Most partnerships in digital health fail. Why?

Only 13% of partnerships in digital health are considered to be a success. There are three main reasons why corporates and startups don’t collaborate successfully and one very operational approach to overcome some breaking points.

Partnerships are one of the main drivers for innovation in digital health. The majority of leading Pharma, MedTech, Insurance companies have some sort of partnership program and invest a significant amount of resources to identify, select, test and integrate digital health companies and their solutions.

Despite this effort, why only 13% of those partnerships are seen as a success (R2G global study: Partnerships in Digital Health – 2023)?

There is a long list of things that can go wrong in a partnership, but three breaking points stand out according to the study participants.

  1. Lack of a clear partnership strategy: The number one reason for a partnership failure is lack of a clear partnership strategy (55% of study participants see this as a breaking point). This applies to both sides, startups and corporates.
  2. It takes too long: 46% share that the time that is needed to come to a partnership agreement is taking far too long (time-consuming and cumbersome decision-making processes) and
  3. A mismatch of expectations: 43% see unrealistic and, above all, not clearly clarified different expectations and goals of the partnership between companies and startups as a main reason for the failure of the cooperation.

It looks like that both sides have not improved their partnership approaches in regard to the lack and clarity of their partnership strategy, speed of partnership setup processes and expectation management over the last 3 years, as the top three failure reasons remained the same since 2019, when the last R2G partnership study was conducted.

Results also show some positive trends. It seems that corporates improved in their operational models for the partnership (only 25% in 2023 versus 32% in 2019 mentions for partnership failures), better management involvement (10% vs. 22%) and an improved access to resources and funds (7% versus 15% in 2019).

Some of the mentioned reasons for failure suggest that corporates and startups are still unknown to each other. 27% report a mismatch of mindsets between both parties and no mutual recognition as equal partners (25%).

If you look at another result of the study, it becomes clear why this is so. Companies were thus asked about the extent to which they make use of standard project management and communication tools during all phases of the partnership.

The answers show that there is a lack of best-in-class tool usage among startups and corporates when they organize their partnerships.

Although 49% develop the partnership strategy together, 48% have expectation setting sessions, and 47% apply constant progress monitoring during their partnership operation, but notably, more than 50% do not.

Furthermore, tools like team member rotation (5%) or a standardized partner onboarding process (12%) are rarely used.

Applying best in class project management and communication tools especially in the context of a partnership setup might not be the silver bullet to increase the share of successful partnerships but it would help.

Applying best practices during the operation of a partnership is one key take-away for both corporates and startups to improve the success rates of their partnerships. There are others. Download the full R2G report Partnerships in digital health – 2023” to see all findings.

R2G has been constantly monitoring the global digital health industry since 2010. We provide strategic advice for how to build and grow a successful digital health business within all therapeutic areas, business models and regions. We are happy to talk and share our experience!
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