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Tech & retail giants in healthcare (Q3 2023): Big Tech pushing GenAI aggressively

Healthcare saw a flurry of activity during 2022 and Q1 2023, with both Big Tech and retail giants making significant strides into the space. However, momentum slowed in Q2 2023 as M&A activity dried up and continued to be subdued in Q3 2023. Similar to previous quarters, primary care emerged as the most popular area for Big Tech and retail players in Q3 2023, accounting for ~70% of all activity tracked during the quarter. Notably, increased interest in leveraging GenAI capabilities to streamline time-consuming clinical documentation tasks and improve the efficiency of clinical workflows led to a surge in activities in Hospital Management. BigTechs, including Amazon, Alphabet, and Microsoft, drove this.
Big Tech companies were more active in Q3 2023, accounting for ~82% of Q3 partnerships (~68% in Q2). Most of these alliances focused on bringing in the aforementioned advancements to clinical operations through the application of GenAI tools. Amazon stood out among the Big Tech players as it consolidated its presence in the GenAI space with a USD 4 billion investment in Anthropic, drawing parallels to Microsoft's relationship with OpenAI. The deal is part of a broader collaboration to facilitate the development of GenAI applications in use cases such as healthcare.

Healthcare activities of Big Tech and retail players in Q3 2023

Q3_Overall_Activity
Activities refer to initiatives by the above companies across industries under SPEEDA Edge’s Health & Wellness and Pharma & Life Sciences verticals
Source: Compiled by SPEEDA Edge

Key takeaways

  • Adoption of GenAI in healthcare continues to grow, Big Tech competition heats up as Amazon makes major moves. While Alphabet and Microsoft continue to make steady progress in the healthcare GenAI space through their product offerings, Amazon’s consolidation through the launch of AWS HealthScribe (a HIPAA-compliant service that enables healthcare software vendors to build clinical applications that automatically generate clinical notes by analyzing patient-clinician conversations) and its strategic investment in Anthropic demonstrate intensifying competition in this space.
  • Alphabet continued to lead healthcare activity. The tech giant accounted for ~32% of all Big Tech activity and nearly a quarter of all healthcare activity. Primary care remained the focus, with nearly 80% of its activities concentrated in the area. However, within primary care, Alphabet broadened its focus to improve preventive healthcare, hospital management and interoperability, AI drug discovery, and clinical decision support.
  • Overall activity of retailers slowed in Q3 2023, accounting for 15% (down from 32% during Q2 2023). Walgreens continued its commitment to value-based care. Following a landmark investment in VillageMD, Walgreens announced its latest strategic partnership with Pearl Health to bring value-based primary care to communities across the country.
  • No major acquisitions during the quarter, but reports suggest a multi-billion dollar move by Walmart is on the cards. The retail giant has shown interest in acquiring a majority stake in ChenMed—a chain of primary care clinics focused on health for older adults. If the deal goes through, it would be Walmart's largest healthcare acquisition to date. 
  • Investment activity remained low. Alphabet and Intel, through their corporate venture capital arms, were the most active investors this quarter. Retail giants remained cautious amid uncertain economic conditions, making no investments during the quarter.

Number of activities by company


Acquisitions: Walmart rumored to make its biggest healthcare acquisition

M&A activity continued to be subdued during Q3 2023, echoing the previous quarter’s M&A lull as the major players stepped back after a period of heavy consolidation.
Walmart, however, was exploring a deal to acquire a majority stake in primary care clinic operator ChenMed to expand its healthcare business, according to a report by Bloomberg. While the terms of the deal are yet to be finalized, the value could run up to several billion dollars and would be Walmart's biggest purchase in the healthcare space, resulting in it owning more than 100 ChenMed health centers in 15 states. 

Partnerships: Adoption of GenAI in healthcare continued to rise

Big Tech

Partnerships continued to fuel advancements in the healthcare space, with both Big Tech and retail giants forming collaborations with healthcare organizations during the quarter. Big Tech companies were the most active in this space, accounting for ~82% of the partnerships tracked during the period. The majority of Big Tech partnerships were in primary care; there was continued interest in adopting GenAI tools, with emphasis on removing administrative burdens and personalizing the patient experience through these collaborations. Partnerships focused on the adoption of novel AI technologies for pharma automation across areas such as AI drug discovery.
Alphabet, Microsoft, and Oracle led the Big Tech companies, entering the most number of partnerships in the healthcare system during the quarter.
Notable partnerships
  • Alphabet’s focus on advancing GenAI into healthcare continued. During the quarter, Alphabet entered several partnerships with CareCloud, Hackensack Meridian Health, and HCA Healthcare to integrate Google Cloud's GenAI tools to enhance efficiencies in clinical operations and improve patient experiences. In addition, Google Cloud entered a partnership with Grifols to support the development of new medicines using the tech giant’s AI capabilities.
  • Microsoft leveraged OpenAI links to ease administrative burdens in healthcare sector. The Big Tech giant leveraged its Azure OpenAI Service to enter a partnership with Mercy that aims to deploy GenAI-powered communication tools to help patients better understand their lab results and to recommend follow-up actions during initial patient calls. In addition, Microsoft partnered with Mayo Clinic to enable the latter to become one the first healthcare organizations to deploy Microsoft 365 Copilot to automate time-consuming administrative tasks. Further collaborations include 1) partnering with Teladoc to integrate its Azure OpenAI Service and its conversational AI platform Nuance to automate the creation of clinical documentation and 2) expanding its partnership with electronic health record (EHR) vendor Epic to integrate similar features.
  • Microsoft is also supporting drug discovery efforts through its cloud service. The company is working with AI-powered pathology computing platform Paige to provide its cloud computing infrastructure to develop an image-based AI model configured with billions of parameters to capture the intricate nuances of cancer. These could be applied to new oncology and pathology use cases and deployed to hospitals globally via Azure Cloud.
  • Oracle’s Cerna partnered with medical clinics to install EHR systems. This included partnerships with Vandalia Health and Universal Health Services to extend the system across their networks to enable more informed care decisions and improve patient safety practices. Oracle also tied up with 1) Syneos Health to leverage the Oracle Cerner Learning Health Network and elements of Oracle’s suite of study startup solutions to close gaps in clinical trial recruitment and with 2) TeleVox to deploy Oracle Cloud Infrastructure to provide customers easy access to TeleVox’s patient engagement solutions.
  • Amazon expands its Clinic marketplace with a partnership following a delayed launch. The e-commerce giant accepted virtual care provider Curai Health on Amazon Clinic’s marketplace to provide message-based care. Amazon established the partnership following the nationwide launch of its virtual health platform Amazon Clinic, which was delayed several times owing to privacy concerns. In addition, Amazon partnered with Maven Clinic to provide Amazon employees access to its fertility and family-building support services.

