CB-Insights_Big-Tech-In-Pharma.pdf

The Big Tech in
Pharma Report
How Amazon, Microsoft, Apple, and Alphabet are capitalizing on
pharma’s digital transformation

Contents
Summary of findings 6
Market drivers 8
Amazon 14
Microsoft 26
Apple 38
Alphabet 50
5
Big tech | Pharma

Big tech pharma acquisitions slowed in 2022, compared
to 2021…
• Big tech’s acquisition activity dropped steeply in 2022,
after a very active 2021.
…and big tech investments also slowed over the same
period.
• Alphabet leads big tech in unique pharma
investments (20) in 2022, followed by Microsoft (4).
• GV (Google Ventures) is the most active big tech
venture arm in pharma by a wide margin.
What’s next?
• Big tech companies are likely to double down on
hardware and software, with the aim of capturing as
much patient data as possible. The amount of data
generated from these products is significant. Expect
big tech companies to utilize their data expertise to
discover and commercialize digital biomarkers.
• Big tech companies will continue to offer AI expertise
to pharmaceutical companies. Anticipate big tech to
begin negotiating contracts with shared upside for
drugs discovered as a result of their pharmaceutical
partnerships.
Overview of big tech’s activities in pharma
Summary of findings
6
Big tech | Pharma

Where big tech is developing solutions in pharma
7
Big tech | Pharma

Where big tech is making moves
8

Amazon is building the pharmacy of the future by using its existing supply chain to create a customer experience on par with its
e-commerce business. It is scaling remote patient monitoring (RPM) solutions to create a unified experience from prescription to
delivery to follow-up.
Microsoft is launching healthcare SaaS solutions, leveraging its experience as an enterprise software company. It is entering the
pharmaceuticals market through partnerships with existing players. Microsoft’s enterprise software products collect patient
data, which is then used to build clinical trials and drug discovery solutions.
Apple is using its consumer hardware and massive user base to its advantage as it aims to build a secure and centralized
location for patient health data. It is creating hardware to collect patient data and is building a developer ecosystem — similar to
its strategy with the iPhone and the App Store.
Alphabet is collecting patient data through its devices and organizing the data into secure patient health records. What
differentiates it from other big tech companies is how Alphabet is using AI expertise to build in-house drug R&D capabilities.
How big tech is transforming pharma
9
Big tech | Pharma

Inefficiencies abound
Many processes and workflows
across the drug development value
chain are still manual (e.g., lab
notebooks). Pharma is partnering
with big tech companies to decrease
costs by improving drug discovery,
enabling faster clinical trials, and
offering better distribution models.
Data, data, data
The amount of patient data available
has skyrocketed in the past few
years. Big tech is using this data to
identify drug targets, predict real-time
medication demand, and build patient
monitoring and health records
technologies.
Digital transformation
Return on investment for drug R&D
has ticked up over the past 2 years,
after continuous decline throughout
the 2010s. Big tech is capitalizing on
opportunities across cloud, artificial
intelligence, and IoT across the
pharmaceutical value chain.
What’s driving big tech activity in pharma?
10
Big tech | Pharma | Market drivers

Drug development workflows and
processes are still largely manual,
from lab notebooks for R&D to
data collection for clinical trials.
Pharma is working with startups
and big tech to deploy digital
solutions from drug discovery to
clinical trials to the supply chain.
Big tech companies are actively
investing in and building solutions
that improve drug development
efficiency.
Much of drug development is still manual
11

The quantity of patient data
housed in clinical systems
skyrocketed nearly 500% from
2016 to 2020. This data is
valuable as “real-world evidence”
(RWE) for drug development.
Big tech is using this data to
identify drug targets, predict real-
time medication demand, and
build patient monitoring and
health records technology.
More patient data = improved personalization
12

Return on investment for drug R&D
has increased over the past few
years, after continuous decline
throughout the 2010s.
This correlates with big tech’s
increased activity in the space.
Big tech is capitalizing on
opportunities in cloud, artificial
intelligence, and IoT across the
pharmaceutical value chain.
Digital transformation takes hold as returns
tick up
Source: Drug Discovery Trends 13

