Please login to the form below

Not currently logged in

Darwin's Medicine blog

Professor Brian D Smith is an authority on the pharmaceutical industry and works at SDA Bocconi University and Hertfordshire Business School.

Coming together

Pharma and medtech are converging to create stronger competitors

The announcement earlier this year by Novartis of its $100m digital health investment company, working with Qualcomm, aroused my interest. Not because it is an especially radical step but because it reinforced several similar, strategic moves announced by pharma and medtech companies in the last few months. To someone like me who looks at the industry through the lens of evolutionary theory, these moves shout 'convergence!' and have greater implications than they appear to on the surface. As usual with this column, allow me to talk about the theory a little before returning to the practical implications.

In biological evolution, we often see very different creatures developing similar traits or capabilities. The most obvious ones are wings in bats, insects and birds or echo-location in whales and bats. I especially like the idea that we humans share an opposable thumb with opossums and fingerprints with Koala bears.

The biological explanation of this is very interesting. It is not, as one might at first suspect, that these species are distantly related. Rather, it is that the traits evolved independently as a response to similar evolutionary selection pressures. Anteaters, armadillos and aardvarks all evolved sticky tongues for getting at ants and termites. Faced with similar challenges, evolution pushes very different animals to have similar characteristics.

So how is this relevant to the life sciences sector? Well most of us view pharma and medtech as two very different creatures, albeit struggling to survive in similar environments. Those of us who have worked in both sectors will understand the differences in both the environments and the traits of the companies. Scientific innovation for example is usually more incremental in medtech and has shorter timelines.

How intellectual property rights and pricing agreements work is different too. Medtech companies would love to have pharma product life cycles, pharma companies would love to have medtech's clinical trial costs.

As a result of these differences, many differences exist between a typical pharma and a typical medtech. How sales teams add value, how investment is justified and how innovation works are just three examples. But these two rather different creatures are facing increasingly similar challenges. In particular, the demand for value, in the form of better healthcare bang for bucks, is the key issue for both pharma and medtech. And both face low cost competition from generic or me-too rivals.

And that leads me back to the trends we're seeing. Increasingly, things that you would call medtech are happening in pharma and the two are co-operating. I've just been reading, for example, about some interesting work about using biodegradable devices to deliver drugs across the blood-brain barrier. The importance of inhaler devices in differentiating the value propositions of asthma drugs is well established. Add to this areas like bioelectronics, which GSK is dabbling in, and we see the line between pharma and medtech becoming less clear than ever.

If you want to feed on ants, it is hard to compete with an anteater

In evolutionary theory, predictions always come with a caveat but it is not hard to see the emergence of companies that can't really be called pharma or medtech but have the characteristics of both. Equally, it's clear that these hard-to-categorise species will exist because it is the combination of pharmaceutical and device technology that will create the bang for bucks that the customer requires.

Why is this important? If this happens and we see the evolution of 'pharmatech' companies, will it make a difference to us in practical terms? Well yes. If you remain a pure play pharma or medtech company, your drug or device will need to be very effective to create better value than a combined product. And if you decide to become a 'pharmatech' company, you will need to become very skilful at working out what traits of each to adopt. It is easy to imagine the recipe for disaster: pharma costs and timescales to create medtech's small innovations and high sales force costs.

And, as always, there's a third option, as we see in the efforts of Medtronic/Sanofi, of forming a symbiote; two distinct companies that support each other and look, from the outside, as if they are one. In biology, coral reefs and lichen do this. But it is a difficult trick to pull off. I'd love to be a fly on the wall watching pharma execs trying to manage with medtech's marketing budgets. Or medtech learning to live with pharma's compliance regime, as they are now learning to.

The bottom line? Expect 'pharmatech' holobionts to emerge first and lead eventually to a whole third species that competes strongly with pure-play pharma or medtech. And whether you decide to be one or compete against them, it won't be easy. If you want to feed on ants, it is hard to compete with an anteater.

Article by
Professor Brian D Smith

is an authority on the pharmaceutical industry and works at SDA Bocconi University and Hertfordshire Business School. He welcomes comments and questions on this column at

22nd June 2015

From: Research, Sales



Subscribe to our email news alerts


Add my company

OncoSec is a clinical-stage biotechnology company focused on developing cytokine-based intratumoral immunotherapies to stimulate the body's immune system to target...

Latest intelligence

Whitepaper: Closing the gap with compelling healthcare communications
Want to learn how to close the distance between a person’s current health and their healthiest possible self?...
Healing the Healers
Because if we do not heal the healers, who is going to heal us?...
The (inevitable) digital transformation of Medical Affairs
It’s not a question of ‘if,’ it’s a question of ‘when.’...