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Corporate venture capital is healthcare's lifeline

Traditional healthcare players can stand up to industry disruption by disrupting themselves.

OVERVIEW

It was just a matter of time before digital disruption took aim at the US healthcare industry. Traditional healthcare players are standing up to the threat by intentionally disrupting themselves. Specifically, they are using corporate venture capital (CVC) to invest in new products and services they need (but can’t develop efficiently on their own). But, importantly, CVC programs do more than provide access to innovation. They also serve as a pipeline to new methods and mindsets that will drive long-term value and ensure business longevity. In this way, incumbent healthcare players’ CVC initiatives represent a lifeline to the future. 

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KEY FINDINGS

Healthcare has become an irresistible target for outside disruptors. Some 85 percent of technology companies and 77 percent of venture capital firms consider the disruption of healthcare to be a top priority.


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Traditional American healthcare organizations, however, aren’t giving up. Many are embracing corporate venture capital (CVC) to tap new innovations and new ways of working. Accenture Strategy research has found that:

  • 60 CVC organizations across five healthcare-related industry segments made $10 billion in healthcare-related investments from 2009 to 2015. 

  • The number of such CVC investments has more than doubled in the past four years. 

  • The total amount invested has nearly tripled—from $743 million in 2009 to $3 billion in 2015 (a compound annual growth rate of 26 percent).


American CVC investments are poised to continue to grow, in number and in value. 

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We predict healthcare-focused CVC investments will reach $7.5 billion annually by 2020.

RECOMMENDATIONS

The most successful CVC programs help their organizations: 

  • Modernize the innovation mindset.  CVC paves the way for sharing new ideas, customer-centric ways of working and the adoption of contemporary metrics. 

  • Reimagine the portfolio. CVCs invest in innovations that bolster current offerings and enable the company to pursue new offerings. 

  • Make the intangible tangible. CVCs scan their organizations for opportunities to capitalize on intangible assets such as datasets, patents, algorithms, human capital and brand equity. 

  • Unencumber growth. Leaders prioritize growth opportunities that would capture value more quickly if transitioned to a different environment.

LEARN MORE ABOUT ACCENTURE STRATEGY

Many organizations are using CVC as a way to ensure business longevity by targeting companies they believe can introduce them to new ways of thinking, new modes of collaboration, a new pace of change and a spirit of entrepreneurship that is lacking in their own organizations.

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