Organizing HealthTech in Pharma and MedTech: Key Insights from the Latest Report

Organizational design for HealthTech initiatives of Pharmaceutical and MedTech companies have had to constantly adapt to the different market conditions. The impact of the teams on the company’s success is generally limited. The roles and responsibilities of HealthTech teams must be redefined for the future. New Insight report from Research2Guidance.

Evolution of HealthTech in Pharma and MedTech

Initially, pharmaceutical companies viewed HealthTech primarily as a marketing tool, while MedTech companies quickly began integrating digital solutions directly into their products. Devices such as blood glucose monitors and blood pressure cuffs were among the first to be paired with apps and web services, enhancing the core value proposition.

By 2015, pharmaceutical companies expanded their digital health efforts, developing tools to support patients and doctors, as well as creating medication companion solutions. Initially, these innovations were often developed in-house or outsourced. However, partnerships and acquisitions soon became the primary channels through which both pharmaceutical and medtech companies drove digital innovation.

These partnerships have become increasingly crucial, not just for innovation but also for shaping the structure and responsibilities of HealthTech teams within these companies. The shift toward a partnership-driven approach has been a significant factor in how these teams are organized and operate today.

Shifting Organizational Structures

As digital health solutions have proliferated, organizational structures within pharma and medtech companies have had to adapt. Initially, digital health units were small, and their primary focus was on identifying promising digital health companies and supporting them in joint ventures. Today, with a more mature market and a greater number of viable digital health solutions, the focus has shifted towards managing and optimizing these partnerships, with less emphasis on scouting and training startups.

The report outlines 11 organizational archetypes that have been employed by these companies to manage their HealthTech activities: Central Teams, De-central Teams, Carve-Outs, Innovation Hubs, Incubators, Accelerators, Collaborative Accelerators, Marketplace Organizations, People Accelerators, Venture Funds, and Outsourcing teams.

Each archetype is tailored to meet specific organizational goals and adapt to varying market conditions. These models span a wide range of responsibilities, including strategic planning, partnership formation, product development, and lifecycle management.

Global, Regional, and Local Implementation

The organizational setup within these archetypes can vary significantly. Some companies employ a global approach, with central teams overseeing HealthTech strategies across all markets. Others prefer regional strategies, focusing on specific areas such as Europe, or adopt a local approach with country-specific teams managing HealthTech initiatives tailored to local needs.

Organizing the HealthTech Activities Based on the Maturity of Startups

A key design criterion for HealthTech activities e.g. pharmaceutical or MedTech companies is the maturity level of the startups they want to work with (target partner group). Early-stage startups need different support than startups that are already successfully established in the market. The roles and responsibilities of the teams were designed depending on the target group.

Four maturity levels were identified as the main targets:

1. Concept/Pilot Stage: Teams with early-stage ideas or study results, often years away from market entry.
2. Early Stage/MVP: Companies with a prototype in testing, typically close to market entry within a few months to two years.
3. Product in Market: Startups with existing market solutions but limited market penetration.
4. Established Companies: Mature HealthTech companies with significant market presence and a proven track record.

The engagement strategies for each startup maturity level range from hackathons to joint sales initiatives, tailored to the specific needs and stage of the startup.

Impact on Company Performance

The performance of the different organizational forms can be compared based on four criteria.

1. Partnerships: The ability to initiate and manage a high volume of partnerships is a key indicator of innovation capacity. Companies that form 100 to 200 partnerships typically have a higher impact on innovation compared to those with fewer collaborations.
2. Solution Launches: The ultimate measure of a successful partnership or acquisition is its ability to deliver an active solution in the market. Companies that have launched 50 or more digital health solutions are more likely to create significant business impact.
3. User Adoption: The success of HealthTech solutions is measured by their adoption rates. High-impact organizations typically achieve 50,000 or more downloads per year, indicating strong user engagement.
4. Cultural Change Support: Internal cultural transformation is crucial for large organizations adapting to digital health innovations. Archetypes that foster cross-team collaboration and broad communication about digital health tend to have a greater impact on driving cultural change.

HealthTech Team Responsibilities in the Next 3-5 Years

Looking ahead, HealthTech teams will need to adapt to rapidly changing market conditions. With a growing number of high-quality digital health solutions and more sophisticated startups, the focus is likely to shift towards scaling existing digital health solutions. This will require new organizational strategies that align with the evolving landscape, emphasizing the need for robust partnership models and internal digital health competencies.

The report from Research2Guidance provides a comprehensive guide for companies in the healthcare sector to organize and optimize their HealthTech activities. It emphasizes flexibility and strategic alignment as key factors in capitalizing on the expanding opportunities within the digital health market.

The full 38-page report is available on the Research2Guidance website for those seeking in-depth analysis and detailed case studies.