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Investors Take Note: These Are the Biggest Challenges Facing Healthcare Disruptors

By Olivia Zitkus - Feb 2, 2021 at 6:00AM

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Safety and efficacy requirements and endless regulatory barriers mean that it's actually pretty tough to disrupt the healthcare sector -- even for companies with seemingly endless resources.

Can Amazon's (AMZN 0.19%) new service, Amazon Pharmacy, supplant brick-and-mortar retailers like CVS Health (CVS -0.94%)and Walgreens Boots Alliance (WBA -1.36%)? As it turns out, it's not easy to disrupt the healthcare industry, which is highly regulated and historically slow on the technological uptake. Ruby Gadelrab is CEO and Founder of MDisrupt, a platform that connects digital health companies to the scientists and healthcare industry experts they need to build, commercialize, and scale health products quickly and responsibly. Ruby joined Olivia Zitkus and Corinne Cardina of's Healthcare and Cannabis Bureau on a Jan. 22 episode of Fool Live, where she spoke with us about the major challenges facing big and small disruptors in the healthcare sector.

Olivia Zitkus: A lot of your work with MDisrupt is advising and consulting digital health start-ups, so younger companies, what do you tell them about competing with big tech giants that are getting involved in healthcare in various ways. The first thing that comes to mind is Amazon's new service, Amazon Pharmacy, as a disruptor.

Ruby Gadelrab: That's a great question. Thank you for that. Building health products is hard and it's hard for anyone, and it's hard and it's expensive, and it takes time, and that's whether you're a big tech company or you're a small digital health company. It's hard for a number of reasons, so firstly in healthcare, the user, the influencer, the payer, and the consumer of the product are often completely different stakeholders with completely different incentives, so that's a really tough challenge. Secondly, it's a really highly regulated space and the regulation is not just per country, it's potentially per state as well. When you're thinking about building a health product, you have to think about the regulatory process countrywide and statewide. Thirdly, unlike tech, in health, you cannot test and iterate quickly. You need to do the studies to generate the evidence that your product is safe, is effective, is clinically useful, and that it's economics work, and these studies can take many, many years. Then after that, you have to find your earliest adopters in the healthcare world which involves building specialized sales teams, deploying expensive KOL programs, and then you have to get your product reimbursed and engage the medical community. These challenges apply whether you're Amazon or whether you're a very small start-up. When companies come to us at MDisrupt, this is my advice to them and this is my advice to anybody who's building a digital health company. It is impossible for one company to solve all of healthcare. So pick a very specific problem that you understand really well, and if you don't know it through experience, engage healthcare experts. Ideally, you can hire a Chief Medical Officer, that really knows this space and can really engage with the problem that you're trying to solve from a target-audience perspective. Secondly, I think early on when you're building a health product, you have to be very clear about who you're building this product for and who is going to pay for it, because the type of products and commercial strategy that you would take if you were building a consumer product would be markedly different than if you're building a product that you are expecting to be used by the healthcare system. Then finally, this is the big one, and this is the big one for everybody. Do not skimp on regulatory or evidence generation. This is really an area where there are no shortcuts. The studies are going to be critically important to every stage of your commercial strategy. You are going to need them to engage with regulators, you're going to need them to convince physicians and payers, and you're going to need them to engage the medical societies too.

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Stocks Mentioned, Inc. Stock Quote, Inc.
$2,146.38 (0.19%) $4.13
Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
$40.61 (-1.36%) $0.56
CVS Health Corporation Stock Quote
CVS Health Corporation
$93.14 (-0.94%) $0.88

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