Verticalization. Fitness Market Map. AI 100 submissions.
Never Get High On Your Own Supply
In tech land, a trend we’re seeing more frequently are platform companies beginning to verticalize and get into the supply side of their platform. A few examples:
Amazon now making their own line of clothing, electronics, consumer packaged goods, and more
Netflix creating their own shows
Uber developing self-driving cars
As a platform grows, they have two main advantages when it comes to making their own products.
The first is that they capture a lot of data from consumers about what they want/need. Netflix is notorious for being data-driven when choosing what shows to develop, like when they detected people wanted Kevin Spacey before creating House of Cards.
The second is that they own the distribution to consumers and the direct relationship with them. Pretty convenient that Netflix can serve their own shows right to you.
We’ve already seen some of this verticalization in healthcare. Many medical supply distributors like Cardinal Health also manufacture gloves, surgical apparel, bandages, etc. A trend in the last few years has also been vertically integrated providers and health insurers like Kaiser Permanente, or Oscar Health opening their own clinics.
One of the interesting developments more recently is the idea of platforms using the data and distribution advantage to make their own therapeutics. We’ve written about this previously when Clover Health CEO Vivek Garipalli mentioned they could get into this area. More recently, 23andMe raised $250M with a big focus on using their database to accelerate drug discovery and develop their own therapeutics. Combine the clinical studies they’re conducting with their customers and 23andMe looks more like a fully verticalized pharma company. We talk more about them in our genomics webinar, including predicting their fundraise.
Any healthcare platform that captures genotype and phenotype information can theoretically become a therapeutics company and deal directly with consumers. GRAIL and Helix could, new clinical trial startups like Science 37 could, and even Apple could through its health app. Of course not all of them will and there are many hurdles to making therapeutics. But owning data and the patient relationship, these platform companies could become an increasing threat to traditional pharma.
Scale to fit
We made a market map of the fitness industry. If you’re an expert research client, check it out.
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