Established healthcare companies and digital health startups form partnerships to drive innovation. Yet, 1 out of 5 partnerships in digital health is unsuccessful. Together with Eugene Borukhovich, former Global Head of Bayer G4A, we explore how pharma companies should make use of different partnership channels to drive innovative healthcare solutions, why most partnerships fail, as well as his new business endeavor YourCoach.
Over the years, healthcare organizations including pharma, health insurances, hospitals, and med-tech companies have used different channels and partnership approaches to drive their digital innovation. Still, most partnerships fail. According to R2G Whitepaper “Partnerships In Digital Health – Breaking Points And Success Factors” , 80% of digital health partnerships are frequently destined to fail. Why this happens and what could be done to improve the collaboration between partners?
We talked to Eugene Borukhovich, Former Global Head, Digital Incubation & Innovation at Bayer G4A, Serial Intra & Entrepreneur, Chairman & Founding Board Member of YourCoach about the main factors contributing to the success of a pharma-startup partnership, why most partnerships fail, where he sees health innovation in the near future and his new role at YourCoach, a health and wellness coach practice management solution.
Enjoy the interview!
Research2Guidance: Can you please share what do you consider your highest point and biggest challenge while you were a Global Head, Digital Health Incubation and Innovation at Bayer G4A?
Eugene Borukhovich: I think the highest point at the end of the day was People. I am proud of the team that the leadership team have built. It was also an amazing experience to work with all the innovators around the world in the extended G4A Family. Seeing the individuals on the ground passionate about human health was fascinating.
While I have been in health & care industry for about 20 years, Bayer is my first experience inside of a Life Sciences company. Prior to me joining the company people were telling me “You are going to the dark side” and my comment is “It is not dark at all.” It is amazing what the industry has done and is trying to do to keep pace with the shifts brought by new technologies to extend our lives.
Generally, corporates are slow moving and for me the biggest challenge at the end of the day was “politics” when it came to the decision-making. I started calling it “Swiss cheese”. You think you have the whole slice of cheese (the decision), and once you walk away with that slice of cheese people poking holes in it. The most challenging thing was to navigate through that and at the same time to be able to motivate and lead the team to execute on the vision. Overall, for me it was a super positive and enlightening experience.
Research2Guidance: What are the lessons that you have learned?
Eugene Borukhovich: One key lesson was around internal communication, We as a team knew how to communicate externally very well. The assumption was that just because we are all, for example, on LinkedIn or Twitter that the rest of the hundred thousand people inside the organization are also there. The key lesson learned is “You want to pick up people where they are. Don’t forget the inside stakeholders, work on engaging with them and show your wins, even if they are minor”.
Research2Guidance: The results from R2G’s latest survey on “Partnerships in digital health” revealed that only every fourth partnership is considered to be successful. From your experience, why do most partnerships in digital health fail and what are the success factors?
Eugene Borukhovich: It is important to have a clear strategy in a sense of a continuous de-risking mechanism. And this is not unique to Bayer, but to any large organization. Put a hypothesis together startup style. You have got to know where you want to go. In a lot of cases that is missing.
Secondly, in many cases entering a startup partnership has a perception of “we are doing something cool”. All around this notion of startups being “cool”, entrepreneurs are “cool”. But then come the KPIs. So, what does a particular partnership mean for enhancing patients’ lives, but also for a brand or particular therapeutic area? What does it actually mean to do “digital health”? – ultimately there is a cash cow business.
From my experience, the pivots that G4A had over the years, get back to what does that commercial model look like. In many pilots some other team that doesn’t have a P&L funds the pilot or in many cases the startup says, “We will do a free pilot”. My first comment to startups is “Never, ever do a free pilot to start. There is no skin in the game whatsoever.” So, initially G4A funded the pilots. But over time we pivoted to “Why do you want to do that, what is the problem statement that you want to solve and what does the commercial hypothesis look like?”
In 2019, G4A did 5 commercial partnerships and time will show if the numbers hold up. I believe one or two of those will scale.
Research2Guidance: How did the innovation and incubation department evolve?
Eugene Borukhovich: We pivoted every year. In 7+ years G4A has been alive the market has tremendously changed, the maturity of the entrepreneurs changed. Huge Kudos to Jesus (Dr. Jesus del Valle) back in the day when he saw the potential, the unmet market need and had the vision of how Bayer can move in this direction to answer the need.
In the first years it was bold to say, “Let’s explore”. Over time it became “Explore, explore.” Exploring is great, but how is the company making impact both monetary and consumer facing?
