Japan’s Otsuka Pharmaceutical is extending its push into digital medicines with a multimillion-dollar deal to commercialise drugs containing tiny sensors that can track whether patients have taken vital medication.

The tie-up with Proteus Digital Health builds on US approval last year for the technology to be used in an existing antipsychotic drug made by Otsuka called Abilify, marking the first time that a medication containing silicon and software had received a regulatory greenlight.

Otsuka wants to extend the use of the sensors, the size of a grain of sand, in other drugs, to treat severe mental health conditions, subject to approval by the US Food and Drug Administration.

Under the terms of the tie-up, Otsuka has made $88m in related equity and other payments to Proteus and the two companies will work on developing and commercialising digital medicines over the next five years. The deal could be worth between $500m and $700m, according to people familiar with the negotiations. Otsuka would not confirm this figure.

Meanwhile, Andrew Thompson, chief executive of Proteus, said most digital deals were worth “single-digit to double-digit millions. Most of those are small projects that can’t really become scaled products.”

“As an investment in real product development”, the collaboration with Otsuka was “very significant,” he added.

Andrew Wright, head of digital medicines at Otsuka, said the tie-up would “result in product features and sensor capabilities that expand the potential of digital medicine offerings, such as wearables”.

When patients swallow a tablet containing the ingestible sensor, a signal is sent to a patch worn on their bodies, which in turn connects to an app on their phones, showing that they have taken their dose.

Poor compliance with drug regimes, particularly among sufferers of chronic diseases, is a pervasive problem for drugmakers and healthcare systems, leading to lower consumption of products and higher costs for payers when patients’ conditions deteriorate as a result of missing treatment.

Mr Wright said that through tracking ingestion of medication, the data would allow the companies to “measure other behavioural markers” that could help “identify the right treatment options” and determine how often patients need to attend clinical appointments. He added the companies hoped it would also “increase the value of the digital medicine system”.

Otsuka is a subsidiary of Otsuka Holdings, which had group sales of roughly $11bn last year. Silicon Valley-based Proteus Health is privately held and investors include Swiss drugmaker Novartis.

According to Rock Health, a provider of data on digital health investment, the third quarter of 2018 yielded “the largest quarter ever in digital health venture funding”, with $3.3bn committed. This surge pushed funding in the year to date to $6.8bn, “already exceeding last year’s annual funding total by more than a billion dollars”, it said.

Get alerts on Digital health when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article