Johnson & Johnson: Embracing Digital Transformation
This essay discusses how Johnson & Johnson is embracing digital innovation and transformation in healthcare.
As the digital revolution is sweeping across many industries, healthcare is relatively slow in embracing the digital transformation. While the digital revolution brought by the large tech players and Silicon Valley start-ups poses outright threat for many incumbents in many industries, however, it provides healthcare incumbents more opportunities as these tech entrants still have significant gaps and barriers in understanding the clinical and regulatory process, and they will be willing to collaborate and partner with incumbents instead of threatening and disrupting them.
Although healthcare lags other industries in digitalization efforts (See the chart below), many leading pharma and medtech companies have started to put efforts in transforming themselves to create more value for patients and embrace opportunities in the digital era. Johnson & Johnson is one of them.
Johnson & Johnson (J&J) is an American multinational medical device, pharmaceutical and consumer packaged goods manufacturing company founded in 1886. The company operates over 250 companies. In recent years, the company has remade itself into a health-technology innovator in many ways[i].
Digitalizing products to improve healthcare outcomes for patients
J&J has created several digital tools[ii] that help guide people on their health care journeys by leveraging their clinical knowledge and technology. RA-RA (Remote Assessment in Rheumatoid Arthritis) is a mobile app that can work with wearable trackers like Fitbit to collect behavioral and health information such as heart rate, sleep duration and daily levels of joint pains, and help indicate how well the medication is working and whether the patient’s condition is improving or worsening.
One-touch Reveal is another mobile app that helps diabetic patients easily monitor and manage their blood glucose levels. Connecting with J&J’s One-touch glucometer, the app can track glucose levels of patients, help visualize trends in their numbers and share data with doctors.
Another great example was a digital ecosystem that helps accelerate surgical consults for people with knee pain. The app starts with asking several questions about pain levels, and will then use the results and predictive analytics to provide personalized treatment advice. Surgical candidates will be able to download another app to help prepare them for surgery and recovery with targeted tips.
Another exciting initiative of J&J is the surgical robotics. Verb Surgical is a joint venture created by J&J and Google Verily in 2015, aiming at developing a better and cheaper surgical robot to facilitate medical surgeries. Verb’s robot is still in prototype form and will not be ready until 2020[iii].
According to the CEO of Verb Surgical, “There are 10-20 million surgeries a year, and only 5% are done robotically. We believe the number should be 75-90%.”[iv] Currently, most of the robotically surgeries are performed by Da Vinci, a machine with large precise arms controlled by surgeons. But Verb’s goal extends beyond hardware – it aims to be a platform for digital surgery. To achieve this goal, the platform will leverage five technology pillars – robotics, visualization, advanced instrumentation, data analytics, and connectivity – and use a large amount of data to help surgeon make highly informed, fast and accurate decisions. Verb calls this innovation Surgery 4.0, the next evolution of surgery[v].
Surgical Robotics create value in many ways:
- First, through constantly learning and adapting, the platform will be able to give surgeons the best information at the right time, help surgeons interpret what they see inside a patient[vi] and help them do surgeries they cannot do before.
- Second, the platform will have the potential to democratize surgeries, as it will make many surgeries accessible to more people, and provide better outcomes with a lower cost.
- Third, connecting different surgical robotics over the Internet can facilitate fast learning among them and quickly improve their skills and capability of offering guidance. In the long term, surgical robotics may become automated and increase the productivity of healthcare.
Besides the exciting digital initiatives mentioned above, I believe J&J can further embrace the digital opportunities in the flowing ways:
IoT will have a big impact on how J&J manufactures and distributes products internally and how their products interact with patients externally.
First, IoT will allow the company to track and trace products throughout the whole supply chain, from manufacturing to distributors and to hospitals. For J&J, getting access to real-time information can help better manage their inventories, anticipate product demands, and drive high-value manufacturing decisions. In addition, knowing where a product is and whether it is maintained in a proper way (for example, temperature control is critical for the vaccine) will help provide a high level of assurance. Furthermore, an automated monitoring process introduced by smart sensors can provide end-to-end visibility to help distributors and hospitals improve operational efficiency and accuracy[vii].