Digital pharmacy
Amazon aims to offer an
upgraded customer experience
for ordering and receiving
medications.
Supply chain
Amazon is leveraging its
supply chain expertise for
generics manufacturing.
Personalization
Amazon is using IoT devices
and patient data to
personalize healthcare
experiences.
Where Amazon is focusing
15
Big tech | Pharma | Amazon

Amazon is building a digital
pharmacy
16
Theme 1: Digital Pharmacy

Coverage of Amazon’s digital pharmacy has dropped
from its peak…
17
456 469
369
295
627
569
625
864 880
636
480 464
396
313
555
0
100
200
300
400
500
600
700
800
900
1000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2019 2020 2021 2022
News mentions of “Amazon” and “pharmacy”

….but Amazon continues to build its pharmacy
capabilities
18
Amazon pharmacy partners with Blue
Plans in five states
March 10, 2022 |
Amazon in talks with Apollo Hospitals
for partnership in pharmacy business
November 26, 2021 |
Amazon launches virtual clinic to
provide virtual care and prescriptions
November 15, 2022 |
Amazon spends $3.9B to acquire One
Medical
July 21, 2022 |

Amazon is developing pharma supply
chain expertise
19
Theme 2: Supply Chain

Soft Robotics
Series C
$26M
Soft Robotics builds soft
rubber grippers for robots
to grab items for
automated fulfillment.
Attabotics
Series C
$72M
Attabotics develops an
automated fulfillment
system to reduce costs in
warehouse environments.
Project44
Unattributed
$31M
Project44 offers an end-to-
end supply chain visibility
platform for shippers and
third-party logistics firms.
Pharma logistics is a hot space…
20

The $482B generic drugs market provides an opportunity for Amazon to manufacture drugs in-house — which could
reduce prices and improve delivery times for customers.
The company is developing its supply chain expertise by helping Novartis and Pfizer digitize their pharmaceutical
manufacturing, supply chain, and delivery operations.
…and Amazon is quietly building expertise
through pharma partnerships
Source: Amazon 21

Amazon is personalizing healthcare
with IoT devices and data
22
Theme 3: Personalization

2.5
4.1
7.5
27.1
46.5
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
Apple
Sonos
Other
Google
Amazon
Amazon has a head start in remote patient
monitoring through smart speaker dominance…
Number of smart speaker installations in USA (millions), as of Jan 2020
23
Source: Statista

…and it’s building a competitive advantage
through integrations and partnerships
24
Amazon’s Alexa voice assistant can
now help you diagnose Covid-19, with
information from the CDC
May 27, 2020 |
Amazon partnered with Cerner to let
patients share Halo watch data with
providers
September 1, 2020 |
Nurx teams up with Amazon Alexa on
birth control reminders and sex
education
September 28, 2021 |
Amazon Halo can now share heart rate
data with third-party apps and
equipment
August 5, 2021 |

Amazon’s plans point to key trends for 2023
25
Amazon is building a digital pharmacy
Amazon is developing supply chain
expertise
Amazon is personalizing healthcare
with IoT devices and data
Summary Amazon’s e-commerce infrastructure
and PillPack acquisition enable
consumers to easily order and manage
medications.
Amazon has an opportunity to reduce
drug prices by integrating generics
manufacturing with its existing supply
chain.
Amazon’s existing IoT solutions (such
as Alexa and Echo) enable integration
into remote patient monitoring and care
delivery.
Implications Expect Amazon to leverage its existing
supply chain to ramp up its digital
pharmacy efforts.
Due to synergies with its e-commerce
business, anticipate Amazon building a
pharmaceutical manufacturing unit.
Consider that Amazon may be after
more than consumer purchasing data
with its widespread deployment of
these devices.
Big tech | Pharma | Amazon | Key takeaways & implications

Software-as-a-Service
Microsoft is building SaaS
offerings for healthcare
enterprises.
Interoperability
Microsoft is using its data
experience to address the
healthcare interoperability
challenge.
Drug discovery
Microsoft is offering its AI
expertise to pharma
companies to help expedite
drug discovery.
Where Microsoft is focusing
27
Big tech | Pharma | Microsoft

