The Reality of the Big Tech Disruption in Medtech

Another tale has been told in the saga of Big Tech’s entrance into healthcare. In the most recent update, IBM decided to sell the guts of its Watson Health unit to a global investment firm. The deal is for Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex, and imaging software offerings.

This move comes after rumors emerged earlier last year the organization was looking to shed the unit, but nothing occurred at the time. Whether the price was too high or the stars simply didn’t align for a deal, no one can be sure. But the fact remains, the high hopes for IBM Watson to truly disrupt healthcare, especially in the area of cancer treatment, has yet to be fulfilled.

“IBM remains committed to Watson, our broader AI business, and to the clients and partners we support in healthcare IT. Through this transaction, Francisco Partners acquires data and analytics assets that will benefit from the enhanced investment and expertise of a healthcare industry focused portfolio,” Tom Rosamilia, senior vice president of IBM Software, explained in a company press release.

A keyword jumps out at me in that statement and I think it’s going to resonate with the greatest impact Big Tech stands to make within healthcare: partner. I’m not sure Big Tech has an interest in flying solo in the healthcare space. I’m not sure they want to compete with the likes of Medtronic, Boston Scientific, or Stryker on novel medical device innovation. I’m not sure Big Tech wants to become experts in regulatory compliance and deal with the likes of the U.S. Food and Drug Administration (FDA). They will certainly become an asset in the medtech space, but I don’t think they will truly become the competition some predicted.

Further, another phrase from Rosamilia’s statement stands out to me: “…benefit from the enhanced investment and expertise of a healthcare industry focused portfolio.” Prior to purchasing the Watson Health assets, Francisco Partners had maintained an comprehensive portfolio of healthcare technology firms. This is the experience and expertise Big Tech has mostly lacked. Sure, they are gaining valuable experience, but when compared to the established firms defining the medical device landscape, they are severely lacking.

Big Tech may take up residence in the related—but unregulated—wellness space and become major players in that industry. For example, Google acquired Fitbit (completed January 2021). While there hasn’t been much to report on since then, the purchase makes more sense. The Fitbit (and other similar wellness/fitness devices) aren’t under the purview of the FDA. Also, the Fitbit is a direct-to-consumer device—something Google has a much better handle on.

Speaking of Google, they made a substantial move last year that seemed to deemphasize their own focus on healthcare. While the company claims healthcare is still a part of its strategy going forward, decentralizing those efforts with the disbanding of its Google Health unit might give another impression. Health-centered projects would no longer be housed under “one roof.” The organization, however, still can offer significant value to healthcare—perhaps more importantly, the established companies developing the technologies for it.

The medical device space is transforming rapidly. That transformation is taking healthcare into the digital realm. We’re already seeing the impact these technologies are making—artificial intelligence (AI), data analytics, virtual and augmented reality, machine learning, robotics, and more. These developments are enhancing almost every area of the healthcare space, from diagnostics to treatment.

While AI and machine learning are still in their infancy in the medtech space, Big Tech has been playing with these toys (and are much more comfortable with them) for quite some time. Just as Big Tech seemed to be a “fish out of water” when attempting to tackle healthcare challenges, the medical device community is just as inexperienced with these advanced tools (with some notable exceptions).

As such, while we may never see the anticipated healthcare disruption from Big Tech, what may be more common is partnerships between firms like J&J and Microsoft—perhaps Medtronic and Google, or Siemens and Apple. This is where the opportunity for innovation can be nurtured to alter healthcare. Through collaboration, each side can put its “best foot forward” and not face the substantial learning curve to achieve the same result on its own.

While disruption from Big Tech would have been an interesting story to cover, the advancements realized by these medtech tandems will be much more valuable to us all.  

Sean Fenske, Editor-in-Chief
[email protected]