Medicines not working? There's an app for that

LONDON (Reuters) - Drugmakers are starting to get into bed with information technology companies as they struggle to prove the value of their medicines to governments and insurers.

By using smart gadgets to monitor patients in real time, pharmaceutical companies believe they can improve clinical outcomes and establish the cost-effectiveness of treatments.

The result, according to a report on Thursday from Ernst & Young, will be a host of new collaborations between pharmaceutical companies and businesses in non-traditional areas such as computing, telecoms and even retail.

A few such tie-ups are already happening.

Novartis, for example, signed a $24 million deal last month with U.S.-based Proteus Biomedical to create "smart pills" that can transmit data from inside the body to monitor patients' vital signs and check they have taken medicines as prescribed.

Bayer is connecting its glucometer for diabetic children to Nintendo's video-gaming consoles to promote consistent blood sugar testing.

And Johnson & Johnson's Lifescan unit has an iPhone application that lets users upload readings from their connected blood glucose monitors to their Apple phone.

"We will see multiple types of collaborations in future," Patrick Flochel, Ernst & Young life sciences leader for Europe, Middle East, India and Africa, told Reuters.

"This movement will be driven by a focus on outcomes, which pharma companies are more and more having to commit themselves to."

Big drugmakers have traditionally relied on a few blockbuster medicines to bring in cash. But the old business model is breaking down, and companies are diversifying into new areas such as consumer health, as well as cutting costs and forging more flexible alliance with small biotech companies.

The revised model is sometimes dubbed "Pharma 2.0".

But coming up next, Ernst & Young argues, is "Pharma 3.0", in which pharmaceutical companies will increasingly look to sell ancillary products and services linked to their medicines by working with IT and other companies.

The new era poses some notable challenges, not least the cultural gap between fast-moving technology companies, with rapid innovation cycles, and a more ponderous drugs industry, where bringing a new product to market typically takes 10 years or more.

The prize, however, is worth fighting for. By monitoring clinical data and ensuring that patients take the right medicines at the right time, drug companies should be able to demonstrate their products really work, ensuring reimbursement by governments or insurers and helping to justify high prices.

(Editing by Will Waterman)