Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

Building a business model in digital medicine

Nature Biotechnology volume 33, pages 910–920 (2015)Cite this article

Subjects

Digital medicine companies can incorporate and build on existing business models in tech and biomedicine to bring transformational new products to market and eventually reshape medicine.

Medical innovation has historically required decades of development and huge cash outlays to reach patients. For companies that successfully take on this burden, the payoff is substantial profits insulated by regulatory barriers and strong intellectual property (IP). In contrast, in the tech industry, novel products can reach the market in weeks or months, but competition and uncertainty around monetization can limit commercial viability. The success of digital medicine products at the nexus of these two industries will require deft navigation of radically different landscapes. In the first of this series1, we defined digital medicine as technology-based products undergoing rigorous clinical validation that will have a direct impact on diagnosing, preventing, monitoring or treating a disease, condition or syndrome. How will the business of digital medicine eventually be defined? What models of innovation, technology development and monetization will emerge? Here, we explore the competing forces affecting the business of digital medicine and discuss some key considerations when building and running a digital medicine business.

This is a preview of subscription content, access via your institution

Relevant articles

Open Access articles citing this article.

Access options

Rent or buy this article

Get just this article for as long as you need it

$39.95

Learn more

Prices may be subject to local taxes which are calculated during checkout

Figure 1: Percentage of total expenditures in 2014 spent on R&D and S,G&A for companies (with a market capitalization >$50 million and <$1 billion) that went public from January 1 to July 31, 2015 for biotech, device and tech.
Figure 2: Building blocks of digital medicine business model.
Figure 3: Cost/quality trade-off in clinical data collection.
Figure 4: Digital medicine models strike a path between tech and medical (drug and device) businesses.

References

  1. Elenko, E., Underwood, L. & Zohar, D. Nat. Biotechnol. 33, 456–461 (2015).

    Article  CAS  PubMed  Google Scholar 

  2. Press Secretary. Fact sheet: President Obama's Precision Medicine Initiative (The White House, Office of the Press Secretary, 30 January 2015). https://www.whitehouse.gov/the-press-office/2015/01/30/fact-sheet-president-obama-s-precision-medicine-initiative

  3. Chen, C. & Womack, B. Google developing health tracking wristband for health research. (23 June, 2015) http://www.bloomberg.com/news/articles/2015-06-23/googledeveloping-health-tracking-wristband-for-health-research

  4. Qualcomm. Qualcomm announces strategic collaboration with Novartis to optimize global clinical trials (Qualcomm, San Diego, 5 January 2015). https://www.qualcomm.com/news/releases/2015/01/05/qualcomm-announces-strategic-collaboration-novartis-optimize-global

  5. Posada, M. The Evolving Landscape of Medical Apps in Healthcare (HIT Consultant, 23 June 2014). http://hitconsultant.net/2014/06/23/the-evolving-landscape-of-medical-apps-in-healthcare/

  6. Moukheiber, Z. WellDoc raises $20 million to market first mobile prescription for diabetes management. Forbes (10 January 2014). http://www.forbes.com/sites/zinamoukheiber/2014/01/10/welldoc-raises-20-million-to-market-first-mobile-prescription-for-diabetes-management/

    Google Scholar 

  7. Anonymous. Fourth Annual Study on mHealth Economics (research2guidance. mHealtheconomics.com; Berlin, 2014).

  8. Quinn, C.C. et al. Diabetes Care 34, 1934–1942 (2011).

    Article  PubMed  PubMed Central  Google Scholar 

  9. Sepah, S.C., Jiang, L. & Peters, A.L. J. Med. Internet Res. 17, e92 (2015).

    Article  PubMed  PubMed Central  Google Scholar 

  10. Fiegerman, S. Omada health raises $23 million to help prevent chronic diseases online. Mashable (9 April 2014). http://mashable.com/2014/04/09/omada-health/

