Too many companies are failing to innovate. One reason, say the authors, is the polarized approach companies take to innovation. At one end of the spectrum, corporate R&D efforts tend to focus on product refreshes and incremental line upgrades that generate modest growth for lower risk. At the other end, venture capitalists favor high-risk "transformational" innovations that seek to upend industries and generate outsize returns. But there's a better, middle, way. This article presents the growth driver model, a framework that partners corporations with outside investors to identify and develop innovation opportunities, drawing on corporate resources and talent and externally recruited entrepreneurs. The authors illustrate the model with a detailed case study of how it revived innovation at Cordis, a large medical technology device maker.
This note provides an overview of the healthcare system in Ghana. It discusses the public and private sector as well as traditional medical practice. It also discusses the country's pharmaceutical industry. It is recommended as a companion to Professor Regina Herzlinger and Ben Creo, "mPharma: Scaling Access to Affordable Care," HBS No. 323-033 (Boston: Harvard Business School Publishing, 2022, rev. 2023). mPharma is trying to create the largest pan-African healthcare company ever to provide much needed primary care and a reliable, fairly priced supply of drugs. Founder and CEO Greg Rockson must decide how best to achieve this lofty goal. He must prioritize launching a telemedicine program, expanding his pharmacies across the continent, and/or creating a new payment program to cover the cost of medication. Rockson cares deeply about health equity, but his venture capital financed company must be profitable.
How can a successful executive assess her next move as the CEO of a firm with a promising and yet uncertain new drug? Amy Burroughs' mandate to find a therapeutic window for Cleave Therapeutics oncology drug was on track but faced an uncertain future. Overseeing the human trials of a refined second-generation drug candidate, Amy had led the company back from the "valley of death" after Cleave's initial offering resulted in off-target toxicity. Still, after completing multiple dose escalation cohorts, Cleave's scientists told Amy that they could not draw any definitive conclusions about the benefits of the drug. Amy and her team knew the importance of speed and capital in the high-risk business of oncology drug development where success often takes more resources and time than expected and competitors lurk . Nearing the close of a five-year investment window, should the thinly staffed Cleave 2.0 continue to recruit patients and clear dosing cohorts at a rapid rate, or should Amy prioritize funding and partnership discussions?
Virgilio "V" Bento, CEO of Sword Health-a startup that provided virtual physical therapy to patients in self-insured firms via AI and sensor technology with supervision by a physical therapist with a doctorate-considered how to increase its U.S. market share. To do so, it could use lower-cost supervisors, such as health coaches; sell a direct-to-consumer product; or work with retailers, among other options. Sword Health's main competitor, the unicorn-valued Hinge Healthcare, had the first-mover advantage, but Sword had FDA clearance, a fuller stack of applications and higher-credentialed supervision. Sword and Hinge charged the same price to the client. How should Sword Health best optimize its business opportunities? This case is suitable both as a general business case for undergraduate and MBA students of any level with focus on strategy, entrepreneurship, digital health, artificial intelligence, muscular skeletal issues, the healthcare industry, and physical therapy.
This case teaches key success factors for both startups and established medtech firms. It examines how to structure a firm to maximize financial returns. Medtech entrepreneur Duke Rohlen is proposing a new model for innovation and business growth. From 2007 to 2019, Rohlen sold four medical technology (medtech) companies, all of which were acquired at significant multiples of the capital invested. While the average medtech startup exited 8.6 years after starting, Rohlen's companies had an average time to exit of 40 months. Rohlen then saw that the companies acquiring his startups were sold to larger firms, in short time spans after the initial sale, at prices significantly higher than their pre-acquisition value. Rohlen observed how much value his companies had created for others after he sold them: $1.5 billion for Covidien (after sale of FoxHollow to ev3), $1.1 billion for Philips (after sale of CVI's Stellarex from Covidien to Spectranetics), and $280 million for Stryker (after sale of Spirox to Entellus), for a total of about $2.9 billion. Rohlen wondered how he could still create innovative new products yet capture a higher portion of the financial returns. He proposed a new model for innovation and business growth, called the Chassis and Growth Drivers model. Partnering with major private equity firms Hellman & Friedman and Kohlberg Kravis Roberts & Company (KKR), Rohlen's firm Ajax Health plans to invest $1.3 billion to prove the model's viability. For $1 billion, they're submitting a bid to buy Cordis, a maker of medical devices for cardiovascular and endovascular procedures. Cordis was formerly a standalone business before it was bought by Johnson & Johnson and then its current owner and seller, Cardinal Health. If their bid is successful, they will invest an additional $300 million to fund an off-balance sheet accelerator, which will develop innovative new products that will drive revenue growth for Cordis.
