IBM has reached an agreement to sell its Watson Health data and analytics business to the private-equity firm Francisco Partners
Reporter: Aviva Lev-Ari, PhD, RN
UPDATED on 2/5/2022
UPDATED on 1/31/2022
AI Hot in Healthcare Despite IBM’s Watson Health Pullout
28/01/2022
- Big pharma companies are snapping up collaborations with firms using AI to speed up drug discovery, with one of the latest being Sanofi’s pact with Exscientia.
- Tech giants are placing big bets on digital health analysis firms, such as Oracle’s €25.42B ($28.3B) takeover of Cerner in the US.
- There’s also a steady flow of financing going to startups taking new directions with AI and bioinformatics, with the latest example being a €20M Series A round by SeqOne Genomics in France.
“IBM Watson uses a philosophy that is diametrically opposed to SeqOne’s,” said Jean-Marc Holder, CSO of SeqOne. “[IBM Watson seems] to rely on analysis of large amounts of relatively unstructured data and bet on the volume of data delivering the right result. By opposition, SeqOne strongly believes that data must be curated and structured in order to deliver good results in genomics.”
UPDATED on 1/31/2022
Key M&A in Health IT include:
Last month,
- IBM arch-rival Oracle announced a $28 billion takeover of electronic health record company Cerner, while 2021 also saw
- Microsoft’s $19.7 billion play for AI specialist Nuance and a
- $17 billion takeover of Athenahealth by investment groups Bain Capital and Hellman & Friedman.
IBM sells off large parts of Watson Health business
January 24, 2022
Francisco Partners is picking up a range of databases and analytics tools – including
- Health Insights,
- MarketScan,
- Clinical Development,
- Social Programme Management,
- Micromedex and
- other imaging and radiology tools, for an undisclosed sum estimated to be in the region of $1 billion.
IBM said the sell-off is tagged as “a clear next step” as it focuses on its platform-based hybrid cloud and artificial intelligence strategy, but it’s no secret that Watson Health has failed to live up to its early promise.
The sale also marks a retreat from healthcare for the tech giant, which is remarkable given that it once said it viewed health as second only to financial services market as a market opportunity.
IBM said it “remains committed to Watson, our broader AI business, and to the clients and partners we support in healthcare IT.”
The company reportedly invested billions of dollars in Watson, but according to a Wall Street Journal report last year, the health business – which provided cloud-based access to the supercomputer and a range of analytics services – has struggled to build market share and reach profitability.
An investigation by Stat meanwhile suggested that Watson Health’s early push into cancer for example was affected by a premature launch, interoperability challenges and over-reliance on human input to generate results.
For its part, IBM has said that the Watson for Oncology product has been improving year-on-year as the AI crunches more and more data.
That is backed up by a meta analysis of its performance published last year in Nature found that the treatment recommendations delivered by the tool were largely in line with human doctors for several cancer types.
However, the study also found that there was less consistency in more advanced cancers, and the authors noted the system “still needs further improvement.”
Watson Health offers a range of other services of course, including
- tools for genomic analysis and
- running clinical trials that have found favour with a number of pharma companies.
- Francisco said in a statement that it offers “a market leading team [that] provides its customers with mission critical products and outstanding service.”
The deal is expected to close in the second quarter, with the current management of Watson Health retaining “similar roles” in the new standalone company, according to the investment company.
IBM’s step back from health comes as tech rivals are still piling into the sector.
SOURCE
https://pharmaphorum.com/news/ibm-sells-off-large-parts-of-watson-health-business/
@pharma_BI is asking: What will be the future of WATSON Health?
@AVIVA1950 says on 1/26/2022:
Aviva believes plausible scenarios will be that Francisco Partners will:
A. Invest in Watson Health – Like New Mountains Capital (NMC) did with Cytel
B. Acquire several other complementary businesses – Like New Mountains Capital (NMC) did with Cytel
C. Hold and grow – Like New Mountains Capital (NMC) is doing with Cytel since 2018.
D. Sell it in 7 years to @Illumina or @Nvidia or Google’s Parent @AlphaBet
1/21/2022
IBM said Friday it will sell the core data assets of its Watson Health division to a San Francisco-based private equity firm, marking the staggering collapse of its ambitious artificial intelligence effort that failed to live up to its promises to transform everything from drug discovery to cancer care.
https://www.statnews.com/2022/01/21/ibm-watson-health-sale-equity/
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