Healthcare is one of the biggest industries in terms of investments globally. Moreover, government, as well as private sector’s involvement, has seen an increase in traction for a continuous improvement in the healthcare services related to individuals and society, both in the major developed and emerging economies. According to Deloitte’s report on the global healthcare industry, the spending on the sector as a percentage of the global GDP stood at ~10.4% ([2015], [~$7.1 trillion]). This share is estimated to increase to 10.5% by 2020, with the overall projected spending seen rising to ~$8.7 trillion.
Furthermore, backed by abundant opportunities in healthcare, the likes of Alphabet, Microsoft, Apple and Amazon are focusing big time on the sector with an increased emphasis on research, technology and intellectual property, while also growing inorganically through acquisition of companies present in the sector. Over the years, these tech giants have played a significant role in different industries ranging from retail to media and finance among others, wherein healthcare is emerging as a next big stop for the tech giants. Notably, these companies have been following their own take to move deeper into the healthcare sector, which is backed by their business strengths. These giants are trying to solve problems that have been a topic of discussion both within the industry and governments for decades, by leveraging their core competency; technology. According to a research by CB Insights, 10 of the largest tech companies in the United States were involved in the healthcare transactions worth $6.2 billion in over 143 deals since 2012. The deal value hit ~$4.1 billion in 2017 alone, up from a mere $215 million in 2012.
Further, looking into the internals among these four players; Alphabet has been the most active over the last few years. It specialises in data; the tech giant’s strategy has been focused towards using data analytics and machine learning to get more insights on diseases. Alphabet is actively involved in the healthcare space through Google X, Calico and of course its life science division.
Microsoft has been investing heavily in the healthcare space by expanding its core capabilities of artificial intelligence (AI) and cloud services. The most notable initiative is the Healthcare NExT, which aims at revolutionising the healthcare sector by leveraging on its existing AI and Azure cloud resources by collaborating with other healthcare players. The aim is to provide personalised and instant access to a person’s medical history and records. Thereby, helping with the ease of data entry, attending to sick patients more efficiently and automate patient care. Microsoft also has multiple projects in the digital health tech space including Microsoft Genomics, Microsoft Azure Security and Compliance Blueprint.
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Apple Inc.’s approach is focused towards digital health technology; using its iPhone and Apple watch to help users’ track and better manage their health. The company recently announced to launch a primary care clinic called AC Wellness for its employees and their families. Apple is yet to reach the reputation of Alphabet and Microsoft in the healthcare domain, but this is because it is not yet focusing on enterprise tools.
In addition, Amazon has also been actively involved in multiple digital healthcare funding and investments. Its partnership with JP Morgan Chase and Berkshire Hathaway with the goal to drive down healthcare cost for its employees and their families has caught the attention of the masses. Amazon’s initiative in the healthcare space also includes a secret lab for the healthcare innovation named 1492.
According to reports published by Ernst & Young’s life science division, Apple, Alphabet and Microsoft have together filed for over 300 healthcare related patents between 2013-17. Of these, Alphabet leads with 186 applications, followed by Microsoft with 73 and finally Apple with 54 applications.
Addedly, with the changing dynamics in the industry and as unconventional players enter the space, the traditional healthcare companies are also striking deals and launching divisions that are changing their already established business structures. Hospitals are becoming drug makers; insurance companies are becoming healthcare providers, and pharmaceutical companies are becoming insurers and all these transitions are happening with technological advancements and inclusion at its core. There is also an effort to lower the healthcare cost and make it more accessible for a larger group of people in the society. Even the likes of healthcare giants such as UnitedHealth Group, in the recent years has started acquiring the group of businesses that go beyond insurance. The company launched Optum Ventures, which will invest $250 million to fund digital healthcare companies. The company also has plans to use its Optum’s data and apply machine learning to improve patient engagements and outcome with its customers. CVS Health, another healthcare giant, has also been active in evolving its business to maintain its position in the industry. It recently acquired insurer Aetna, which was a move to take control of the chain between a drug maker and a patient.
One can say, Alphabet, Microsoft, Apple and other notable tech giants have revolutionised the way consumers shop, communicate, socialise and work. Now, these are making bets on the healthcare market, announcing their interest in disruption of the industry that has raised several debates on rising costs and inefficiencies for decades, keeping technology as a catalyst for change. These companies want a bigger share of ~$7.1 trillion healthcare market by identifying and capitalising on synergies between technology and healthcare. The companies do possess the core competencies to enter the healthcare industry, like data analytics, AI and a strong technological foundation. Of course, none of the companies on the face of it seems to be competing directly with each other as of yet. While few are focusing exclusively on helping their own employees with a better healthcare administration, others are testing the possibility of partnering with existing healthcare insurance companies. Another is carving out a new venture, ready to battle it out with the big players in the healthcare space. While these tech companies, in general, are yet to lay down and implement their long-term strategy with respect to their healthcare intentions, considering this being a heavily regulated industry with well-established competitors. The progress seems to be positive as it provides opportunities and efficiency in the delivery of healthcare to both the players and patients respectively.
Date: August 27, 2018
Source: Televisory
