What are the Challenges and Opportunities for Novartis on the Mobile Health?

What are the challenges and

opportunities for Novartis

on the mobile Health in

France?

Joseph Pategou

Digital Economy

Msc International Strategy

and Influence2014/2015

Skema Business School

Mr. Zakaria Babutsidze

1 What are the challenges and opportunities for Novartis on the mobile Health?– Joseph PATEGOU 2014/2015

Summary

Acknowledgment .................................................................................................................. 2

I. Introduction ........................................................................................................................... 2

II. Novartis in the mobile health ................................................................................................ 2

1. Presentation of Novartis ......................................................................................................... 2

2. The mobile health market ...................................................................................................... 3

3. What is the place of Novartis in this market? .......................................................................... 5

III. Challenges and opportunities for Novartis on the mobile Health market .............................. 6

1. The case of Kodak: The example that Novartis is not following ............................................. 6

2. Novartis: The future challenges and opportunities ................................................................. 6

IV. Conclusion ............................................................................................................................. 7

References ............................................................................................................................ 8

Interview of Mr Guillaume Marchand ................................................................................. 9


ACKNOWLEDGMENT

Firstly, I wish to thank Mr. Guillaume Marchand, president and co-founder of Health dmd and Mr. Lionel REICHARDT, founder of 7C's Health for the interview they gave me. I thank Mrs Claire Leblond, librarian / community manager at SKEMA Business School, Mr.

Richard LERAT, Chief of Staff of the Presidency of LEEM (The Pharmaceutical Companies) and

François-Régis Moulines Director of Communications and Public Affairs of SNITEM for their

help in finding information.

I. Introduction

The pharmaceutical industry manages the development, production, marketing and

monitoring of all marketed drugs. It concerns drugs for Men and animals. The

Pharmaceutical and biotechnology companies are major players in the industry and are

responsible for the production of drugs.

This is one of the most important industries in the world, with a turnover of

approximately 990 billion in 2013, up 3.3% from 2012. France is the second European market

after Germany and has approximately 300,000 employees in this industry.

Pharmaceutical companies, protagonist of this industry are companies dedicated to

the research and marketing of drugs and health products. There are about 254

pharmaceutical companies in France and Novartis is the second in the world with a turnover

of 43.6 billion and a market share of 4.8% in 2013.

Digital company of the year 2013, Novartis is clearly positioned for several years on

the segment of the mobile health with a vision, as said the deputy director of mHealth at

Novartis Michele Angelaccio, "Through solutions such as mobile health, we intend to make a

major change in the way in which care is delivered and to increase access to health services."

MHealth matches all services related directly or indirectly to the health permanently

available through a mobile device connected to a network. It represents a global market of $

2.4 billion in 2013 and expected to reach $ 26.5 billion in 2017.

MHealth is transforming the health care system and Novartis wants to be a player in

this transformation, we can therefore asked the following question:

What are the challenges and opportunities for Novartis in the market of mobile

health in France?

To address this issue, we will present initially Novartis and the market for mobile health.

Then we will examine the challenges and opportunities of Novartis in this market.

II. Novartis in the mobile health

1. Presentation of Novartis

The pharmaceutical industry is one of the most important industries in the world

with a turnover of about 990 billion dollars in 2013, The American market is the largest

(38%) followed by Europe (18%), Japan (9%) and emerging markets (10%). France is the

second European market after Germany.


In France, this industry has a turnover of € 53 billion and employs approximately

300,000 employees. This sector has different types of actors including pharmaceutical

laboratories which are 254 in France including Novartis.

Novartis is the second laboratory in the world with a turnover of 43.6 billion and his

headquartered is in Switzerland. It operates in five main activities: ethical drugs, generic

drugs, consumer healthcare, ophthalmology, vaccines and diagnostics.

This pharmaceutical company has over 2584 salaries for more than 2 billion euros of

turnover in France.