Summary of Big Tech players’ partnerships in Q3 2023

Q3 2023_ Bigtech_Partnerships
Source: Compiled by SPEEDA Edge
Q3 2023_Big Tech Partnerships
Not illustrated is IBM Consulting’s collaboration with Microsoft to help companies accelerate the adoption of GenAI
Source: Compiled by SPEEDA Edge

Retail

Compared with previous quarters, partnerships among retail giants witnessed a dip during Q3 2023. During this period, CVS Health, Walgreens, and Best Buy were the only retail companies that entered partnerships in the healthcare space. These partnerships focused on primary care and were geared toward improving the affordability and accessibility of healthcare products and services.
Notable partnerships
  • CVS Caremark partnered with GoodRx, aiming to reduce out-of-pocket prescription costs. The initiative came with the launch of the Caremark Cost Saver program. Through this program, Caremark members with commercial insurance would be provided automatic access to GoodRx’s discounted prescription pricing on generic medications when available. In addition, CVS Health partnered with Viome Life Sciences to sell its gut testing kits in more than 200 CVS locations across the US. It would be the first-ever gut test available in the national retail chain both online and in-store.
  • Walgreens announced its partnership with Pearl Health to accelerate the expansion of value-based care in collaboration with community-based primary care physicians. The partnership opens an additional channel that will enhance the retail giant’s reach whilst offering a broader range of solutions to providers and health systems. In addition, Walgreens and VillageMD continued the expansion of the full-service primary care model with the opening of the first Village Medical at Walgreens’ primary care practice in Chicago.
  • Best Buy extends partnership with Geisinger to improve at-home chronic disease management, building on a July 2022 agreement between the duo in which Best Buy provided specially trained Geek Squad agents to deliver, install, and activate remote care management devices for Geisinger patients. Through the expanded partnership, they will provide advanced technology and logistics services to empower patients and help healthcare organizations manage their own at-home chronic disease management programs.

Summary of retail players’ partnerships in Q3 2023

Q3_2023_Retailers Activity
Source: Compiled by SPEEDA Edge
Q3 2023_Retailers' Partnerships
Source: Compiled by SPEEDA Edge

Investments: Retailers step back; Amazon–Anthropic deal could open up new healthcare use cases

Overall investment activity continued to decline in Q3 2023, with Big Techs accounting for all rounds, as retail companies made no investments during the quarter. In total, five Big Tech investment rounds were tracked during the quarter (compared with four last quarter). Alphabet and Intel were tied for the most rounds (two) during the quarter.
  • Amazon’s USD 4 billion deal with Anthropic stands out. The investment is part of a strategic collaboration between the companies to bring together their respective technologies and expertise in GenAI. The move also underscores Amazon’s aggressive push into the AI space as it looks to keep pace with its Big Tech rivals. Among other things, Amazon aims to open up use cases such as drug discovery for healthcare by making Anthropic’s model available through Bedrock, its generative AI service.
  • Alphabet, through its venture capital arm Google Ventures (GV), continued its investment spree. During the quarter, GV co-led a USD 210 million private financing round of Nimbus Therapeutics, a clinical-stage company that designs and develops breakthrough medicines through its computational drug discovery engine. The funds will be used to advance Nimbus Therapeutics' pipeline of drugs for various disorders. GV also led Midi Health’s USD 25 million Series A round, which will be used to expand the latter’s operations across the US by January 2024 and to launch additional partnerships with major hospital systems and employers.
  • Intel returned to the mix with two notable investments during the quarter. After sitting on the sidelines in the second quarter, Intel Capital led a USD 17 million Series A round for lab-grade at-home health testing startup SiPhox Health to enable team expansion as SiPhox Health worked toward FDA clearance for its SiPhox Home platform. In addition, Intel Capital participated in a USD 8.9 million investment round of senior living technology provider K4Connect to support the adoption of its technology.
Q3 2023_BigTech Investments
Source: Compiled by SPEEDA Edge

Appendix

Large incumbents have continued strengthening their presence in primary care in the US. This table summarizes the number of brick-and-mortar clinics each company currently has, with an indication of their reach and scale in the market.

Large incumbents in primary care

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