Seizing the Opportunity: Developing Personalized Medicine Technologies

Traditional medications have long struggled to deliver a desirable level of effectiveness for patients. The Personalized Medicine Coalition suggests that efficacy rates for drugs can vary from 25% to 60%. Drug compliance is also a major concern – a number of studies have shown that compliance is often only around 50%, a figure in part driven by negative side effects. While drug treatments often deliver significant improvements in quality of life, many patients continue to struggle with the compromises that come with taking a drug designed to be one-size-fits-all.

To address these deficiencies, medical technology is turning to personalized medicine: medications designed to work for the individual. The US federal government has shown recent support for technological innovations in healthcare, as demonstrated by its commitment to the 21st Century Cures Act, the Precision Medicine Initiative and the Cancer Moonshot.

About a quarter of novel drugs approved from 2014 to 2017 were personalized medicines, which has provided unique opportunities for innovative therapeutic and diagnostic companies. There are now 32 approved companion diagnostics (not including other FDA-cleared, pharmacogenetic assays) that can identify individual differences in drug metabolism and pave the way forward for personalized medical interventions.

As shown by results over the past half-dozen years, sorting patients based on their genome using evolving technologies (such as DNA sequencing and other biomarkers, as well as patient demographics/history) has the potential to overcome a number of problems – including efficacy and safety concerns. These technologies may also reduce unnecessary treatments and prevent spiraling treatment costs, as well as save on R&D expenses for developers and manufacturers.

Acknowledging the challenge of personalizing medicine

While many believe that personalized medicine (along with the companion diagnostics to implement it) will be the best way to achieve better and cheaper healthcare, there are still a number of (real or perceived) barriers (see Figure 1). These barriers drive drug research and development back towards the one-size-fits-all approach, rather than encourage the development of personalizable treatments. For companies already investing heavily in traditional drug development approaches, it may be difficult to imagine taking on these new challenges.

The dynamics of personalized drugs and companion diagnostics

Figure 1: The dynamics of personalized drugs and companion diagnostics

The Tufts Center for the Study of Drug Development estimates that the R&D cost for developing a new drug is between $1.4 billion and $2.9 billion – a huge investment for any organization. In addition, Health Affairs has highlighted the growth of ‘step therapy’ (trying one lower-cost drug before another more expensive drug, also sometimes called ‘fail first’) – an approach that indirectly reins in innovation and encourages the status quo. Step therapy grew to 73% in 2013 (up from 27% in 2005) among employer-sponsored healthcare plans, despite studies showing that, in a number of cases, delaying treatment can increase mortality or worsen other outcomes. So, how can medical technology businesses overcome these challenges to achieve the promise of personalized medicine?

Targeting future research efforts and collaborating strategically for success

Medical technology companies need to focus their energies on developing and utilizing tools that can match patients to the right drug (or other intervention) at the right time. To do this, they need to harness the potential of diagnostic and prognostic tools and resources, such as genome sequencing, novel protein and metabolic biomarkers, and, in the future, machine learning and artificial intelligence. They also need to identify the next research capacity bottleneck (rather than chasing their current competitors) so that they can lead the way with these evolving technologies.

Targeted investment in developing technologies, such as genome-based therapeutic technologies, may help with screening for compounds that have broader uses for targets with low genetic variation. Using state-of-the-art tools to target novel biomarkers may also be pivotal to success (to find out more about novel biomarkers, take a look at my White Paper on the topic here). Other valuable investments might explore blood-testing technologies to replace invasive biopsies (so-called liquid biopsies). Accumulating data on other biomarker types, such as immunoassays and metabolomics, could also provide an invaluable data bank for future research.

Medical technology companies will need to work with pharma and biotech firms early to identify, validate and gain approval for companion diagnostics. In addition, identifying companion diagnostics early in the drug development process may prove useful for selecting patients during clinical studies and getting timely co-approval during the regulatory process. Ultimately, creating the infrastructure for efficient trials will enable organizations to adjust their approach and work towards nichebusters rather than blockbusters.

