Seeking to accelerate technological capabilities, healthcare investors have been snapping up artificial intelligence and machine learning companies and driving up digital health M&A in the pharmaceutical and biotechnology space as a result. In fact, 2019 marked a new record for digital health M&A in pharma, according to a report from S&P Global.
Digital health deal values in biopharma rose to $6.4 billion in 2019, mostly due to one large $5.9 billion acquisition of Medidata Solutions by Dassault Systemes Americas Corp.
Pharma and biotech investors are interested in solutions that speed along innovation, such as drug discovery, clinical trials and data interpretation. Other investors, such as tech companies, are looking to break into the healthcare space for the first time through acquisitions.
Investors are also interested in cutting costs from their investments in digital health, the report found. For example, bringing a drug from the lab to market can cost up to $19 million per clinical trial phase, S&P Global cited. Others are looking for ways to streamline clinical trials or better interpret data.
One digital health company using AI for drug discovery, Exscientia, was acquired in 2018 to help Kinetic Discovery, which specializes in assessing molecular compounds and drug binding, enhance drug targets.
While M&A in the digital health space is ramping up to produce biopharma innovations, many challenges are still in play for “the often-hyped realm of digital health” before widespread adoption is achieved. The FDA is one regulatory hurdle that has to evaluate digital therapeutics, wearables and virtual trials. And a standardized pathway for companies to seek approval for digital medicines “has yet to emerge,” the report found.
As the regulatory process lags, drugmakers and digital health companies should continue to strengthen their clinical data analysis.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."