Can an online, direct-to-consumer pharmacy both improve the quality and speed of care for patients who need branded drugs and stabilize profits for pharmaceutical manufacturers? UpScript, after years spent achieving legal and regulatory compliance and simultaneous technological innovation has developed a direct-to-consumer (DTC) channel that could upend the standard model of pharmaceutical insurance and pharmacy benefit manager channels that dominate the industry. But UpScript's reliance on self-investment constrains it from access to the capital it now needs to grow and remain at the forefront of its ability to provide pharma with this sales channel. With whom should UpScript invest to maintain growth and market leadership? And as it grows, how will UpScript be challenged by the deeply entrenched pharmacy benefit managers that currently cover most American lives? And how does UpScript stay ahead of the other online pharmacies or telehealth businesses offering a DTC sales channel, mostly for lifestyle generic drugs? This case is suitable both as a general business case for undergraduate and MBA students of any level, focused on strategy, entrepreneurship, DTC pharmaceutical strategies, the pharmaceutical sector, regulation of pharmaceutical marketing and advertising, pharmaceutical benefit managers, and the healthcare industry.
mPharma CEO Greg Rockson is attempting to create the largest pan-African primary healthcare company. He must evaluate a three-year strategy potentially involving three key components: a rapid and extensive expansion of the company's network of 600 retail pharmacies in nine African countries, the future of a recently launched telehealth program, and the creation of a new customer payment plan that will cover the cost of the common prescription drugs that are used for prevalent communicable diseases, such as malaria. Rockson must balance his desire to promote health equity with ensuring that mPharma becomes a profitable company. This case is suitable both as a general business case for MBA students of any level and as a case for courses focused on the healthcare industry, the pharmaceutical value chain, health care systems in Africa, innovation in health care, social entrepreneurship, and African businesses.
As one of the world's largest healthcare companies, Philips sought to reach beyond the walls of the hospital and expand its hospital-to-home program to gain future competitive advantage through technology solutions combining predictive analytics with care delivery. By its estimation, 40% of hospital admissions could be avoided, and its variety of home-based resources could be delivered at 30% less cost than the same level of care in a hospital. This tremendous potential left the chief executives at Philips wondering how best to commercialize these solutions. Should they position themselves as a technology-commercializer relying on clinical partnerships to capture value through data insights; or should they own the patient care experience as a clinical enterprise or as a cost-reducer?
After Humana debuted its new pillar strategy focused on driving integration across members' health care experiences, feedback from investors in private conferences and other forums was positive but stressed the need for execution and faced several questions in order to execute its strategy.
To implement a bold new strategy, Humana needed to decide how to prioritize the pillars; where to own and where to partner; how much risk is acceptable; and how to continue to deliver strong operational performance while implementing a new strategy. Had the firm made the right decisions?
More than one third of Americans were said to suffer some type of behavioral health ailment at some point in their lifetime, with many people requiring chronic therapy or intervention. Despite significant clinical needs, access to reliable treatment has been difficult due to shortage of providers, stigma, and poor reimbursement. Marvin's primary offering was online teletherapy via video chat. They hoped to bring Marvin's solution to a wider audience and thought that the race belonged to the swift. As they considered the market opportunity and the complex landscape of digital mental health, they wondered what to do?
Can Brainlab, a privately held firm, compete with giants like Medtronic and Amazon in delivering the Digital Operating Room of the future? The CEO is pondering solutions for secure exchange of medical information, pricing a new robotic imaging device, and reorganizing the firm. Thirty years have passed since the self-taught computer programmer Stefan Vilsmeier founded the firm and achieved dominance in many fields. How can he maintain it in the face of this new, powerful, and well-funded competition?
In 2019, Fitbit lost its leadership in the wearable sensor market to Apple and to cheaper alternatives. Why did it lose its market position? How will the proposed acquisition affect it and Google?
This case focuses on Acıbadem Healthcare Group's, Turkey's only premium nationwide hospital network, potential expansion strategies after it was acquired by International Healthcare Holdings Berhad (IHH) in 2011, the world's second-largest publicly listed health care group and a private hospital leader in Singapore and Malaysia. By providing perspectives on both Acıbadem and IHH-Parkway-Pantai's operational models, growth aspirations, collaboration and synergies, as well as cultural and operational differences, the case allows students to discuss which expansion strategies would be best suited for Acıbadem's operations--which geographic regions should initially be targeted, what business model is best suited for Acıbadem's growth (specialized chain, public-partnership etc.) Also, students are encouraged to discuss how Acıbadem should leverage its relationship with IHH and collaborate with Parkway-Pantai.
Bonitas, a South African medical scheme (i.e., health insurer), must navigate highly restrictive regulations that make it difficult for Bonitas to innovate, grow, and compete with market leader Discovery as well as providers of alternative insurance products. Bonitas (HBS No. 315-020) must also plan ahead for the rollout of national health insurance-a deeply politicized issue in a country with great disparities in health care quality and access. How can Bonitas compete today while positioning itself to thrive-and not lose relevance-under a universal public health insurance system?
Duke Rohlen (HBS MBA '01) hoped to win over a prominent venture capital investor for Series B financing of his firm CVI that was creating a drug-eluting balloon (DES) to treat peripheral arterial disease. As a second-mover, Duke felt he was more likely to acquire funding because his primary competitors had already received FDA approval to conduct a trial and he had learned a great deal about how to improve the DES from the problems the first mover encountered. But Duke's strategy ran counter to many business guru injunctions. Would these bar the investment? His second mover strategy was unconventional because many medical technology marketers believed that being the first technology to be adopted by clinicians was critical to future success. But Duke had spent no money on marketing. Instead, he spent his limited funds on R and D that would correct the problems experienced with other DESs. Then too, he had allowed a likely exit, Covidien, to invest early in CVI and used their balloon. Would Covidien's relationships bar other bidders and lower the price CVI would receive? And instead of using a CRO, Duke performed his own clinical trial of the DES. Did he have sufficient expertise to pass through the FDA's stringent regulatory hurdles?