Finally, medical technology companies will also need to develop the conversation with medical device companies to identify additional areas where a personalized approach may be effective. Medical device trials could also benefit from better patient selection. By pursuing complex health economic analyses in partnership with a range of therapeutic, diagnostic and medical device firms, as well as potential competitors, medical technology companies can drive and take charge of innovations in personalized medicine.

The application of personalized medicine may not only improve patient outcomes and lower healthcare costs, but also provide valuable business opportunities for perceptive medical technology firms. Organizations utilizing machine learning, artificial intelligence and other big-data technology can also contribute to personalized medicine, and benefit commercially as well. If your organization is looking to position itself at the forefront of developing medical technologies, contact a-connect today to find out how we can support your work.

Blockchain-ing the Money Machine

State of the banks

The financial services industry is today arguably the world’s most powerful industry. The global financial system is responsible for moving trillions of dollars every day, serving billions of people, and supporting a world economy worth more than $100 trillion. A closer inspection of this omnipresent money machine, however, reveals the haphazard ways in which it has evolved. Most notably, the machine is plagued by a helter-skelter patchwork of new technology welded onto old infrastructure. Take, for instance, the somewhat strange co-existence of internet banking and paper check issuance at banks that run on mainframe computing infrastructure from the 1970s. Or the fact that, when a customer uses Apple Pay to buy a drink at Starbucks, the money goes through some five different intermediaries before finally reaching the coffee chain’s bank account – the transaction clears in seconds, but takes days to settle.

Such bizarre ways of working are widespread in the industry. Stock and bond trades clear almost instantly but take two to three days to settle. A foreign laborer in Singapore earning daily wages could wire his money home and, in the process, have to tolerate absurd transaction costs and a long wait, as if it were physical notes making their way across the world. Worse still, such daily wage laborers – part of the almost one billion people around the world living on less than two dollars a day – are seen as unattractive for banks to take on.

The crux of these problems lies with the fact that the gears of the financial services industry are powerful centralized intermediaries that consolidate capital and enforce monopoly economics. This makes the industry exclusive and centralized, leaving billions unbanked and the industry vulnerable to Equifax-like data breaches.

So how can we make today’s money machine efficient, secure and truly global in scope?

In cryptography we trust

In the wake of the global financial crisis was unveiled the world’s first cryptocurrency, bitcoin, by an anonymous person (or persons) under the pseudonym Satoshi Nakamoto. The fundamental message in Nakamoto’s white paper ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ resonated with the belief that the mass adoption of virtual currencies would ultimately obliterate the institutions – intermediaries such as banks and other ‘trusted’ third parties – that, one could argue, were responsible for the crisis. The white paper proposed a breakthrough approach to owning, exchanging and accounting for value.

So what is bitcoin? It is a digital currency with a security system run by a massive network of total strangers. The technology that underpins bitcoin represents one of the greatest innovations of our time – a true revolution in distributed computing that eliminates the need for trust. This technology, called the blockchain, is an open and immutable digital ledger that stores the history of financial transactions in a decentralized and distributed manner. Because blockchain can be adapted to store any kind of digital information conceivable, systems like bitcoin could be the future of all secure digital transactions, and thus overhaul how today’s money machine works.

How do bitcoin and the blockchain really work?

The blockchain is a decentralized, distributed and secure digital ledger of all past transactions ever made using a digital currency or token such as bitcoin. Owners of bitcoins have a digital signature represented by a two-part key. The private key, kept safe from view, proves ownership, while the public key is stored on the blockchain, which is accessible to anyone with a computer and an internet connection. Individual blocks of the blockchain – components of the ledger – contain multiple transactions, each of which stores a reference to an earlier record in the chain.

