potentially greater) reductions in their insurance premiums or co-pays. As yet, there is no evidence supporting either option.



Datamonitor Healthcaree improvements in R&D efficiency that many expect, pharmaceutical firms may see as less urgent the need for a direct commercial return from the technology component of future therapeutic solutions.


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