Digital is transforming all sectors of activity; the sector of the pharmaceutical industry

also knows that revolution. MHealth is one of its revolutions that transformed the industry

more specifically access to health services. Novartis wants to use mHealth to transform

access to care.

2. The mobile health market

The mobile Health corresponds to all services related directly or indirectly to the

health, permanently available via a mobile device connected to a network. The global

market for mobile health is 2.4 billion in 2013 and expected to reach $ 26.5 billion in 2017,

Europe will represent $ 6.9 billion , Asia-Pacific $6.8 billion and $ 6.5 billion in North

American.

In Europe, the UK is the first actor and the third actor is France in terms of turnover.

Rank Country

1 UK

2 Spain

3 France

4 Germany

List of four major countries in the mobile health industry in Europe

This market was boosted by the rise of smartphones and application development. We can

clearly identify 100,000 mobile health applications present on different platforms (iOS and

Android), 60% of these applications target welfare and shape market and the remaining 40%

is intended for health professionals.

In France, 90% of these applications is on iOS and 10% on android, but android represents

65.2% of the smartphone market in November 2013 against 22.2% for iOS, which poses a

problem of availability of materials. This reflected by the fact that 7 out of 10 mobile users

have not downloaded health application because they haven't found.

These 40,000 applications are produced by 200 companies and correspond to 2,000 jobs;

there are 5 categories in these applications:

1. Tools for Information and training 2. Medical test calculations 3. Monitoring Application for patients 4. Punctual tools (example: translation of medical language and Géomedica) 5. Community Tools


There are 6 Actors responsible for the production of applications:

Traditional healthcare players: It includes Pharma, Hospitals, health insurance and Med-

tech companies, representing 3,4% of the total number of app publishers.

App specialists: App specialists are small companies with 3-10 employees. They have an app

developer background and are familiar with the available development tools. This group

represents 14% of the total mHealth app publisher community.

Helper: Helpers are companies or individuals with the primary motivation of publishing

mHealth apps in order to help others and are typically small companies of 3-10 employees.

They represent 32% of the market.

Medical specialists: Medical specialists leverage their medical know-how to develop mobile

apps. They represent 20% of the market.

Fitness specialists: This group of app developers represents around 10% of the total

mHealth app developer community. The typical company size is 11-100 employees.

Connecters: This group of mHealth app publishers represents 18% of the total mHealth app

developer community.

We can observe that pharmaceutical companies are not the leading producers of

application, helpers dominate this production activity.

The Pharma app publishers can be clustered into three groups: The Niche players, the

Still Trying, who publish many apps but so far have not been really successful, and, finally,

players who have already achieved some First Success.

The leading Pharma companies have been able to generate 6.6 million downloads

since 2008 and have less than 1 million active users. Given their dominant position in the

healthcare market, the investment made into app publishing and the spectacular success

stories of garage-type mHealth app publishers, the Pharma companies app portfolios’

performance is disappointing.

The raison of this situation:

• The app portfolios are not globally available

• The app portfolio is built around the core products of the Pharma companies

and not around the actual market demand

• No cross-referencing and common and recognizable design

In terms of demand 7 million health mobile users have looked for health information

in 2013 and 22% have downloaded apps. In addition, 52.9% of mobile user’s health with

chronic illness want their doctor to advises them mobile health applications.

In Europe, 185 million Europeans will benefit from mobile health in 2017, this will result by €

99 billion save on health spending.

The existence of a demand and a large offer confirms the potential of this market.

The resolution on the action plan 2012-2020, adopted by the European Parliament

stresses the need for a clear legal framework to ensure the development and adoption of

applications. The market of mobile health is not controlled or regulated.


