The world is a bit more… regulated
It has been a while. Just hard work, busy days and fantastic encounters occupied most of 2022. One of the reasons I am writing again is to bring a voice to some of the discussions I have been reading, and I compile tons of notes! People often ask me why my attraction to regulated industries and ask myself the same question as it keeps following me like a label. I just embraced it now, and to be franked, I quite like it. It forces you to stay on your toes and think outside the box. It is more challenging, too, so if you are like me, re-doing a game in hard mode when you finished it, industries like Pharma are your final boss level.
Meanwhile, the world is running with more “constraints” than usual, and by it, I think of COVID bringing restrictions but also ESG programs forcing consumers to be “consciously buying”. Companies and their boards have told executive teams about the shift long ago, but it is now becoming almost routine.
Why should you care, and is it a good thing?
Data processing new regulations are coming soon to Switzerland
Following GDPR a few years ago, Switzerland took an observation period to adapt its legal framework to data privacy called the Federal Data Protection Act. In the meantime, most global companies have already prepared themselves for collecting consent and cleaning their databases.
This is a good thing per se; as per design, GDPR introduced some excellent operating principles with minimum requirements. Now the new bill is getting something even more strict, and GDPR is no anymore the only standard to observe. It is important to note that because of the exchange companies have with data providers worldwide, you’ll have to ensure that data processing contracts are in place to apply the correct compliance code and not be blinded by poor data privacy management outside the country.
With healthcare data increasing on the cloud due to the digitalisation of services and communications in the field, it is essential for global and local companies to pay close attention to this.
Is nothing new for healthcare companies?
The industry is equipped with a solid basis for taking the curve of new regulatory frameworks. It is harder for startups to comply with this as it jeopardises their agility. Some roadmaps get slowed down by unanticipated medical device certifications or data privacy frameworks that need to be put in place. The pace of innovation has a different momentum than the one of regulatory and compliance, and the companies who can balance both are the winner of the race. A race that VCs are evolving in healthcare, especially digital health, paying attention to. Building growth for a digital health startup in such a context will add to the operation costs and burn rates but to the price of having a higher barrier to entry. I believe that the company that pivoted fast enough would drive the M&A game in the next couple of years, standing on solid grounds to become a “therapeutic area platform” for the industry and the other digital health platform looking to penetrate these markets.
The industry has a headstart on taking a steadier turn at a slower past anyway, but the scale to win the race is a different game. Reaching critical mass for a digital product isn’t the same organisation, and healthcare companies will have sooner or later to adapt existing “launch excellence” plan to their non-drug assets if they start considering their investments as such.
Pharma companies who got close to their ecosystem will be served with fresh news and return on experience on what to implement at a better scale and cost.
What about other regulated industries?
Financial institutions are taking a pledge to bring digital currencies to the front scene. The crypto winter and the disastrous story with FTX making headlines are calling for more regulation. But, again, this industry has been under scrutiny long enough to let fast movers see signals and take opportunities. I believe there is no white or black hat here, but ventures that will leverage the new legal framework to their advantage. Plenty of companies are waiting to pivot their roadmap for the right moment when things are more transparent, and larger institutions are on the verge of making moves and taking on new markets. Remember that the world isn’t stopping in the US and Western Europe and that banking means something different in emerging economies. New winners will emerge, and we might need to learn how to pronounce their names.
Social media is another one. There might be more pressure to regulate content online due to the more significant influence these platforms have, especially with the rise of Tiktok. Sovereignty isn’t linked to data ownership and processing, but simply the outcome of consuming the product could be perceived as an issue. On this one, there is a role for education more than regulation; having feeds pushed to you and changing your behaviour is a concern, but being dependent on your algorithm is something else. Both sides of the chain (content creators and consumers) are seeing negative impacts on some influencer’s marketing gone wrong or mental health issues in teenagers; having COVID passing by is not helping for sure.
Generative AI is following quickly behind as the new kid around the block you can’t avoid speaking about at the coffee machine. This is another case calling for regulation, not only for copyrighting but also for the fair use of these tools at school or work. As such, they are tools until they impact your score or your pay slip. Again here, winners and losers will determine how strongly a regulator might intervene. Still, discussions around new forms of work, remote freelancers, and digital workplaces might see a new kind of interaction between employees and their companies. Having worked out some Chat GPT and Mid journey prompts, I was amazed to see how well you can generate decent output. This made me think that the hyper-specialisation of tasks is making these AI efficient so far. Still, as soon as you need to mix an ad copy with a strategic imperative and an illustrative picture, it is less convincing for now.
That is a plus for marketers looking for a tool for crunching data and generating insights. I am working on a new approach to the dynamic persona we featured recently for OM Pharma, and some of the AI tools used to crunch large amounts of data did make a difference. More to come on this; let us know in the comment section if we should cover audience profiling and persona analysis separately.
By the way, this post has yet to be written by AI. It is weird, but I felt compelled to say it.
Small businesses are paying the price of more robust regulation.
This is the sad reality, but we need to remember that a collection makes most of the innovation done next to you by entrepreneurs managing the last mile of the services you see. For them, too, having to deal with more regulations is complex. Imagine being a hotel in the heart of covid-19, and you have to chew more work for managing your digital transformation and the data privacy part if you still need to do so. Small businesses rely heavily on vendors to support them, and the market for turn-key solutions making their activity bulletproof is skyrocketing. Many startups I see in healthcare go either the Big pharma road or the consumer’s avenue. Still, they shouldn’t forget about the B2B2C boulevard offered by private clinics and liberal HCPs, for instance.
For most of these companies, there isn’t a choice to comply with the new frameworks, and it is likely to bring disadvantages or consume precious time for their management.
Wait, is Big Tech missing or what?
They are the Mastercard and Visa of digital regulation. By provoking new sets of requirements by regulators, their size and capability to pivot to their solution make them the perfect candidate to structure the pace and nature of future frameworks. Don’t get me wrong; it is not a bad thing we need to have that conversation going which is a healthy one. I have been engaging at EUcope for the new Digital Health Space, representing the industry’s interest, and I loved the exchange. They are doing the same for these frameworks, and judging by what the EU has been cooking for the last few years; the debate is still going strong.
We need more Big Tech players in Switzerland and mainly in the EU to draft a specific path to what’s more adapted for this part of the world. The recent drama around Twitter makes too much noise for my taste when I see a healthy market correction.
Where to go from here?
At the beginning of 2023, wherever you’re a startup founder, a pharma leader, an entrepreneur, or even a student looking to find a career call, you should see these events as an opportunity. Industries such as Food and Beverages will become more regulated, and we see it with the rise of nutraceuticals and microbiome-based therapies. Anything that might impact your behaviour might be a target for regulation. This means countries running these frameworks would penalise the speed of their new ventures, but the good news is this will increase their intrinsic value too. When times are complex, and pumping valuation isn’t in the air for pleasing LPs, there will be a market for such venues.
Legal tech companies could bring value here to guide entrepreneurs and intrapreneurs.
What about you? Do you feel more regulations coming to your daily work? Do you see more complexity ahead? I’d love to know how you guys approach this, and if you have challenges, we can discuss them openly in a webinar later this January. So stay tuned, and please give me feedback!