Accelerator model was pulled much closer to the core Bayer business. What we have done over the past three – four years since I have joined is, we looked at the commercial model as the deal maker and then pivoted that along the way.
What I thought was important is that we still explore, but we explore within the swim lanes of the overall strategy. Those swim lanes can be expanded and that is how we took the growth track in 2019. We made some interesting exceptions as a trial for us and then the deal maker evolved into the advanced track and even within the deal maker and the advanced track, we pivoted the underlying strategy heavily including how the team operates.
Research2Guidance: How should pharma companies make use of accelerators / incubators / innovative centers to drive innovative healthcare solutions?
Eugene Borukhovich: I look at it very binary. From one side you need to continuously explore and on the other side you need to continuously de-risk the strategy around the core.
So, if you think about the Pharmaceutical industry and the productivity of the core business R&D and the molecular business, there is this declining curve. From one side laser focus is needed. How do you reverse that curve? There is a lot of noise in the industry about AI and drug discovery. Virtual clinical trials have the potential to dramatically reduce the time and the complexity from identifying unmet clinical needs and through all the discovery process. But how do you commercialize it quicker with digital technologies? This is a big thing. That is the core. On the other side, which in my opinion nobody in this industry has claimed “to run away”, is the non-molecular side – it is the services, the non-molecular therapies. You have to improve the core.
There are a lot of efforts going on and a lot of open innovations when it comes to kind of new revenue streams. What is holding back is in Life Science everything is IP patent. And some of these things are important. Yet, in this new digital world cooperation is the new competition. I think leveraging on one side to “hack the core” in a positive way and on the other side to explore new health consumer facing therapies and services is crucial.
I think most Pharma companies are lacking how to actually combine those digital layers with the core product. Because the skills do not exist truly on the R&D side and even when it comes to digital therapeutics, we have seen the ups and downs in the last year. And the part of that is how do you commercialize it, what does this mean for the business, how predictable it is, what about the IP, etc.
Research2Guidance: You left Bayer G4A at the beginning of 2020. What are you up to today?
Eugene Borukhovich: I have said this a long time ago, I don’t think I will ever leave the health industry. I have joined my wife in her journey of YourCoach. It is a platform management solution for coaches. It helps coaches guide their clients to live healthier lifestyles holistically.
We have a bold vision to enable by 2030 as many of 9 billion people to be empowered by a squad of health coaches. First of all, the market is very nascent. What is even a health coach? There is a lot of “woodoo science” around it, but there is also a hard science coming out.
Given my prior experience as a serial intra & entrepreneur, read more than 4K applications and worked with dozens of entrepreneurs for the last 3 years, I felt like it is time to roll up my sleeves and be part of this fantastic journey as a Chairman. Helping YourCoach team build a community where coaches can work together based on a client need is much more operational in nature.
Research2Guidance: Coaching is like “orange is the new black”. A new market hype and I must say the potential I believe is enormous – chronic, prevention, wellness. Can you share a use case?
Eugene Borukhovich: There is an interesting market dynamic and there is some science backed clinical trials showing benefits of health coaching. People also behave more naturally and differently when they are outside the doctor’s office in an environment where they can share their goals, needs, emotions. But we are not talking only about medical cases and the squad of coaches can consist of – nutritionist, fitness instructor, meditation guru, sleeping expert, etc.
Just to give you an example – let’s say I am 38 and I am a busy professional, I am travelling most of the time and I may have some early signs of hypertension. Get me a health coaching squad. This is not a treatment, this is a preventative in nature. At present, it is highly out of pocket pay, so our “go to market” is really enabling this long tail of health coaches.
At present, we are very much focused on our presence in the USA market, because it is where the industry is picking up. Hundreds of thousands of health coaches are out there and they all need assistance with how they can better manage their own business.
Research2Guidance: You are just at the beginning of this journey. But just to get the idea what is your present – How many coaches do you have today?
Eugene Borukhovich: We have over a hundred coaches signed up. A percentage is active on the platform. Our laser focus is on coaches themselves. Nine out of ten times they have face to face discussions and then it comes “How do I better engage with my clients?” Our aim is to work with the coaching community. They will bring their clients on board.
There is an interesting thing that we are going to watch as we grow, because our hypothesis is that as in health care there are many specialists and there are general practitioners. And just as there is an accountable care model, we are looking at this as an accountable wellness model. Because if I at first have a nutritionist and share with him / her that at 3:00 am I am opening my refrigerator – now, this could be because I am stressed or a combination with lack of sleep. Then the question is “Can I get a stress coach? Can I get a sleep coach?”, so we would like to start seeing these coaches cooperating and see how they can holistically help their clients become the best version of themselves.