Microsoft is creating SaaS solutions
for healthcare enterprises
28
Theme 1: SaaS

1
2
1
6 6
5
7
0
2
4
6
8
10
12
14
2014 2015 2016 2017 2018 2019 2020 2021 2022
YTD
11
Partnerships
13
Microsoft has stepped up its healthcare
partnerships in recent years…
Disclosed business relationships (as of 12/1/2022)
29

…and is now building its own SaaS business through
acquisitions and product launches
30
Microsoft and CMR Surgical are
collaborating on “Project Silica” to store
clinical data into glass
July 4, 2022 |
Microsoft is working with SAS to make
health analytics more accessible to
healthcare organizations
September 1, 2020 |
Microsoft Cloud for Healthcare expands
portfolio with Azure Healthcare APIs
August 3, 2021 |
Microsoft acquires Nuance to enhance
Healthcare AI, Cloud strategy
April 12, 2021 |

Microsoft is building data storage
and interoperability tech
31
Theme 2: Interoperability

Interoperability funding has skyrocketed over the
past few years
$1.1B $2.2B $4.3B $5.2B
Funding
$4.0B
$0.0B
$1.0B
$2.0B
$3.0B
$4.0B
$5.0B
$6.0B
2018 2019 2020 2021 2022
32

CMR Surgical
Series D
$600M
Microsoft and CMR
Surgical are collaborating
on “Project Silica” to store
clinical data using glass.
Rescale
Series C
$50M
Rescale is a R&D platform
that helps scientists build,
compute, analyze, and
scale simulations in the
cloud.
Allscripts (Veradigm)
IPO
$112M
Microsoft is working
Allscripts to use EHR
data for clinical trial
matchmaking.
Microsoft is partnering with and investing in data
storage and accessibility companies
33

Microsoft is helping pharma discover
new drugs
34
Theme 3: Drug discovery

AI algorithms allow pharmaceutical companies
and CROs to rapidly and cost-effectively
identify drug candidates. Leaders such as
AstraZeneca, Sanofi, and Biogen are rapidly
adopting AI-powered drug discovery platforms
as a core part of their R&D process.
As AI-powered discovery technology matures,
providers (such as Microsoft) will look for more
shared upside in the drug candidates they help
discover.
AI-powered drug discovery is a top priority for
pharmaceutical companies
35

Novo Nordisk
Microsoft and Novo Nordisk are
collaborating to automate the
summarization and analysis of
information from sources such
as literature, patents, scientific
reports and discussion forums to
get scientific insights.
About:
Novartis
Microsoft partnered with Novartis
in 2019 to create an AI innovation
lab for drug R&D.
About:
UCB Pharma
In early 2021, Microsoft entered
into an agreement with UCB to
create an oral antiviral for Covid-
19. By leveraging Microsoft’s
Azure, UCB was able screen and
design compounds in 3 days —
a process that usually takes 6
months.
About:
Microsoft is discovering drugs with pharma partners
36

Microsoft’s plans point to key trends for 2023
37
Microsoft is creating SaaS solutions
for healthcare enterprises
Microsoft is building data storage and
interoperability tech
Microsoft is helping pharma discover
new drugs
Summary In the past year, Microsoft has doubled
down on healthcare SaaS offerings,
through product launches, acquisitions,
and partnerships.
Microsoft is partnering with startups to
improve data storage and
interoperability.
Microsoft has already had remarkable
success helping pharmaceutical
partners discover drug candidates.
Implications Following its healthcare cloud launch
and Nuance acquisition, expect
Microsoft to continue investing in its
healthcare SaaS business.
Expect Microsoft to keep exploring new
technologies for data storage, access,
and interoperability.
Consider that Microsoft is well-
positioned to build an AI-driven drug
discovery business unit.
Big tech | Pharma | Microsoft | Key takeaways & implications

Hardware
Apple is investing in hardware
improvements, primarily the
Apple Watch, to collect more
patient data.
Biomarkers
Apple is turning patient data
into new biomarkers for
disease.
Ecosystem
Apple offers a software
ecosystem for pharma
companies to build apps.
Where Apple is focusing
39
Big tech | Pharma | Apple

Apple is building hardware to collect
health data
40
Theme 1: Hardware

Portable Ultrasound Electrocardiogram (ECG) Vital Signs
The iPhone can integrate with medical devices
41
Grant Series F Series B
$5M
Butterfly Network
provides portable point-of-
care ultrasounds devices
that can be read through a
smartphone.
Unknown
AliveCor offers a mobile
ECG solution that can
provide sinus rhythm
analysis and atrial
fibrillation detection.
$14M
Binah.ai enables real-time
vital signs measurement
via a device’s in-built
camera.