Using bitcoin to pay for something triggers a request to update the ledger. This request is sent to a specific class of participants on the distributed network, called miners. Miners are responsible for detecting transaction requests from users, aggregating them into a block, and ultimately ensuring the irreversibility of new transactions. Specifically, they run the new block and all previous blocks through a set of energy-intensive mathematical calculations called hash functions. Here, all miners compete to solve a complex cryptographic puzzle; the more computing power a miner uses, the more likely they are to solve the puzzle first. The first miner to solve a block tags it onto the end of the blockchain and broadcasts it to all other miners, who then check to verify the accuracy of the hash function. Once verified through a 50 percent consensus mechanism, the ledger is updated and the miner that solved the block is rewarded with newly minted bitcoins (12.5 bitcoins or about $75,000 per block today). New blocks are created on average every 10 minutes. Also, the supply of the currency is limited so that there will only ever be 21 million bitcoins.

Solving the cryptographic puzzles on the blockchain is so complex that every new block makes the previous blocks and the whole blockchain more secure. Hacking the blockchain would require tremendous computing power and speed. In order to alter just one past transaction, an attacker would have to change the information in that block and every block that comes after it before the blockchain is updated. With countless miners working on the chain simultaneously, corrupting the ledger would require massive amounts of computing power – more than half of the power being committed to the bitcoin network at any given time. This immutability feature makes the blockchain a database that everyone can see and add to, but nobody can destroy. Additionally, because computers belonging to many different entities enforce these rules, no single party is in charge and there is no need for a central entity such as a bank.

The world computer

Bitcoin is far from the only application that uses blockchain technology. In 2013, a 19-year-old cryptocurrency researcher and programmer, Vitalik Buterin, developed Ethereum. Ethereum is a decentralized platform on which one can build and deploy virtually any kind of decentralized application. The breakthrough with Ethereum is that it allows one to build smart contracts – digital triggers that self-execute and manage enforcement, performance and payouts. Applications deployed on Ethereum, called decentralized applications or ÐApps, run exactly as programmed without the threat of downtime, censorship, or third-party interference, thereby enabling secure and transparent governance for communities and businesses.

The Ethereum protocol, which is powered by a digital currency called Ether, makes the process of creating blockchain applications easier than ever before. Instead of having to build new blockchains for every application from scratch, Ethereum enables the development of any application imaginable on one single platform. For this reason, the Ethereum protocol is often referred to as the ‘world computer’. ÐApps have the potential to profoundly disrupt a wide range of industries – from financial services, healthcare and ride-hailing to social media and music.

The great upheaval

With its decentralized and distributed features, blockchain technology has clear potential to bring about a profound paradigm shift, busting the monopoly of large powerful intermediaries and offering end-users the chance to shape how they want to manage their money. One of its greatest advantages is the consensus mechanism that eliminates the need for trust. This has implications for today’s banks and insurance firms. ÐApps have already demonstrated the power of blockchains to make banking truly digital and distributed, secure and tamper-proof, inexpensive and inclusive, and able to run intelligently with significantly fewer intermediaries.

We now have the power to transform not only the payments world, as bitcoin has shown, but also other parts of the machine such as insurance, risk management, securities trading, capital raising, accounting, and auditing. There are essentially five core functions of the money machine that are ripe for blockchain-based disruption. These are as follows.

