From start-ups to established companies, almost everyone in the life sciences and diagnostics industries is playing with digital health in one form or another. But how do you ensure this investment translates into commercial success for your company?

The past decade has seen an influx of digital health start-ups and venture capital dollars. In 2019 alone, 359 digital health companies raised US$7.4 billion in the United States, according to Rock Health. And it’s not just start-ups – established players in the life sciences, diagnostics and healthcare industries are also working to expand their digital offerings. Digital Health is the future and no one wants to be left behind.

But has this investment in digital initiatives actually generated substantial revenue? From what I’ve seen, the answer is usually no. The companies are either losing money, or they’re not maximizing their revenue and impact. While COVID-19 social distancing measures have put even more focus on digital health, the fundamental problem of how to build a viable and sustainable business still stand.

So where are companies going wrong?

Some get caught up in the hype of new technology or mesmerized by the latest start-up unicorn, thinking that what works for others will work for them too. Other traditionally hardware-focused companies delay thinking about digital until well into the product development process, meaning it often ends up as a tacked-on feature. Some companies invest in collecting data, but only have a vague plan for what to do with that information once they have it. None of these scenarios are likely to deliver results without a clear vision and digital product strategy.

If you’re a life sciences, diagnostics or medical device company, here are three ways you can ensure your digital investment delivers value to your customers and money for your company.

1. Shift your mindset to view digital as a profit center.

To be successful with digital, you need to shift your mindset early to be more commercial. Don’t think of digital as a cost you must bear to meet customer expectations, but an opportunity to profit. And the key to making money is creating value. Ask yourself: “How can digital immediately add value for my customer and sustainably make money for me, the product manufacturer?” Then, even more importantly, ask: “How else can digital add value for my customer and make money for my company.” Many companies fail to identify huge opportunities to leverage digital solutions because they fixate on one use case of their technology.

PI has developed a digital ‘Value Horizons’ model that enables you to look beyond your end user and consider all the ways digital solutions could benefit your customer and your company by fully understanding the ecosystem that your product or service operates in, be it clinic, lab or home environments. Don’t stop at customer value; look for ways digital can quantifiably benefit your organization’s operations. This could be customer acquisition, retention and repeat sales, cost takeout, risk minimization, maintenance reduction, increased revenues from sales of adjacent products etc. Once you’ve identified all the ways digital can benefit your customer and your business, you can then prioritize the initiatives that will bring the greatest value.

To give you an example of how the model can be applied, let’s look at PI’s recent work with Cole-Parmer, a leading global source of laboratory and industrial fluid handling products. Cole-Parmer partnered with us to refresh its range of peristaltic pumps. In the first horizon, Cole-Parmer greatly improved the device user experience by introducing an intuitive touchscreen user interface. Moving to the second horizon, Cole-Parmer enhanced user productivity and flexibility by introducing internet connectivity, which allows users to control and monitor their pump remotely through their secure cloud-based platform. These improvements have been well received, with the new pumps receiving positive customer feedback.

PI Digital Value Horizons
2. Develop your digital roadmap early

Whether you’re a digital health service company, device manufacturer, or playing in the digital therapeutic space – you need a clear and commercially-focused product strategy to win. If you’re a diagnostics or life sciences company, digital strategy and development should not be delayed while the physical product takes shape. You will likely miss opportunities to add value (and revenue) through digital. Digital is the bridge between your connected product and the customer experience – and it shouldn’t be left too late.

Considering digital early on will also help you determine the right digital ecosystem to meet your needs, now and into the future. Do you just need a connected device with an interface, or do you need a cloud application? Are you expecting to use AI or machine learning at some stage? We often use the ‘Spectrum of Digital Solutions’ to help focus your thoughts. At one end of the spectrum you have a connected device and at the other, you have a pure digital and data play. In the middle you have on-premise and cloud-connected ecosystems. By determining where you sit on the spectrum of digital solutions, and where you ultimately want to get, you avoid having to retrofit digital capability later (which is expensive, inefficient and often unviable). You can also begin to think about potential relationships with any partners you need to create this ecosystem. For example, when Merck decided to move into creating technology for fertility clinics, they partnered with instrument manufacturer Genea Biomedx and PI Digital to build up a secure, integrated technology ecosystem.

PI Spectrum of Digital Solutions

3. Use remote monitoring for evidence-based learning and iteration

Developing a compliant medical product is a complex undertaking that is fraught with risk. You don’t want to spend your time and money developing a compliant device or instrument, only to realize your assumptions were wrong, and your customer does not want what you’re selling. Testing your product in the market with customers is the key to minimizing this risk. Otherwise, you’re flying blind.

With a digital product, or a product with digital connectivity, you can quickly learn how your product is being used, based on clear, un-biased evidence. Remote monitoring and insights have become even more important in light of recent COVID-19 related restrictions on physical movement. Having dashboards to understand data (aggregate, non-private and non-identifiable data obtained with customer consent) on device usage, popular features, common faults etc. makes it easier for product managers to identify and prioritize the improvements that will add the next-best-value to your product. These insights will be invaluable as you attempt to move into different business models such as pay for service, pay-per-use, tiered subscriptions, consumable based pricing, pay for content or tailored insights, pay for automation etc. Going through this learning and iteration cycle will help ensure you deliver a product that your customers want, and want to buy.

Let me give you an example. A leading manufacturer of a device for skin clinics was losing revenue due to customers using counterfeit consumables. When developing the next generation device, they implemented digital connectivity and remote monitoring capability to understand usage patterns and ensure that clinics used original single-use cartridges. This has allowed the company to protect a significant portion of its consumable revenue, improve its marketing effectiveness and ensure better outcomes for customers by preventing use of sub-standard or duplicate cartridges. Remote connectivity in its very simplest form can have a significant impact on business success.

Summary

For your digital initiative to be commercially successful, you need to have a clear digital strategy in place from day 1. You need to look beyond the most obvious use case and map the Value Horizons to identify all the ways digital could add value to your customer and money for your business. Identify where you sit on the Spectrum of Digital Solutions, and where you want to be in the future, so you can plan your development and begin to form the partnerships you may need to get there. Finally, get your product into the market early and use remote data monitoring to learn and improve. If you follow this path, you are well on your way to making a commercially successful digital health product that will create value for your customers and money for your business.

PI Digital has a proven track record in assisting clients to develop and implement a commercially sound digital strategy.  Get in touch to see how we could help you.