Second, there is a possibility of implanting sensors into some medical products, like artificial joints or contact lenses[viii], to get real-time data on the health condition of patients. This not only benefit patients in monitoring their health or rehabilitation after surgeries but also help gain insights from patients (from inside) and inform product development in the future.
Applying AI in the discovery and development
In this digital era, I think J&J should double down on Artificial Intelligence and leverage its expertise to continuously create breakthrough drugs and surgical solutions. Surgical robotics mentioned above is definitely one of the focus, in addition, precision medicine will be another direction. “In the near future, more patients will be treated with precision, with interventions that are specific to their unique individual needs and are predictive, preventive, personalized, and participatory.”[ix]
Leveraging the advanced tools like machine learning and a large amount of clinical data, J&J will be able to understand which treatment will be the most effective for each individual based on the personalized information such as genetic or molecular profiles[x], and thus provide a data-driven treatment to help patients improve healthcare outcome and reduce follow-on healthcare costs. Although precision medicine may sound like a too stretching goal and a buzzword in healthcare nowadays, I truly believe it will be a reality in not-too-distant future. After all, “we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” (Roy Amara)
Driving the changes to embrace digital opportunities is easier said than done. As such a large company with over 130 years of success, it has its own ways (process, culture) of doing business. Moving to digital transformation will face challenges of high investment in technology when ROI is not clear, limited internal technical expertise and talents, and the unwillingness of employees to adopt the new process.
Firstly, although most people have recognized that new technologies like AI/ML provide many exciting opportunities for healthcare companies, according to a survey, “Nearly 50% of US companies believe that the healthcare industry needs to be convinced further of ROI from AI / ML investments”[xi]. All of these new initiatives require lots of investment and CEO should be really committed to it, willing to allocate resources, focus on the long-term rewards and resist the ROI pressure from Wall Street.
Secondly, in order to drive the change, the company should modernize its IT foundation. As suggested by Mckinsey, companies can do it “by upgrading pools of talent and expertise in the IT organization, moving to digital platforms such as cloud servers and SaaS products, managing data as a strategic asset, and improving security protocols for the company’s most vital assets”[xii]. In addition, J&J could continue to gain the technical expertise by building an ecosystem and partnering with large tech companies like Google and other startups to drive the change.
Finally, to ensure the digital innovations have a lasting impact, they need to be woven into the organization’s DNA, including its culture and processes. As the CIO of J&J- Stuart McGuigan said “True digital transformation touches every part of the organization—from core IT all the way back into the supply chain. So, in our view, it has to be an integrated effort rather than a separate one. “[xiii] Senior leaders should focus on winning the hearts and minds of employees to ensure that they see the digital transformation as an opportunity, embrace the new way of working, and adopt it in their everyday professional lives.[xiv] Business and technology team should work together to solve a specific problem, especially those can benefit and streamline core business, probably that’s a logical sequence to reduce validation effort while maximizing value.
[vii] Deloitte, Using smart sensors to drive supply chain innovation
Student comments on Johnson & Johnson: Embracing Digital Transformation
I see digital transformation affecting J&J in two different ways: in the way J&J operates internally (e.g., using digitalization to improve supply chain management or using AI in their drug development process) and in the products it offers (e.g., RA-RA). I agree with you that it will be difficult for J&J to digitally transform the way it operates, but I actually think that creating and launching more “digital” products will actually be more difficult. Operationally, it may be easier to create and launch such products, but depending on who these products are marketed to, selling them may be very difficult. If they are products meant for patients (like the ones you mentioned), patients may buy the product if they see their value-add, even if insurance does not cover the product. However, for products that are meant to be used by other entities like hospitals, the hospitals will always need to understand how the product will be paid for. Since healthcare is so “behind” when it comes to digitization, ensuring that hospitals can find a way to get the product reimbursed will be key to the success of J&J’s digital offerings.
Ting, great post! Super interesting how J&J approaches digital innovation in medical devices. Two quick thoughts. First, I was thinking about the partnership with Google and how they structure the data sharing. It would be critical that J&J still owns the key consumer and product data to inform their future products.
Secondly, I wonder how J&J, because they have a strong consumer brand, should be thinking about digitization across their whole portfolio of products. Could they actually aggregate health and medical data and serve the whole health of a consumer? I’m sure there are data challenges with that, but interesting to think about how this data can be shared across their products.