SAN FRANCISCO—It’s been a busy year for 2015 Fierce 15 company Propeller Health, culminating at the 2019 J.P. Morgan Healthcare Conference with the official closing of its buyout by connected medical device manufacturer ResMed.
Propeller also announced a new partnership with Walgreens, which allows asthma and COPD patients to refill their pharmacy prescriptions directly through a smartphone app.
The $225 million acquisition, first unveiled last month, folds in Propeller’s cloud-connected inhaler add-ons for tracking early-stage patients alongside ResMed’s digital, at-home solutions for more severe disease or sleep apnea, including ventilators and CPAP machines. But how did they get there?
“One of the first meetings was at J.P. Morgan last year,” Propeller’s chief commercial officer, Chris Hogg, told FierceMedtech. “We started to talk about potential ways to partner, especially around COPD.”
“We started to really dive into that type of partnership, but then the conversation pivoted to how it would make more sense to be part of the ResMed family,” Hogg said. “Those conversations really began in the middle of last year.”
One of the early meetings illustrated the common interests and goals between the two companies.
“Back when we were dating—before we got married, if you like—Richard McHale, president of our respiratory division, went to Wisconsin to meet with the Propeller team,” described ResMed CEO Mick Farrell.
“He presented our growth strategy, and his three horizons of growth within respiratory care—and his third one essentially described Propeller’s business model,” which included the development of partnerships with drugmakers to build connected delivery devices.
Then, Propeller’s presentation provided the complement, listing its plans to partner with the medtech industry and accelerate commercialization of its digital inhalers.
“And it was almost like they looked at each other, with everybody in the room saying, ‘Did you guys plan that?’” Farrell said. “No, it was just one of those things.”
“And then it’s, so your first date is successful, but do the financials make sense? Is there a strong cultural overall between the teams? Does it fit the corporate strategy, as well as the strategy within the business unit? And it was check, check, check on all of those,” he said.
Propeller will continue as a standalone business within ResMed’s respiratory care portfolio, operating out of its Madison, Wisconsin, and San Francisco offices, and will keep working with pharmaceutical company partners and other healthcare organizations.
“Number one, it’s the Hippocratic Oath that doctors take: Do no harm,” Farrell said of the acquisition structure. “Don't mess with the core business and let the team keep performing, because they're doing really well.”
In addition, since ResMed isn’t a drugmaker itself, it’s seen as something of a neutral party in the eyes of Big Pharma.
“There had been a fear that if we were sold to a pharma company, we wouldn't continue working with the others,” Hogg said. “But it's been very favorably received. The move allows us to become part of a neutral company and maintain our relationships with all of the other respiratory pharma developers.”
And JPM’s annual conference, aside from providing chances to check in with customers previous and potential, also offers an easy way to see how those conversations have progressed.
“It's actually kind of fun to look back—since it's at the same time every year, it's a good timestamp. It's good to see how conversations and relationships have evolved over time,” Hogg said.
“Four to five years ago, we were meeting with pharma companies, and Propeller was an interesting thing that they were curious by. The next year it was, 'Well this might be a way for us to differentiate,'” he said. “The next year was, 'Well it seems like everybody's doing this, and if we don't do it, we're going to be left behind,' and so on. It's always a very productive week for us.”
Going forward, Propeller’s new My Pharmacy feature will provide Walgreens patients a single platform to help manage their asthma or COPD medication regimens within Propeller’s app. Patients will be able to refill prescriptions for in-store pickup, as well as find nearby locations, talk live with a pharmacist, and check their rewards points, and Propeller plans to add other pharmacy chains in the future.
The feature is analogous to ResMed’s digital resupply offerings, which remind patients they’re eligible for reimbursed replacement parts for CPAP masks every few months.
Meanwhile, ResMed will work on pulling Propeller’s devices up through its global marketing and commercialization infrastructure, which does business in 120 countries—alongside 2019 resolutions to scale up its existing business in the U.S. and Europe, and get more patients and physicians on the platform.
“I'm meeting with them this afternoon, and I'm looking forward to them telling me how fast we can do this,” Farrell said. “But whatever they tell me is not going to be fast enough, because we’ve got almost 400 million people living with disease—and I don't know if they know that there's a solution out there, but they need a solution like this.”