  1. Authenticating identity: The banking industry is, at its core, a trust broker. These intermediaries ultimately decide who gets to access banking services via establishing trust and verifying identity. The blockchain eliminates the need for trust altogether by relying on cryptographic technology, and enables peers to establish identity that is verifiable and cryptographically secure. Blockstack, a blockchain startup, uses a blockchain to track usernames and encryption keys – the basis of a new identity system that relies on decentralized information not tied to any single social network or other website. Using a similar system, banks can collaborate to authenticate identity, lower their compliance costs of individually having to perform Anti-Money Laundering (AML) and Know Your Customer (KYC) checks, and more easily provide services to a segment that was previously ignored.
  2. Moving and exchanging value: The financial services industry is responsible for moving money around the world, ensuring no double-spending. The blockchain does exactly this for anything of value, but at a much lower cost, regardless of geographical borders. Given that several intermediaries can be eliminated, the blockchain can cut settlement times on all transactions from days and sometimes weeks to mere minutes. Further, in countries with low financial inclusion, building a blockchain payment rail and connecting it to mobile phones can enable billions of currently unbanked individuals to send funds across borders quickly and cheaply, and participate in the world economy. Coins, a mobile-first, blockchain-based platform in the Philippines, does precisely this; it has partnered with financial services firms and retail outlets to create a distribution network of more than 22,000 cash disbursement and collection locations. Over half a million users use Coins for remittances, bill payments and mobile airtime top-ups.
  3. Managing risk: Risk management is intended to protect against uncertainty, but a common complaint is a lack of transparency of how risk is measured, especially in the developing world. Blockchain-based insurance systems have the power to run more transparently, simplify cumbersome claims processes and lower premiums. A distributed ledger can enable the insurer and any third parties to instantly and seamlessly access and update relevant information such as claim forms, police reports and third-party review reports. BITPARK, a blockchain-based startup, strives to provide an insurance service that is both transparent and user-directed by offering a peer-to-peer insurance model. Built on smart contract technology, the service offers customers fulfillment of contractual obligations, an approval and compensation system managed between users, a user-based evaluation system, and more.
  4. Funding, investing and lending: Raising capital has traditionally required intermediaries such as investment bankers and venture capitalists. Initial Coin Offerings (ICOs) – new crowd-funded ways to raise capital on the blockchain – are fast replacing venture capitalists. ICOs have raised a combined $3 billion to date, with more than $800 million of that raised in September 2017 alone. In addition, on the blockchain, anyone will be able to issue, trade and settle traditional debt instruments, allowing consumers to seamlessly access loans from peers. The blockchain automates many functions of investing such as making dividend and coupon payments but in an efficient and secure way through the use of smart contracts.
  5. Accounting for value: Accounting is a multi-billion dollar industry, but there are questions over whether it can survive the velocity and complexity of modern finance. The blockchain ledger is an already audited trail. Blockchain-based accounting methods will make auditing and financial reporting transparent and able to occur in real time, thereby dramatically improving the way regulators can scrutinize financial actions in large corporations. Since the data stored in distributed ledgers is continually updated, it offers finance teams the possibility of real-time reporting to both management and external auditors. This could free up auditors to offer more value-added services to their clients.

Is any of this possible today?

We have a banking system that is in dire need of overhaul, and what seems to be the perfect, foolproof approach for disrupting the machine. So what is stopping us from going full steam ahead? Several factors, such as enormous electricity usage (if bitcoin were a country, it would rank 69th in the world for annual electricity usage), limited scalability, and the lack of a well-defined and universally accepted regulatory framework all pose challenges to the blockchain technology going mainstream.

Of these, limited scalability is a particularly hard problem to solve. To put things in perspective, PayPal clears 200 transactions per second, Visa manages 1,700 transactions per second, and the Shanghai Stock Exchange clears significantly more than 10,000 transactions per second. The most promising blockchains of today are orders of magnitude away – the bitcoin blockchain is realistically limited to seven small or three complex transactions per second. Ethereum fares marginally better at between seven and twenty per second.

The scalability limitation is a side effect of decentralization; the consensus mechanism necessitates that every fully participating computer in the network process and validate every transaction and maintain a copy of the ledger. As a blockchain grows in size, the requirements for speed, bandwidth and computing power required by the network will increase exponentially. This could reach a point where it becomes unfeasible for every node in the network to play the same role, leading to the risk of centralization.

Slowly but surely

The blockchain technology is still in its infancy. To truly overhaul the money machine, the crypto-technology world would need to first figure out a way to scale while keeping power consumption in check. Regulators would need to develop strong legal frameworks and agree on how inherently decentralized protocols should be governed. In addition, the financial services industry would have to agree on standards, develop easy-to-use programming modules, and clarify regulatory uncertainties.

