Barriers to success

Collaborations are vital to seizing digital health opportunities, but we know they are difficult to pull off. Organisations not only struggle to find the right partners to work with, but also struggle to forge successful relationships.

Our research shows that only 11% of collaboration and investment proposals that cross organisations’ desks ever enter detailed due diligence, and only 4% are executed. Even when collaborations do go ahead, there is no guarantee of success. Respondents told us that only 34% of their collaborations achieved their stated goals.

Why do collaborations struggle to realise their full potential?

Drawing on our experience and research, we identify eight barriers that prevent many from forging mutually beneficial relationships.

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1. Lack of direction
  • Organisations are still unsure about their collaboration objectives. Many enter talks without having a clear view of what they are looking for or what they hope to achieve. In our study, respondents say the biggest challenge they face during due diligence is working out the technology they want. Without a clear focus, organisations will struggle to separate hype from opportunity and could waste significant resources on partnerships that were doomed to fail from the start.

    Our research also revealed that target companies are often ill-prepared to answer questions from potential collaboration partners or investors – respondents say obtaining the necessary quality of information is the second most common issue when carrying out due diligence. Those unable to share the right information at the right time will find that doors to collaborations and investment soon close.

2. Siloed thinking
  • In our experience, the best digital health collaborations blend deep patient insights with cutting-edge technology. However, our research shows that HLS and TMT companies do not always want to work together. When TMT companies were asked which types of organisations they look to collaborate with, most mentioned established tech players or tech start-ups. Likewise, HLS companies seek to work with others in their sector, with most prioritising collaborations with healthcare providers or pharmaceutical companies. This lack of cross-sector thinking will prevent many from realising their goals. TMT companies that create digital health projects in isolation risk developing products and services that do not meet the needs of patients or clinicians, and which payors will not reimburse. Similarly, established HLS companies will quickly burn significant resources if they try to develop complex digital solutions – internally or via sub-contracting – without partnering with a digital leader from outside their organisation.

    Bissan Al Lazikani, Head of Data Science at the Institute of Cancer Research.

    You may have a wonderful AI solution, and you may think you can just stick it in a room with a clinician and then they’ll cure cancer. Obviously that doesn’t work, and there’s been some very high-profile examples of how that’s really not delivered.

3. IP complexities
  • IP discussions are critical in digital health collaborations. Unfortunately, organisations can find it difficult to get the assurances they need. In our study, respondents say working out whether co-parties have good title to their IP is a top-three challenge when carrying out due diligence. Foreground IP – IP that arises from a collaboration – is another key sticking point. Our research shows that organisations struggle to resolve the ownership and licensing of rights to foreground IP. They also find it difficult to agree who should protect it and who is responsible for funding that protection. IP discussions are likely to become more complicated with the arrival of AI technology.

    For example, if an algorithm learns from an organisation’s existing proprietary IP, can that party stop it from using this insight outside the scope of the collaboration? And how are parties incentivised if the only foreground IP to arise from a collaboration is an improvement to one party’s algorithm? Those that do not have a firm handle on these key points may struggle to reach a fair agreement with their potential co-parties, or any agreement at all.

    Lydia Torne, Managing Associate, Simmons & Simmons, UK

    Businesses should adopt robust IP capture and protection processes so they can quickly and easily demonstrate their IP rights to collaborators and investors. For nascent businesses that don't yet have controls and processes in place, potential partners may instead find it fruitful to speak directly with team members that have been involved in the product development process.


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4. Data insecurity
  • High-profile cybersecurity breaches and a raft of new regulations have thrust data security and cybersecurity firmly into the spotlight. However, many organisations have still not embedded the right controls to keep sensitive data safe. Our research shows that 68% of organisations struggle to find partners with acceptable cybersecurity risk frameworks.

    Moreover, resolving data security and cybersecurity issues is the single greatest challenge faced when agreeing collaborations. It is critical that organisations take steps to secure their data security and cybersecurity position – otherwise, they will find that collaboration opportunities quickly disintegrate.

    Amy Reddell, Vice President of Legal Services at Houston Methodist

    No real player is going to get any traction unless their encryption is appropriate and their security is compliant.

5. Uncertain market access
  • It is no secret that healthcare is a highly regulated sector. However, organisations continue to underestimate the hoops they need to jump through to bring products and services to market. Our research shows that resolving regulatory and compliance issues is the second greatest challenge when agreeing collaborations. In part, problems arise because regulatory frameworks have struggled to keep pace with technology innovation.

    At the same time, some businesses do not realise their products qualify as medical devices, which are subject to stricter regulatory requirements that differ between countries. There are also indications that some actively try to avoid engaging with regulators altogether. This is a short-sighted strategy: co-parties, investors and regulators will always need confidence that organisations have properly understood their obligations.

6. Product liability issues
  • Product liability has become a critical battleground during digital health collaborations. All parties need to understand their accountability in the event that the innovation later causes harm to a patient. This can be challenging when creating products or services that link to a piece of software or operate within an IoMT ecosystem, as well as when developing personalised treatments or patient empowerment innovations.

    In these scenarios, all involved parties – including the medical device hardware manufacturer, software developers, physicians and even smartphone manufacturers – could potentially face costly and reputation-damaging product liability claims. As such, liabilities need to be clearly apportioned in contractual arrangements. Unfortunately, we know that many struggle to reach an agreement that all parties are happy with. In our study, respondents say product liability issues are the primary reason their collaborations did not deliver on their intended outcomes.

7. Divergent objectives
  • Organisations often have different motivations when entering collaborations. Our research shows that payors and HLS companies keep patients front of mind: they look for partners that can help them build a better picture of patient needs, or help them improve patient outcomes and experiences. Conversely, our research shows that most TMT companies look for partners that either support the development of their technology or provide access to new products.

    Mismatched objectives do not always create problems; challenges only arise when organisations fail to understand or manage their co-parties’ expectations. In our research, respondents say misaligned or divergent objectives have caused their collaborations to fail.

8. Cultural clashes
  • Cultural differences can make or break a collaboration. While 63% of organisations believe successful collaborations are founded on diversity of all forms, 56% say cultural differences can hinder progress. Problems often arise because co-parties have different appetites for innovation and risk. The traditionally slower pace of innovation and rigour of scientific R&D may be perceived as stifling TMT players’ creativity, while TMT players’ fail-fast attitudes may not always gel in complex healthcare landscapes.

    It is important to recognise that cultural differences do not always have to be a barrier to success. The key is to manage potential conflicts from the start. Unfortunately, this does not always happen. In our study, cultural issues were cited as a key reason why collaborations fail.

Collaboration success will be key to securing investment

Investors are ready to seize the digital health agenda, and there is no shortage of dry powder and other capital across the market. Yet, despite a wealth of opportunities, investors still find it difficult to find winning propositions. Our research shows that just 12% of the opportunities coming to investors’ attention enter due diligence, and only 4% are transacted. Interestingly, our research reveals that many of the barriers preventing organisations from building successful collaborations will also stop them from securing investment. 

When making investment decisions, investors look first and foremost for leading technologies and products that have a clear path to market. They not only prioritise organisations that are led by skilled management teams, but also those that have IP protection locked down. A further 51% also consider an organisation’s track record on collaborations when making investment decisions. Yet our research shows investors find it difficult to secure the right assurances from target companies. Top challenges include obtaining the necessary quality of information from management teams and establishing whether the target company has good title to IP.


This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.