Apple is focused on enabling health
measurements with the Apple Watch
42
NIH-funded study to test if Apple Watch
can prevent strokes, limit blood thinners
August 31, 2022 |
Rune Labs translates Apple Watch data
into Parkinson’s insights with FDA nod
June 13, 2022 |
Apple reveals medication tracking
feature and more health updates
June 6, 2022 |
AI researchers at Mayo Clinic use the
Apple Watch to detect silent, weakening
heart disease
May 3, 2022 |

Amazon is creating/discovering
digital biomarkers
43
Theme 2: Digital biomarkers

141
187
331
476 471
0
50
100
150
200
250
300
350
400
450
500
2018 2019 2020 2021 2022 YTD
Interest in digital biomarkers is growing…
News mentions of “digital biomarker” from 2018 to 2022 YTD
44

…and Apple is in a unique position to capitalize
45
Biogen, Apple to initiate study to
develop cognitive health digital
biomarkers
January 11, 2021 |
Digital biomarker for asthma indicates
Apple Watch move into health tech
December 1, 2020 |
UCLA collaborates with Apple to develop
digital biomarkers for depression
December 1, 2020 |
Apple, Eli Lilly, and Evidation present
first results from digital Alzheimer’s
study
August 8, 2019 |

Apple is building a healthcare
software ecosystem
46
Theme 3: Ecosystem

ResearchKit CareKit HealthKit
Apple has created an open-source framework…
47
ResearchKit is a tool for
medical research that enables
consent flows, dynamic tasks,
and surveys delivered through
developer apps. It gives access
to valuable data for research
studies, such as step counts,
calories, and heart rate.
CareKit helps developers
better understand and manage
user health by creating
dynamic care plans, tracking
symptoms, connecting to care
teams, and more.
HealthKit integrates into health
and fitness apps to create a
more seamless user
experience. It provides access
for developers to read and
write health and activity data.

…that universities and companies are using to
build health apps
48
University of Rochester is using
ResearchKit to monitor and measure
Parkinson’s disease
Duke University is using ResearchKit to
discover a better way to diagnose
autism
Johns Hopkins is using CareKit to offer
heart attack recovery at your fingertips
One Drop is using CareKit to provide an
easier way to manage diabetes

Apple’s plans point to key trends for 2023
49
Apple is building hardware to collect
patient data
Apple is turning patient data into
disease biomarkers
Apple is offering a software ecosystem
for health apps
Summary Apple has doubled down on hardware,
in particular the Apple Watch, to collect
patient data.
Apple is partnering with academia and
pharma to turn patient data into new
biomarkers for disease.
Pharmaceutical companies are using
Apple’s software ecosystem to build
healthcare apps.
Implications Expect Apple to continue advancing its
Apple Watch hardware. Consider that
Apple may eventually dominate the
remote patient monitoring market.
Consider that Apple is creating a
competitive moat by collecting and
storing unique patient data via the
Apple Watch.
Recognize that Apple’s software kits
are uniquely positioned in the pharma
tech ecosystem, and they continue to
garner usage since their release in the
mid-2010s.
Big tech | Pharma | Apple | Key takeaways & implications

Interoperability
Alphabet is making health
data easier to access and
utilize.
Hardware
Alphabet is building hardware
to collect patient data.
Drug discovery
Alphabet is discovering drugs
with AI through its subsidiary
companies.
Where Alphabet is focusing
51
Big tech | Pharma | Alphabet

Alphabet is making health data easier
to access and utilize
52
Theme 1: Interoperability

DNAnexus
Series I
$200M
DNAnexus offers a cloud-
based DNA data
management and biomedical
data analysis platform.
Verana Health
Series E
$150M
Verana Health offers real-
world data to accelerate
drug research and provide
clinical decision support
for physicians.
Tempus
Debt
$275M
Tempus offers molecular
and clinical data to help
physicians deliver
personalized cancer care.
Alphabet is backing real-world data and
informatics startups
53

