As the healthcare investing world converges on San Francisco for the annual JPMorgan Healthcare Conference, Monday, the notion of partnership being critical to survive the shift into value-based healthcare was very apparent.
Two CEOs of billion-dollar companies stressed how collaboration and partnerships are key to their company's strategy and how that, among other things, is going to have a direct impact on their firms' financial fortunes.
First up was Novartis CEO Joseph Jimenez.
Jimenez stressed the importance of partnerships and science-based innovation at a time when incremental reimbursement is getting harder and harder to get.
As an example, he pointed to the company's collaboration with Google whereby Novartis is licensing the tech company's smart lens technology to develop a contact lens that can sense glucose in tears.
"We know nothing about sensors – they do," but we have a lot of clinical information, Jimenez said. "Technology and biology are coming together in ways to solve big problems."
And it's not just drug makers that are preaching the mantra of partnerships. Device makers, traditionally more insular than pharma companies, are also racing to get on the collaboration bandwagon.
Medtronic CEO Omar Ishrak told JP Morgan attendees that the medical device company is partnering with providers to help make their cath labs more efficient in Europe.
"We are guaranteed revenue of $900 million over next five years. We are really excited about that,” Ishrak said. "This dramatically increases revenue while holding fast operational expense."
This hospital solutions business of Medtronic's is a significant departure from its business model of working with individual physicians to sell cardiac devices. Now, Medtronic is trying to help hospitals manage their cardiac catheterization labs win savings so it can take a share of those savings.
"We are making investment in areas related to devices but not dependent on them," Ishrak explained.
Partnering is also playing a role in the company's globalization and emerging markets strategy. Ishrak said Medtronic is partnering with both private partners - such as individual providers in China and India - as well as public partners.
Ishrak did not mention this at the conference Monday, but Medtronic is partnering with insurance companies like Aetna on pilot projects in heart failure and diabetes.