As innovation in the space progresses at breakneck speed, governments and various factions of the crypto-technology and financial services industries are currently working to solve these complex problems. In the meantime, the industry and both its users and non-users should prepare for an inevitable revolution in the way they manage anything of value. 


[1] Blockchain Revolution by Don Tapscott and Alex Tapscott





Digital Wealth Management

The basic conditions for the management of private assets have changed drastically in recent years. This is due to a number of factors, including:

  • Products: The increasing importance of passively managed and therefore low-margin funds, which should reach a market share of around 30% by 2020 (EY Global ETF Research 2017)
  • Profitability: The decrease in profitability since 2009, from 37 to 23 basis points of assets under management (BCG Global Wealth Report 2017)
  • Regulatory: The increase in transparency requirements – e.g. regarding costs in the EU through Mifid II
  • Digitization: The rapid growth of assets managed by FinTechs and robo-advisers – e.g. to over $150 billion in the US (TechFluence, 2017)

When these dimensions are compared internationally, there are significant differences. The US, for example, is much more advanced than Germany especially regarding the adoption of digital solutions However, in Germany, the importance of robo-advisers will also massively increase in the next few years and, according to Oliver Wyman, the assets managed by them will increase to $42 billion by 2021.

The following article outlines developments in Germany. However, the key messages regarding the disruption scenario and future business models can also be transferred to other countries.

What are the implications of the above developments on wealth management – especially if robo-advisers expand their focus from smaller assets to the larger asset volumes of private banking clients? In addition to the high level of convenience that robo-advisers offer, they can provide clients with significantly lower costs than traditional banks. In Germany, while the total cost of traditional private banking (including the costs of depots, trading, portfolio management and products) is around 2% of the value of assets under management per year, the cost of robo-advisers is 0.5–1%.

The significantly higher cost of private banking, which is having a massive impact on returns – especially in the current low-interest-rate environment in Europe – is justified by traditional private banking providers by two aspects:

  1. The active management of clients’ portfolios and the claimed generation of an excess return
  2. The scope and quality of the personal advice they offer

On the one hand, one must question the value of active management in the context of private wealth management given the empiric evidence and lack of scale. On the other hand, personal and high-quality advice cannot justify the significant price differences seen between traditional private banking and robo-advisers. Rather, the significant cost differences result from the complexity of the products and, above all, a lack of standardization and digitization of support and back-office processes. The continuation of trends seen in recent years leads to a disruption scenario in private wealth management.

The resulting disruption scenario is not only promoted by technological change and market developments, but, above all, is accelerated by changes in customer requirements – in particular, by the “generation of heirs”. This generation has a significantly higher online affinity with user behavior and price transparency. Due to the large volumes of money that are inherited across generations – according to estimates for Germany, €2.1 trillion will be inherited between 2015 and 2024 – this change will have a significant impact on the industry.

The resulting changes do not affect banks alone. These also affect all those involved in the value chain, especially asset managers and stock exchanges. We assume that the relevant investors in Germany have liquid assets of €1 trillion. As already described, the total costs of traditional asset management generally amount to at least 2% of the investment volume or, correspondingly, €20 billion per year. In the future, with the improvement of efficiencies, it will be possible to offer private wealth management with a differentiated level of personal advice- profitably for 1% – i.e. there is a potential for disruption of €10 billion per year. In the disruption scenario, two €10 billion-questions will have to be answered: 1) how fast will the efficiency potential of €10 billion per year be lifted; and 2) who earns the remaining €10 billion?

However, the future will not belong solely to robo-advisers. Rather, these developments pave the way for digital wealth management as a profitable business model for existing players. This means the rise of private wealth management for investors with liquid assets of €10 thousand to €1 million, which uses a rule-based investment approach relying on  ETFs to increase efficiency potential and combines this in a hybrid model with comprehensive online and offline advice. The combination of scaled investment processes with personal advice, which efficiently combines online and offline formats, will be the decisive success factor here.