3. What is the place of Novartis in this market?

In the pharmaceutical industry, Novartis is one of the most active companies in the field of

digital. Four factors illustrate:

Novartis won the PharmaSuccess Award Marketing Excellence in 2013

In 2013, Novartis is the digital company of the year

Novartis won the PharmaSuccess Award Marketing Excellence in 2014

Partnership with Google

Novartis is very active in terms of number of published apps which predominantly target

large private user segments. Despite this mass market focus of the app portfolio, the user

reach is low and below average. Novartis is a member of the still trying group.

Novartis in the still trying group

Example of Novartis apps:

MAImoris-e

SEP Agenda

WeCare-SMC


This company wants to play an important role in this transformation of the industry that

is why in 2013 Novartis organized an ‘mHealth Challenge’ a 48-hour development marathon

in the heart of Silicon Valley in the United States, aimed at identifying a novel way to use

mobile technology to address a major health challenge.

Novartis was one of the first companies to produce apps for patients, she wants to use

apps to change the way care is delivered, and increase access to health services. She is also

looking to expand its mobile health services from healthcare monitoring to virtual

healthcare.

III. Challenges and opportunities for Novartis on the mobile Health market

1. The case of Kodak: The example that Novartis is not following

Created in 1880 in Rochester, by George Eastman, Kodak was able to make it easy

and cheap, the photography, previously expensive and complex activity.

In the late 1980s, Kodak has 20 billion dollars in revenue, and exudes a margin of 17%, with

no equivalent in the sector (90% market share).

In the early 1990s, the company will opt for a slow transition to digital; in addition, the

technology seems uncertain and costly. Kodak is quickly overtaken by Sony, Canon and even

the Fuji in the digital photo.

Between 2003 and 2011, the group after leaving the production of Kodachrome in 2009,

suppress 47,000 jobs, close 13 plants and 130 laboratories. In 2012, Kodak weighs only 150

million euro traded, against 7 billion in 2007 the company went bankrupt and sold its

patents, some of which attracts computers and mobile phones companies.

Market leader, Kodak missed the turn of digital, which has transformed the world of

photography. This missed opportunity will lead the company to bankruptcy.

Novartis, digital company in 2013, understood that mobile Health is transforming the

pharmaceutical industry. She did not miss his appointment with the mobile health as Kodak

with the digital photography.

2. Novartis: The future challenges and opportunities

The configuration of the mobile health industry, offer to Novartis many opportunities and

challenges.

We can identify three main challenges for Novartis.

The first one is to win the trust of patients

Pharma companies are fighting an uphill battle in many ways. One is that, as technologies

like mobile devices bring healthcare into patients’ homes, patient trust becomes more

important than ever. And pharmaceutical companies generally aren’t as trusted as

physicians or even insurers.


A Deloitte survey last year found that although people trust doctors and academic centers

most, the next most trusted entities are companies like WebMD, then Google search results.

At the bottom of the list are pharma and payor companies.

A more recent study, by Makovsky Health, found that only around 35 percent of consumers

would trust a disease website sponsored by a pharmaceutical company, and 16 percent said

they would never visit a disease website sponsored by a pharma company.

The second one is the ability of Novartis to take risk

Pharma companies is historically extremely risk-averse, when you introduce a new factor, it

inherently increases risk. In a business that is focused on reducing risk, then those are things

that life sciences companies are going to stay away from. In the business of mobile health,

Novartis will always need to take risk to be the best.

The last challenge for Novartis will be its ability to produce relevant apps for patients,

for that, they need to develop a customer culture.

Mobile health offers many opportunities to Novartis

Novartis will be closer to patients and will understand the needs, expectations and

will be able to produce Blockbusters.

Novartis will improve his image through the development of application which help

patients.

This revolution may allow Novartis to become a key player in the prevention of

diseases

MHealth will become a new level of growth (Turnover)

IV. Conclusion

The mobile health market is growing rapidly and Novartis understood its importance,

she wants to use this digital revolution to transform access to care. She must and will face

challenges like winning the confidence of patients or produce relevant applications, but

behind these challenges there are many opportunities.


