Executive Spotlight: Andrew Thompson, Proteus Biomedical

Andrew Thompson, president and CEO of Proteus Biomedical, has lived in Silicon Valley since 1987 and has been working on what he calls “technology-based healthcare companies” since he graduated from Stanford GSB in 1989. Last week I talked with Andrew to hear his views on challenges the industry will face in the coming years and what new technologies are on the horizon that will transform healthcare.

Q: What does Proteus do?
A: We are a company that is pioneering a field that we call Intelligent Medicine. We embed computers and sensors inside proven therapeutic products—drugs and devices—so that you know when you take a drug and know how you respond to it. For example, if you’re a heart failure patient you can track taking your ACE inhibitor, your diuretic, and your beta-blocker. If you’re older, and you have a family member who wants to help you, then we’ll give them reminders and notices so they know whether you’ve taken your medicine. Because you’re a heart failure patient, we can also remind you to do your exercise and give you incentives every day to go for your walk. And because you may need to be on a special diet when you go shopping, we’ll help you select low sodium products. We’ll do all of this for the same price as the drugs you buy now. For one daily price of your medicine you get the drug, the monitoring, the applications and tools, the incentives and the connectivity.

Q: How long do you think until that technology becomes mainstream?
A: Broad adoption will probably happen in developing markets like China first because they can’t afford to replicate the type of healthcare delivery system we have here in the US. We think that Intelligent Medicine can be delivered at low cost compared to delivery systems that rely on lots of physical infrastructure and many high cost professionals. If you think about what I described here, it’s a drug that is a “healthcare delivery system.” It includes all kinds of behavioral medicine tools so you can get your drug, know that you take it, know that you’re responding to it, get coached by your family caregivers and be paid to do all this. Intelligent Medicine empowers the patient and their family to look after themselves and reduce the burden on the professionals. From a health systems perspective, that’s terrific!

Q: What companies do you view as your main competitors?
A: Walmart. What Walmart is doing is to understand that you can be very successful delivering healthcare products and services whilst you monetize the customer around different aspects of their lives. So they’re effectively giving away drugs. They’re providing very low-cost clinics inside their stores and making money because they monetize peoples’ purchase of food and apparel.

We put computers and sensors inside proven drugs. We make use of the Internet and mobile computing and put application layers on top of those proven products. The consumers’ experience of a drug now has an interface on their phone or desktop. I like to use the analogy of Apple. Why does Apple sell songs for 99 cents? Because they monetize hardware and they monetize carriers and increasingly they will monetize other applications. A song to Apple is what a drug is to Proteus. It is content we can repurpose.

Walmart is doing something similar to Apple. They’re taking products, drugs and healthcare services, and they’re repurposing them. It is a way to get people into their stores so that they can spend money on other things. Why does that make sense for Walmart? Because in most other channels, healthcare costs a fortune. If you went to have a routine clinic check at Stanford it might cost $500. Its $19.99 at Walmart and the drugs are basically free. That’s a real innovation.

Q: Who have been your business partners over the years to get Proteus to where it is today?
A: We’ve got a great team. I’ve worked with the same business partner for 20 years, George Savage M.D., who is our chief medical officer. Another co-founder of the company is Mark Zdeblick, who is a Stanford Ph.D. and inventor—he is our chief technology officer. David O’Reilly is our senior vice president for corporate development.

Q: What do you see as major changes the industry will face in the near future?
A: The first thing is the funding environment. I think there will be fewer start-ups and the start-ups that do get funded will raise much larger amounts of capital. There needs to be fewer companies.

Number two, the nature of innovation in healthcare will change dramatically. Innovation in healthcare has to map innovation in the real world and that means things have to get better and cheaper. And the bar for what is a meaningful innovation is going to get much higher.

The third thing is geography. America is going to become relatively less important to companies from a financial perspective and countries like China will become much more important.

Q: What keeps you up at night?
A: That’s a good question. I would have to say that the single-most important thing that I worry about is that we do nothing that harms a patient.

CHI-Advancing California biomedical research and innovation.