Despite these opportunities for banks and financial services providers, who are adapting quickly to the new conditions, the upcoming disruption will initially lead to massive changes in the market. Two aspects will have to be addressed for the successful rise of digital wealth management. On the one hand, the exploitation of the efficiency potential through the extensive standardization of portfolio management, the digitization of processes and the seamless integration of online and offline customer interaction is important. The second aspect, which is critical to customer loyalty and business model profitability, is a new form of customer focus that breaks away from liquid assets and focuses on the investor and their family’s advisory needs.

Examples of concrete project approaches for banks with traditional retail businesses include:

  • Cost-efficient mapping of smaller asset volumes, which are typically not profitable, by using robo-advisers, possibly as a white label solution
  • Changing from an active to a standardized passive investment approach to increase efficiency
  • Expanding customer advice on all asset components – i.e. liquid and illiquid assets – based on digitized support processes

The key to the success of a digital wealth management strategy and the implementation of these measures will be a comprehensive transformation process that accompanies the introduction and use of new technologies and prepares employees for new roles and tasks within customer interaction. The development and direction of this transformation will be the core task of senior management in preparation for the new world of digital wealth management.

Managing an effective sales organization

How to increase performance and sales is a key question in most sales organizations. And what are the implications for those managing these organizations in the digital age? Today, there are many new ways in approaching and servicing customers, complementing the personal approach of a sales force. The speed of change is high, information is readily available, and performance can be measured instantaneously. Taking this into consideration, a fellow management consultant and I have written a book describing which areas to address and what tools are available for management to improve performance in their sales organizations.

The models described in the book are proven and based on academic research. Additionally, the models are further qualified through our decades of personal experiences as leaders for successful sales organizations and as management consultants. Under each area in the book, you will find practical examples of how companies have solved the various challenges in real life, as well as explanations of why it works with reference to marketing models, organizational theory and psychology.

The premise of the book is sales organizations with a sales force, wholly or partially, working in the field with business-to-business sales (B2B).

However, the book and its models are in many aspects applicable to other types of sales organizations, such as telemarketing organizations and sales forces aimed at consumers (B2C).

What is the background to the model

The model is based on practical experience in how to manage sales organizations and has been used as an analytical tool in several projects. As management consultants we have conducted over a thousand interviews of sales people and sales managers at 150 companies in 15 countries where the model has been tested and well received. Under each dimension in the book, we will give numerous examples to illustrate the problem areas and how different companies have handled the issues.

What are the parts of the book 

The book is divided into three parts:

Part I provides basic knowledge of the sales organization. We describe its role, go through several common concepts and show the link between the sales organization’s productivity and the company’s income statement. Part I is primarily intended for readers who have no prior knowledge of marketing and sales organizations.

In part II we go through our model of how to analyze and influence the sales organization’s productivity. The model describes nine performance areas, called dimensions, and the tools available for management to improve performance in each area. The nine dimensions are:

  • Dimension 1: Territory management
  • Dimension 2: Targets, follow-up and rewards
  • Dimension 3: Visualizing the performance
  • Dimension 4: Forecasting
  • Dimension 5: Opportunity follow-up
  • Dimension 6: Individual coaching and follow up
  • Dimension 7: Activity levels and planning
  • Dimension 8: Joint field visits
  • Dimension 9: Performance improvement program

Part III provides ideas and methods on how to implement changes in the sales organization with the help of the model, as well as a number of other practical implementation tips.

Throughout the book, cases will be presented with anonymous companies from a wide variety of industries. These are primarily based on our own experiences.

What’s the target audience for this book

The book was originally written for university students studying business administration and marketing. Since the book has a very practical perspective, it has also been very well received as a management book. In 2017 it was nominated as the best marketing book in Sweden (by Swedish Marketing Confederation), which inspired us to translate the book to English so it could reach a wider audience. It’s suitable for anyone with an interest in sales, marketing or management in general.

Where to buy