Research2Guidance: Do you screen the coaches?
Eugene Borukhovich: Not today. In the US there is a National Board of Health & Wellness coaching, which is a volunteer body that is working with the American Medical Association and there are some certification processes going in place.
Today, at YourCoach, we want to see the broad set of specialties and understand what the market is all about. As we embarked on this venture, we conducted a lot of research and we have found so many gaps in understanding the market. We estimated around half a million coaches are out there. A lot of nurses are becoming health coaches too. We have a coach that is focusing only on STEM professionals as an example. One of the first things we are putting in place is a validation process, because we want to back up, for example, the certification by the client’s outcomes. It is important to see what the client’s goals are and what the outcomes are.
Research2Guidance: What makes a digital health solution successful?
Eugene Borukhovich: I think there are several components to this answer. In the venture capital industry, the talk is about valuation. To me the discussion needs to flip to value. Defining what that value is.
To give an example, for 2020 our metric at YourCoach is 10,000 clients helped by +1,000 coaches. The coaches are our customers. Yet, we start from how many people we want to help this year through the coaches.
Research2Guidance: How familiar are you with the new German law? It is interesting to see what your recommendation for digital health companies will be entering the German market.
Eugene Borukhovich: I haven’t read the full law documentation, but I can share my perception. First, I think it is a very bold move and I applaud it. Kudos.
The second point is the expectations. Startups and even large corporations are asking themselves “So, how we monetize on this?”. I think the realities on the ground is what needs to be checked. I have spoken to just a few doctors and / or potential prescribers and there are questions “How do we do it? What is it? What does this actually mean?”. Also, even with the “Fast Track” obviously the already certified solutions have an advantage. There is also the question “Who needs to do the validation for the next set of clinical trials, etc.?”
There are so many laws coming out along with the DVG that it is putting tremendous pressure and resources on hospitals and entities that would be doing the validation. So, as a startup I think it is important to not have false expectations that you can enter the German market, especially if you don’t have the certification already overnight.
Research2Guidance: I saw you said, “People love to innovate, but hate change”. And I believe it is so true.
Eugene Borukhovich: It is not my original line. But if you take, for example, doctors looking at a new CGM tool, or a new solution for a back pain. They might say “Wow, this is a cool tool!” and they might be using it themselves at home. How that applies into their daily workflow. So, if a doctor needs to prescribe an app for pain, what does this mean for them? How do they understand the science behind it besides the drugs, molecules, etc.
So, there is a lot of work to be done! Again, I applaud this step. One can say it is not ready, but when it is going to be ready? It is important also to note that because we are dealing with health and our bodies, the tech startups that are just entering the healthcare or digital health space must understand that it is a different and more complex market because of the nature of it. So, the new market players better not look at the market through rose glass saying, “This is easy just like ecommerce”.
Research2Guidance: Where do you see health innovation in the near future?
Eugene Borukhovich: We have been talking about magic AI across the whole value chain. At YourCoach we believe human intelligence for the foreseeable future will still be better than artificial intelligence. And this has the word empathy embedded in it. We are still human beings, so there is one piece, whereas there are absolute use cases where within the innovation we still need humans.
The second part is, I do think that we need to see more early diagnostics wrapped around a health consumer experience. I think innovation needs to be wrapped around an experience. There is this term “jobs to be done” and this is not that is not the actual job, but we all wake up, do our things and the question is “How does that fit it in? How this new solution becomes the least intrusive in my daily operation as a person?”. I haven’t named any technology per se. I think it is humans and the experience we have. The companies and the startups that try to figure out how to do that is where I see the innovation actually happen. Technology will be the underlying stack to support it.
Research2Guidance: Is there a topic that you think is important and we haven’t touched it?
Eugene Borukhovich: Stepping now in the startup world, I must say it is the entrepreneurs that are driving new experiences. And it is difficult to think about how one can really cooperate. The reality is I am positive that there is YourCoach somewhere in the world and there are so many solutions that are so regional. I would just urge entrepreneurs, the influencers, the connectors to connect more dots, because we can’t do all this in isolation. I think this is the biggest thing that is sort of missing for us to take in the digital health – the cooperation. And I heard something years ago “What do you know! Things that are good for the society can be profitable too”. So, I would say –do more collaborations and don’t look blindly in your particular area, seek out cooperators and co-instigators of change.
Research2Guidance: Eugene, thank you very much for your thoughts and insights.
Health and Wellness coach practice management solution that enables coaches to holistically lead their clients, connecting mind, body and soul through behavior modification and accountability tools towards outcomes. To learn more, please visit: https://yourcoach.health/