BioPharma, Startups, Health Tech

If Big Pharma is from Mars and digital health startups from Venus, PharmStars wants to play Cupid

Digital health startups and pharma industry players sometimes don’t speak the same language, and the culture gap has led to failures in the past. A new accelerator focused on helping digital health companies engage better with pharma hopes to flip the script.

The track record of Big Pharma collaborations with digital health startups has been at best nothing to write home about. At worst, an abject failure.

Consider the highly vaunted tie-up between Otsuka and once-of-unicorn-fame Proteus. Their effort at transforming behavioral health through drugs embedded with sensors ended with Otsuka pulling out and Proteus declaring bankruptcy last year. Novartis’ relationship with Pear Therapeutics took a turn for the worse when clinical trial results of a Pear app for schizophrenia were disappointing that led the startup to point fingers at its pharma partner. And then there is Onduo, which started as a joint venture between Verily and Sanofi, but Sanofi withdrew later though it apparently remains an investor in the company. The culprit in these high-profile stumbles? Different cultures and a lack of understanding of each other’s business, believes Naomi Fried, a former pharma executive, digital health innovation expert, and now a pharma-digital health startup matchmaker. On Tuesday, she launched a new accelerator, to catalyze partnerships between these two unlikely bedfellows. Called PharmStars — a name no doubt inspired by the innovation model in the tech world, TechStars — the new accelerator has one goal: to bridge the gap between pharma and digital health entrepreneurs and help foment partnerships, collaborations and dealmaking between these two entities.

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“They are almost often speaking across rather than to each other,” Fried said in a recent Zoom interview, describing the chasm between pharma companies and digital health startups. “There’s just really a disconnect and so what I’ve observed over time is that there seems to be a fundamental difference in culture, in timing, in language, in the ability communicate between big pharma and digital health startups.”

PharmStars is stepping into this void. Digital health startups selected to be part of the first cohort in September will take part in a 10-week virtual program where they will be students of what Fried is calling PharmaU — coursework that will help explain how and why Big Pharma functions the way it functions as well as learn to prepare themselves for any potential meetings down the road.

“They conceptually understand that it is a regulated environment but startups often don’t understand how those regulations affect them and how pharma is restricted from interacting with patients and how careful they have to be when they interact with clinicians and doctors. There’s also a very high level  of scrutiny around privacy and data management, compliance around things like CCPA in California  or GDPR in Europe.”

At the end of the 10-week program, digital health startups will pitch to pharma members of PharmStars as part of a private showcase event with the hope that dealmaking would happen shortly thereafter. To that end, startups hoping to apply to be part of the first cohort need to have at least a functioning protoytpe of their product, if not already a finished product. Those in the concept stage are not quite ready to take part in the PharmStars program, Fried said.

The first cohort will begin in September, but the applications are due by 11:59 ET on July 21. This time, the accelerator is accepting applications only from digital health companies that focus on making the clinical trials process more efficient and innovative. No surprises there, given how many traditional trials were forced to pause during the pandemic causing the drumbeat of the decentrialized trials movement to grow louder. Ultimately, Fried hopes to attract digital therapeutics or what she calls digiceutical companies, digital diagnostics startups as well as those helping pharma across many areas both clinical and operational such as AI in drug discovery and development.

Naomi Fried (l), founder and CEO of PharmStars, a new accelerator, with Laura Gunn, its managing director

Starups who are selected and choose to join PharmStars will pay $1,000 to the accelerator. Fried, who is founder and CEO, stressed that PharmStars will not take any equity. She added that another point of differentiation from other startup accelerators is that the mentorship function will not be fulfilled by executives volunteering their time but rather full-time staff at PharmStars, some of whom have pharma industry experience, including Fried and managing director Laura Gunn.

“We feel that there is just too much variability when you rely on volunteers who may or may not have experience. And understanding pharma requires experience in the pharma industry,” she said. “So we will  be providing all that mentoring from the PhamStars staff.”

The program is not only to get digital health startups up-to-speed on pharma industry mechanics. Fried is also planning an executive ed program for pharma industry members of PharmStars that are interested in adopting digital health strategies.

“For pharma, they are busy building out a single molecule and are looking for FDA approval — there is no change in that molecule or patent. For a startup company, which is doing Agile development, iterating, and starting with a minimum viable product — it’s a very different mentality,” she said. “I think for those pharma companies that have been working in digital health for a couple of years, they have struggled to do successful deals. Part of this is because of pharma’s historic orientation with molecules and lack of familiarity with digital health.”

So far Eli Lilly has agreed to become a founding member of PharmStars, Fried said but the company was not able to make an executive available to answer questions via email. PharmStars’ website says that pharma founding member identities will be revealed shortly.

Some of the pharma companies that we are talking with see PharmStars as a way to demonstrate their leadership and commitment to digital health,” she said.

A reset was needed in the digital health-pharma collaboration world. Whether Fried and PharmStars is successful will depend on how many Big Pharma members the new accelerator can attract and how many deals occur following a program’s end.

Photo: Gerasimov174, Getty Images and PharmStars