An overweight pharmaceutical industry has left the healthcare sector ripe for a wave of disruptive technologies according to the co-founder of a new business accelerator in Cambridge targeting medical related innovators.
Toby Wilson Waterworth of Atlantic Accelerator believes the enormous size and entrenched culture of these companies has left them in a similar position to IBM in computing in the 1960s, who left a large gap for those daring enough to push back the boundaries of innovation.
“Healthcare has become a disruptable industry because you have so many players who have become more and more risk averse,” said Wilson Waterworth.
“The analogy would be like IBM in the 1960s supplanted by Microsoft and Dell. That’s where healthcare is.
“There is a need for new and innovative companies because the big companies are too large – how can you turn a supertanker on a sixpence? You can’t. They do not have a culture of being able to change quickly and that is where the opportunity is.”
Wilson Waterworth says the pressure in the NHS to achieve more for less money is a key driver in the emergence of new converging technologies that take a wider view: “It’s about looking at the overall treatment of the patient.”
A report prepared by a team of MBA students from the Cambridge Judge Business School for Atlantic last year, predicted a £20bn funding gap in the NHS by 2014, which Atlantic proposes to fill by targeting clinicians working in therapeutic areas that present the highest costs to the hospitals.
The report highlighted four potential areas of focus: long-term conditions such as diabetes or dementia, facilitation of patient discharge (mobile healthcare, telemedicine), methods that reduce patient referral to hospitals and technologies that target QIPP (Quality, Innovation, Productivity and Prevention) objectives and NICE patient care pathways.
Wilson Waterworth says by taking this approach, Atlantic and the companies it eventually works with can address a need in a market where patient care is particularly high in cost, rather than pursue a specific technology, which he believes makes for a more scaleable business.
Being at such a sharp end of the healthcare market and dealing with clinicians also makes it a more responsive space to work in he says: “It is one of the most receptive markets because doctors there are much more receptive to new treatments.”
Convergence means that Atlantic will consider several industry sectors including therapeutics, diagnostics, medical devices, medical software and ICT.
Opportunities here are already evident in such sectors. Addenbrooke’s Hospital in Cambridge claims to have saved over a quarter of its bed capacity by using new software.
Technology startups in this area are popping up in Cambridge too. Cambridge Healthcare is developing an ehealth portal that allows commercial third parties to plug their products in to the NHS Spine, Cambridge Temperature Concepts’ pregnancy aid is arguably a cost-saving alternative – at least initially – to IVF and most recently Rosedene Video Care, who emerged at Cambridge Startup Weekend.
Though Atlantic only launched this week, Wilson Waterworth says there has already been early interest, including from two US medical devices companies that are considering setting up in the UK as the first point of commercialisation, where EU approval for their devices would be granted faster than the US, producing early revenues.
Atlantic plans to take on no more than eight companies every year at a pre-VC stage. The process involves conducting due diligence before shortlisting some companies to present to its team of mentors and advisers.
The company will likely take a share (“modest”, says the literature) of the companies’ profits in exchange for plugging it into a network of quality advice and contacts, including the US.
While Atlantic does not intend to provide a fund itself, it will help companies build a compelling case for investment, which Wilson Waterworth says may eventually need to be sought overseas.
“We need to look at international funding, across Europe and US, which is one of the reasons we want to work with Silicon Valley Bank who can also share connections with VCs across America. It’s about accessing investors.”
Prospective companies are being asked to apply now with the first pitching opportunity scheduled for 20 April.