Reference

1. Bilan économique du LEEM (les entreprises du médicament) / édition 2014

2. Livre Blanc 2013-Télémédecine 2020 Modèles économiques

3. Livre vert sur la santé mobile- Commission Européenne

4. Research2Guidance-mHealth App Developer Economics 2014

5. Pwc-L’émergence du mHealth : un levier de croissance

6. Pwc- Socio-economic impact of mHealth An assessment report for the European Union

7. Syntec Numerique-Télémédecine 2020 faire de la france un leader du secteur en plus forte

croissance de la e-santé

8. http://mobihealthnews.com/35895/novartis-mobile-health-strategy-poised-to-move-from-

tracking-to-virtual-care/

9. http://www.01net.com/editorial/626092/ios-versus-android-comparaison-nest-pas-

forcement-raison/

10. http://mobihealthnews.com/32420/10-digital-health-startups-that-

pivoted/http://www.novartis.com/newsroom/feature-stories/2014/06/mHealth-a-

revolution-in-healthcare.shtml

11. http://www.novartis.com/innovation/focus-on-patient-outcomes/index.shtml

12. http://www.novartis.com/innovation/focus-on-patient-outcomes/remote-monitoring.shtml

13. http://mobile-health.fr/2014/06/weecare-temoignage-de-novartis/

14. http://europa.eu/rapid/press-release_IP-14-394_fr.htm

15. http://www.healthdatachallenges.com/challenges/database/novartis-mobile-health-

challenge/

16. http://www.mmm-online.com/avatar-wins-hearts-at-novartis-mhealth-

challenge/article/321705/

17. https://itunews.itu.int/fr/1632-Dialogue-de-Geneve-la-sante-sur-mobile.note.aspx

18. http://lemondedelaesante.wordpress.com/2012/07/31/le-remplacement-du-stethoscope-

par-le-mobile-est-il-pour-demain/

19. http://lemondedelaesante.wordpress.com/2013/03/05/la-m-sante-doit-elle-evoluer-pour-

permettre-une-adoption-generalisee/

20. http://research2guidance.com/why-pharma-companies-have-no-substantial-impact-on-the-

mhealth-app-economy/

http://www.01net.com/editorial/626092/ios-versus-android-comparaison-nest-pas-forcement-raison/

http://www.01net.com/editorial/626092/ios-versus-android-comparaison-nest-pas-forcement-raison/

http://lemondedelaesante.wordpress.com/2013/03/05/la-m-sante-doit-elle-evoluer-pour-permettre-une-adoption-generalisee/

http://lemondedelaesante.wordpress.com/2013/03/05/la-m-sante-doit-elle-evoluer-pour-permettre-une-adoption-generalisee/


Interview of Mr Guillaume Marchand, President and co-founder of

Health dmd

1. What is your definition of mobile health?

The mobile Health corresponds to all services related directly or indirectly to the health permanently available via a mobile device connected to a network.

2. What is your view on offers and demands in this market? First, there are 100 000 application and 40% of these applications are for health professionals. Regarding demand, there are 7 million mobile health users and 22% of the users have downloaded at least one app.

3. What is the role of pharmaceutical companies on the French market?

Pharmaceutical companies are important because they support financially and work with associations. In the Same time, they create applications.

4. Is there a regulation of the market for mobile health in France? If so, how do you rate this regulation? There is no regulation in this sector.

5. What is the place of France in this market on the global stage (turnover, market share etc.)? In 2017, the market for mobile health will reach $ 26.5 billion, 30% of this turnover will be in Europe. The UK is number one in this field followed by Spain and France, which ranks third countries.

6. What is the place of Novartis in the market for mobile health in France? Novartis is a pioneer in this field

7. How will evolve the market of mobile health? In the future, end users will produce applications and the quality of application will be higher.

Health & Medicine

What are the Challenges and Opportunities for Novartis on the Mobile Health?