Cultivating an Ecosystem of Consumer Health Startups at Bayer

By Pamela Bump |  April 13, 2018

More than a century after it formulated, patented, and branded Aspirin, $51 billion Bayer AG is still best-known for that stalwart of the household medicine cabinet. But Bayer, headquartered in Leverkusen, Germany, owns a range of other healthcare-related brands, including Dr. Scholls, Alka Seltzer, Claritin, and Coppertone. And the 150-year old business is now in the midst of acquiring Monsanto, the St. Louis-based agriculture corporation which owns widely-used farming products like Roundup pest repellents, Fontanelle Hybrids, and Kruger Seeds.

Bayer AG’s G4A Accelerator’s 2017 cohort poses for a photo during its kickoff event. While G4A’s Accelerator and Dealmaker programs are based in Berlin, Bayer brought an online-based G4A Generator competition to the United States in 2018.

On a smaller scale, Bayer is investing in new ecosystem engagement initiatives, like its G4A programs, to discover potential partnerships with players outside its walls.

In 2013, Bayer began to roll out its global G4A program in Berlin—under its original name “Grants4Apps”—with a focus on finding startups that could help them innovate in emerging or niche markets that were otherwise tough for big corporations to access. The G4A Generator launched in the U.S. in January of 2018. Along with two other Berlin-based programs, Accelerator and Dealmaker, the plan is to allow new and more mature startups around the world to pitch solutions to Bayer in hopes of an acquisition, pilot, licensing deal, or other collaboration opportunities.

Priscilla Beal, who heads digital health innovation for Bayer and the U.S. G4A initiatives, said her team felt it was the right time to bring the Berlin program to the United States.”

Bayer as an organization has been absolutely kicking ass at innovating on the molecule for the last 150 years. Now with the digital revolution, we’ve finally gotten to a place where, as an organization, we’re embracing the digital future,” says Beal.

Stepping Up Ecosystem Engagement with Subgroups

Priscilla Beal, head of US G4A Generator, Bayer

G4A is one of three subgroups within Beal’s Digital Health Innovation Team, which is tasked with creating new digital products and partnerships related to self-care. The other two groups are an Intelligence team and a Ventures team.

“Intelligence does scouting and strategic partnerships with five of the core innovation hubs around the world: Silicon Valley, Tel Aviv, Singapore, Shanghai, and Berlin. [Those cities are also] where our five physical locations are. They’re looking at ramping up partnerships specific to those ecosystems,” Beal explains.

Intelligence also focuses on strategic and academic partnerships. For example, in Pittsburgh, “They’re doing everything from partnering with organizations like the Pittsburgh Computing Center and local academic institutions like Carnegie Mellon University,” says Beal.

“They’re trying to build reciprocal relationships with local ecosystems and organizations that have a shared vision.”

The Ventures team is not focused on making venture investments, but rather forming companies. They’re charged with “spinning out a product—and a company around that product.” Beal adds, “Once it becomes viable, it either gets absorbed back into the company into the relevant division, or it gets spun out entirely on its own to Bayer’s [global ventures group] LEAPS.”

The G4A Initiative

Through G4A’s original Berlin program, “Grants4Apps,” Bayer was promoting challenges focused on mobile application solutions, which were “the big thing” at the time, according to Beal. It has since expanded in scope. The startups are given 50,000 euros, 100 days in a Bayer coworking space, and mentoring from Bayer employees in order to build a product.

This program has housed startups including xbird, an artificial intelligence program that uses smartphone sensors and other movement technology to predict the signs of illnesses, such as complications related to diabetes. Another example of a Grants 4 Apps participant is ThinkSono, which is developing diagnostic ultrasound technology that can diagnose Deep Vein Thrombosis, a potentially fatal condition causing blood clots to rise from the leg to the lung. Rather than forcing patients to schedule expensive and time-consuming radiology appointments to diagnose DVT, the app and technology turns portable ultrasound devices into diagnostic tools that can quickly spot clots.

The second program, Dealmaker, is for mature startups with close-to-market products. Startups similarly apply by submitting solutions to challenges posted on Bayer’s G4A site.

Beal explains that Dealmaker is “more of a matchmaking program where we issue more complicated challenges from [Bayer’s pharmaceutical division] and R&D. … We spend a very intense bootcamp day where each startup and each challenger sit in a room and hash out a letter of intent and begin to talk about a scope of work for a product, acquisition, or whatever the startup’s solution to a challenge is.”

In 2017, “[Dealmaker] had over 70 applications, and we closed 11 partnerships by the end of the year.”

G4A Enters the US

The US-based “G4A Generator” program Beal oversees is modeled after Dealmaker. The emphasis is on companies that have more mature products that are close to being marketable.