Alphabet is also acquiring health data directly
through partnerships
54
Mayo Clinic CIO: Google partnership will
‘transform healthcare’
November 19, 2021 |
Google Cloud to beef up HCA
Healthcare’s clinical operational data
analytics in multiyear partnership
May 26, 2021 |
Highmark Health inks 6-year partnership
with Google subsidiary Verily Life
Sciences
March 2, 2021 |
Google, Ascension continue EHR
collaboration by launching new search
tool
February 23, 2021 |

Verily, the life sciences subsidiary under
Alphabet, raised $1B in capital in September
2022.
Verily will use these funds to invest in and build
“precision health” products. Applying machine
learning to research, clinical, and non-clinical
data, Verily hopes to improve healthcare
personalization.
The capital may also be used to fund strategic
partnerships, business development, and
potential acquisitions.
In 2021, Verily acquired SignalPath, a clinical
trials operating system provider. It has also
partnered with Lumea, L’Oreal, and Mayo Clinic.
Verily raised $1B to use patient data for
precision healthcare
55

Alphabet is building hardware and
software to collect patient data
56
Theme 2: Hardware

198
304 305
360
401
150
200
250
300
350
400
450
2018 2019 2020 2021 2022
Executives are increasingly talking about remote
patient monitoring
Earnings transcript mentions of “remote patient monitoring” or “RPM” from 2018 to 2022
57

Alphabet is building RPM hardware and software
58
Alphabet’s Verily, ResMed launch sleep
platform Primasun
November 14, 2022 |
Patent granted for “Imputation of blood
glucose monitoring data”
October 18, 2022 |
Patent granted for “Display on a
bandage-type monitoring device”
October 4, 2022 |
Google and Samsung join forces to
make it easier to sync fitness data
between apps
May 15, 2022 |

Alphabet is discovering new drugs
with AI
59
Theme 3: Drug discovery

Drug discovery funding falls from all-time high but
stays above pre-pandemic levels in 2022
$1.4B $1.3B $2.5B $6.0B
Funding
$2.8B
$0.0B
$1.0B
$2.0B
$3.0B
$4.0B
$5.0B
$6.0B
$7.0B
2018 2019 2020 2021 2022 YTD
60

Google’s DeepMind division is developing AI for
Drug R&D. AlphaFold — released in 2021 —
predicted more than 350,000 protein
structures, which encompass proteomes for
humans and other organisms.
Google packaged this technology into a new
company called Isomorphic Laboratories,
which will take an “AI-first approach” to drug
discovery and development.
In addition, Google’s work in quantum
computing may eventually amplify its drug
development capabilities.
Alphabet launched a drug discovery company
based on DeepMind’s research
61

Terray Therapeutics AbbVie Broad Institute
Alphabet subsidiary Calico Life Sciences is
partnering to develop anti-aging drugs
62
Terray Therapeutics and
Calico have a multi-target
collaboration to discover
small molecule therapeutics
for age-related diseases,
including cancer.
AbbVie and Calico are
working together to
develop drugs for aging-
related diseases, including
neurodegeneration and
cancer.
The Broad Institute and
Calico have an ongoing
partnership focused on the
biology and genetics of
aging and early-stage drug
discovery.

Alphabet’s plans point to key trends for 2023
63
Alphabet is making health data easier
to access and utilize
Alphabet is building hardware to
collect patient data
Alphabet is discovering drugs with AI
Summary Alphabet is investing in health data
startups and gathering health data
through partnerships.
Alphabet’s companies are partnering
with existing players and patenting
novel technologies for remote patient
monitoring.
Alphabet now has 3 separate
pharmaceutical ventures, with Verily,
Calico, and Isomorphic Labs.
Implications Expect Alphabet to continue investing
in companies, products, and
partnerships that provide access to
patient data.
On the heels of recent granted patents,
expect Verily Life Sciences to use a
portion of its recent $1B funding round
to develop remote patient monitoring
tech.
Consider that Alphabet is the only big
tech company to pursue drug discovery
and development in-house. Its unique
AI expertise is well-suited to this
strategy.
Big tech | Pharma | Alphabet | Key takeaways & implications

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CB-Insights_Big-Tech-In-Pharma.pdf