    Google Scholar 

  11. Tarakji, K.G. et al. Heart Rhythm 12, 554–559 (2015).

    Article  PubMed  Google Scholar 

  12. Battelle Technology Partnership Practice. Biopharmaceutical Industry-Sponsored Clinical Trials: Impact on State Economies (Battelle, Columbus, OH, March 2015). http://www.phrma.org/sites/default/files/pdf/biopharmaceutical-industry-sponsored-clinical-trials-impact-on-state-economies.pdf

  13. Akili. Akili Interactive Labs announces partnership with Pfizer to test video game in people at risk of Alzheimer's Disease (PR Newswire, 9 January 2015). http://www.prnewswire.com/news-releases/akili-interactive-labs-announces-partnership-with-pfizer-to-test-video-game-in-people-at-risk-of-alzheimers-disease-239412291.html

  14. Tufts Center for the Study of Drug Development. Briefing: cost of developing a new drug (Tufts, 18 November 2014). http://csdd.tufts.edu/files/uploads/Tufts_CSDD_briefing_on_RD_cost_study_-_Nov_18,_2014..pdf?__hstc=261393298.2848554334d37e0371e5a4fb0dfc293b.1438881102208.1438881102208.1438881102208.1&__hssc=261393298.1.1438881102208&__hsfp=3664478715

  15. Herper, M. How much does pharmaceutical innovation cost? A look at 100 companies. Forbes (11 August 2013). http://www.forbes.com/sites/matthewherper/2013/08/11/the-cost-of-inventing-a-new-drug-98-companies-ranked/

    Google Scholar 

  16. US Food and Drug Administration. Orphan Drug Act—Excerpts; Public Law 97-414, as amended (FDA, 18 July 2013). http://www.fda.gov/RegulatoryInformation/Legislation/SignificantAmendmentstotheFDCAct/OrphanDrugAct/default.htm

  17. US Food and Drug Administration. Adaptive design clinical trials for drugs and biologics (FDA, February 2010). http://www.fda.gov/downloads/Drugs/Guidances/ucm201790.pdf

  18. Pharma, H.B.M., Biotech, M. & Report, A. 2012 (HBM, Zug, Switzerland, January 2013). http://www.hbmpartners.com/wAssets/docs/industry-reports/HBM-Pharma-Biotech-M-A-Report-2012.pdf

  19. Makower, J., Meer, A. & Denend, L. FDA Impact on US Medical Technology Innovation (Medical Device Manufacturers Association; Washington, DC, 2010).

    Google Scholar 

  20. Hay, T. Medical device investing drops, though some VCs welcome 'weeding out' process. The Wall Street Journal (7 February 2014). http://blogs.wsj.com/venturecapital/2014/02/07/medical-device-investing-drops-thoughsome-vcs-welcome-weeding-out-process/

  21. Walker, R. The guts of a new machine. The New York Times (30 November 2003). http://www.nytimes.com/2003/11/30/magazine/the-guts-of-a-new-machine.html

  22. Nazar, J. 14 famous business pivots. Forbes (8 October 2013). http://www.forbes.com/sites/jasonnazar/2013/10/08/14-famous-business-pivots/

  23. Novet, J. Slack now has 1.1M daily active users, 300K paid seats, $25M in annual recurring revenue. VentureBeat (24 June 2015). http://venturebeat.com/2015/06/24/slack-now-has-1-1m-daily-active-users-300k-paid-seats-25m-in-annual-recurring-revenue/

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. David Steinberg, Geoffrey Horwitz and Daphne Zohar are at PureTech, Boston, Massachusetts, USA.,

    David Steinberg, Geoffrey Horwitz & Daphne Zohar

Authors
  1. David Steinberg
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Geoffrey Horwitz
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Daphne Zohar
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Daphne Zohar.

Ethics declarations

Competing interests

D.S., G.H & D.Z. have interests in Akili and the Sync Project.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Steinberg, D., Horwitz, G. & Zohar, D. Building a business model in digital medicine. Nat Biotechnol 33, 910–920 (2015). https://doi.org/10.1038/nbt.3339

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1038/nbt.3339

This article is cited by

Search

Advanced search

Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing