The digital developments in the healthcare industry, combined with an aging population and enormous scientific progress, pose new challenges for pharmaceutical companies. On the road to new and effective drugs, they must be careful not to lose touch with exploding knowledge and current technologies. Dieter Weinand, Member of the Board of Management of Bayer and President Pharmaceuticals, explains in an interview with Thorsten Schüller how the company is positioning itself in the face of these changes.

CHEManager: Googles Calico does research in age-related diseases, Mark Zuckerberg works on a human cell atlas, Samsung Biologics establishes the biggest biopharmaceutical production capacities worldwide, and Amazon has an eye on drug distribution and health insurance. Are you confronted with game changers entering the healthcare industry?

Dieter Weinand: The entire healthcare industry is going to be upended by revolutionary digital technologies and progress in science. The traditional biopharmaceutical industry is, therefore, at a crossroads. The announcements of Amazon entering the pharmaceutical market, or Roche acquiring Flatiron are just recent examples amongst several game changers. The groundbreaking progress, which is often driven by smaller-size digital disruptors, is starting to foster an evolution of new business models in the pharmaceutical industry and, indeed, in the healthcare sector as a whole.

How can companies in the Pharma industry keep pace and continue growing in the current environment, where digitization and scientific advancements are driving the evolution of the industry?

Dieter Weinand: Digital technologies are an integral component in all we do. The landscape is evolving toward more custom-fit, individual offers comprising diagnosis, personalized medicine, and supplementary digital support. Such “beyond the pill” solutions will shape the future of medical care. That is why digital technologies and applications are already considered in all phases of our value-creation process – from research and development through production to market access.

Accordingly, we are investing in high quality and high performing electronic platforms, software and hardware. In addition, we look increasingly at cutting edge breakthrough technologies like artificial intelligence and machine learning. Other parts of the healthcare system are in fact already integrating these to augment the work currently done by humans, from providing customer service to patient counseling and diagnostics.

What challenges do you expect to encounter on the way to the digital pharmaceutical world?

Dieter Weinand: enormously through digital services. However, we must pay appropriate attention to the patients’ right to determine what information is revealed and to whom.

Another aspect that I would not necessarily call a challenge, but rather an open question we need to further pursue, concerns the ownership of data. What does this mean for our current portfolio of offerings and services? The acquisition of Flatiron through Roche is a good example: Is Roche now a data company that also manufactures drugs, or are cancer therapies still their main focus business? I am sure that we will see more of these types of developments in the future and we will need to assess them carefully.

Another challenge is the aging society – people are living longer and consuming more healthcare resulting in rapidly increasing healthcare spending. What does it mean to pharma?

Dieter Weinand: As a result of our aging society, healthcare expenditures have indeed risen, consuming a greater share of GDP than in the past. However, the cost of innovative medicines has remained relatively stable around 10 percent of total healthcare expense, and these often save much greater costs by preventing hospitalization or long-term care.

Nevertheless, a high medical need still remains.

Dieter Weinand: Yes. The most common diseases are well addressed, but an aging population and the associated epidemiological changes require new therapies. As a consequence, there is an increased focus on value, and rightfully so. I am confident that in the future, the increased digitization, the availability of data, and the use of artificial intelligence in medicine offers the greatest opportunity for us to provide better medicine with better outcomes, for lower cost than ever before. Pharmaceutical companies, but also other healthcare stakeholders, must work together to evolve the current system to take advantage of this opportunity. And the outcomes are in greater focus rather than rationing or restricting care, as is all too often the case now.

What do these changes mean concretely for the way companies like yours conduct R&D?

Dieter Weinand: Because of the developments I have described above, the focus of researchers has also shifted. Much of the unmet medical need going forward will be in sub-populations and in orphan diseases. For pharma companies, this means that outdated business models need to be changed. No single organization or company can alone hold all the necessary know-how anymore. We must go where the science is. It is important to be more flexible and gain access to the best science. Collaborative networks with academic centers of scientific excellence, other large and small companies, including IT companies and payers must be established, and we must change the nature of these collaborations to be effective. Only this way will we be able to exploit the potential of scientific breakthroughs such as gene editing or stem cell therapies, supported by AI and machine learning.

Pharma companies today are not only collaborating to enhance geographic or commercial presence. Instead, they are forming more and more research collaborations to pool their expertise, know-how, IP, and entire portfolios. For example, when it comes to market launches, the proportion of licensed medicines across all therapeutic areas is higher than that of medicines developed by a company alone.

So which approaches has your company taken to get greater access to all of the knowledge out there?

Dieter Weinand: We have recently established two joint ventures at Bayer which address the need to integrate new scientific modalities. One, Casebia Therapeutics in Cambridge, Massachusetts, is a partnership with CRISPR Therapeutics that is focused on gene editing. Another is Blue Rock Therapeutics, a Stem Cell technology joint venture between Bayer and Versant Ventures.

Besides these two, we are also increasing our broad, strategic collaborations with academic institutions. Overall, we now have about 30 of them in place. Amongst our partners are the Broad Institute of MIT and Harvard in Cambridge, Massachusetts, or the German Cancer Research Institute. These are worldwide leading research institutes in biomedicine, especially in genomic studies. Our successful work with them has already resulted in exciting progress in oncology drug discovery, with several programs advancing toward the clinic.

In the area of R&D, we also complement our internal resources through crowd sourcing and smaller bolt-on acquisitions and license deals with companies ranging from smaller biotechs to those of our size.

Bayer has pharma “CoLaborator” facilities in San Francisco and Berlin. What are your experiences with these incubators for life-science start-ups?

Dieter Weinand: Our CoLaborator facility here in Berlin and as well as the one in San Francisco are good examples of how we create an ecosystem for innovative ideas. We offer young companies laboratory or office space on our research campuses, serving as their first point of contact in the search for potential collaboration partners in the pharmaceuticals industry. As such, they get access to our expertise and infrastructure, creating an ideal environment in which to advance research and innovation. We have had very good experiences with these formats as they bring in fresh perspectives on entrepreneurial mindset to our organization.

How do you secure intellectual property in the different collaborations?

Dieter Weinand: Intellectual property is obviously critical to the sustainability of research-based pharmaceutical companies. At Bayer, we are therefore always looking to secure rights to the IP resulting from any collaboration project we enter. Thereby, we always seek to ensure that we fairly reflect the interests of all partners involved in a respective project.

However, given the very diverse nature of partnerships, there is no one-size-fits-all solution

A look into future: What will the treatment of patients look like in 20 years?

Dieter Weinand: 20 years from now, the patients’ health will be monitored by their wearable devices, downloading all data in real time and combining it with all the other available data being collected on the patient and their daily activities, comparing their data to that of millions of patients to draw instantaneous conclusions about the patients’ health, based on all the medical information and outcomes data available worldwide. The patient will be diagnosed and alerted via their smartphone, by a supercomputer utilizing AI, which will have vastly greater knowledge and computing power than any single physician. The patient will receive a treatment plan via their smartphone, and their medication will be delivered to their office or home.

Is there already an example of this development?

Dieter Weinand: IBM Watson has already proven more accurate in diagnosing lung cancer with an accuracy of 90% compared to an average of 50% for human doctors. This requires us to re-think the traditional way we as companies engage with patients, payers, healthcare providers, and AI.  But not only companies will experience changes. It will be equally interesting to see how the current role of the physician will evolve. Amazon’s smart speaker, for example, already has the ability to assist in resuscitation procedures by setting the pace for a cardiac massage or sending reminders for the delivery of urgent emergency calls. It’s entirely possible that your next nurse or physician might be named “Alexa”.