Convergence watch: Novartis, Qualcomm at healthcare-IT frontier

The big theme that continuously comes up among corporate venturing units in recent years has been convergence.

Many different groups are investing in sectors, which can seem surprising at first sight, for units that ostensibly have a strategic mandate. Of course, as is frequently noted technology is affecting more and more fields, so it is less surprising that such investments are deemed strategic. 

The latest convergence partnership to turn heads in is digital health, when DRX Capital, a $100m fund jointly run by Qualcomm Ventures, the corporate venturing unit of the US-based technology company, and Novartis Pharmaceuticals, the Switzerland-based pharmaceutical company was revealed in January.

Marc Ceulemans, head of the strategic venture capital fund at Novartis, and Nagraj Kashyap, head of Qualcomm Ventures, met with Global Corporate Venturing, to discuss the project.

According to Ceulemans, DRX Capital, is part of a wider strategy to pick up on new developments in the tech sector, which it has pursuing over the last two to three years, as this area was moving very quickly.

The fund was actually an idea, which came “over lunch”. Ceulemans said: “We were working together at the corporate level and the idea of the fund came up.”

Kashyap said the fund was an extension beyond its activities in healthcare through the $100m Qualcomm Life Fund. Kashyap added: “We have invested in more than 18 companies over the period of the last four years, which makes us a credible investor in this space.”

The pair of companies will still make investments in healthcare or IT, through their own venture funds, but the DRX Capital structure provides a way for both companies to back companies of mutual interest. Nagraj Kashyap, head of Qualcomm Ventures, said: “We also have our own venture funds, and for some companies both would add value.”

The hope is the partnership will bring further gains from the exploration of digital medicine, while largely venture investments in digital health have been focused on areas besides pharmaceuticals. Jack Young, a spokesman for DRX Capital, said: “While patient (customer), payor and provider have started to rake in benefits from the innovations in digital health seeded by venture funding, pharma (the missing P in the 4 Ps) has not played a big role. Novartis and other pharma and medical device industry leaders have recognised and acknowledged that potential.”

Global Corporate Venturing will keep track of the Qualcomm and Novartis partnership and will also look to update on other areas where disconnected sectors are colliding rapidly in our new Convergence Watch series.