In its first year, the G4A program has decided to focus on the challenges of consumer health, rather than pharmaceuticals. Challenges for the competition were designed created by members of the Strategic Initiatives group within Bayer’s consumer health division.”

Since the first cohort [in Berlin], we’ve really moved away from ‘One app to rule the world’ to ‘How our applications can be applied to the challenges that we have,” Beal says.

The program, which closed applications for its first cohort in March, is also managed predominantly online. It features just one in-person pitch competition at the end.

Building Support

Beal notes that in most global companies, there are always challenges related to gaining support for something new—especially something designed to move fast.

“When you’re working in a large organization and you’re coming at them with this startup spirit that the G4A team has generally, there’s a speed that takes some getting used to for others,” she says. “I would say that’s the challenge, but that’s also where the fun is.”

“The process of getting stakeholders involved in the launch of a new program is long. We spoke with dozens of contacts in consumer health before we found the best fit,” Beal says.

Skepticism centered around costs, and questions like, “Will it really result in innovation at the P&L level?” according to Beal.

To prove the “entrepreneurial need” for the G4A initiative in the US, Beal’s team devoted time to internal messaging to promote and build support for its launch. While the digital health team is based in Pittsburgh, they sought help at other US locations from Bayer’s already-implemented Street Teams.

Street Teams, overseen by site leads at the six primary Bayer locations in the U.S., are made up of 10 to 20 enthusiastic Bayer employees. The teams are tasked with learning about and spreading the word on innovation initiatives within the company. Street Teams hold events about programs like G4A throughout the major Bayer cities.”

We had [a Street Team-hosted event] a few weeks ago in New York where we had a panel of speakers talk the self-care industry, and we gave an introduction to the G4A Generator specifically.” Beal says.

“We had the soft launch announcement of the program at Health 2.0 in October 2017. In January, when we launched the program, we worked with these challenge owners [who were] coming up with and digging down into what these challenge areas were, and what they wanted to accomplish. Once that was done, we had an onslaught of internal social media with e-newsletters, mailings, digital signage and videos to engage people with the Consumer Health Division itself.”

With approval from members of Bayer’s consumer health division, including its head, Natalie Bartner, Beal’s team began to do similar external messaging and social media campaigns to let the outside world know about the competition.

Let the Competition Begin

Beal has made sure to align her work with the larger vision and mission at the company. “What we’ve done is we’ve framed [the program] all around the strategic vision and mission of consumer health, which is ‘to empower patients and their ability to deliver self-care to help their lives.'”

On its website, the Generator allows startups to apply for challenges in three specific areas of self-care: Nutritional Support, External Pain Management, and Skin and Sun Protection. It also features a fourth challenge catering to the whitespace, titled Digital Self-Care Solutions. The Generator also has a video submission area, which gives Beal’s team a better sense of the people involved with each startup.

“We feel very strongly that it’s the team, more often than not, that makes the startup,” Beal says. “So we’ve crafted our program in a way that not only lets us capture very candidly the value that a possible partnership might bring, but it all still lets the personality of the startup shine through.”

Along with the video submission, the application asks entrants to briefly state the startup’s value proposition, as well as explain the market and revenue opportunities.

Four finalists from each category will pitch their product to panelists which include Bayer employees, VCs, and related industry experts at a New York City Kickoff event May 24. Following the pitches, one winner for each category will be announced.

Winners will be given a cash prize to help them move forward with their project. In early July, they’ll have a negotiation meeting and work to craft a letter of intent describing how their partnership with Bayer will continue. By the end of the month, partnerships will be announced and the startup will be handed off to Bayer’s consumer health division.

“Once they’re in, they’re actually in,” Beal explains. “They’re not put into an incubator where they either co-create, partner, or develop on their own. They become a partner with whomever their challenge owner is to decide how they want to move that product forward. They’ll be working and partnering with teams within consumer health.”

Plans for the Future

As the submission period for the first G4A Generator cohort comes to a close, Beal says Bayer is open to making changes that new startup relationships could require.

“While we’re looking for mature startups and products close to [being] on-market, we also understand that [a partnership] might require both the startup and Bayer to change. Either in process, or in approach. We really have very open-ended requirements or thresholds. We’re intentionally inviting people looking for outright acquisition to investments or otherwise—whether it’s a [formal] partnership or a ‘Let’s see how it works’ project as a first go. We’re really kind of opening it up to the gamut, in hopes that it spreads that aperture of the types of innovations that come our way.”

Although the G4A Generator is still in its pilot year, Beal plans to expand the program in the future with new challenge offerings.

“We’ve launched this with very US-specific challenges for 2017, with the idea that next year we’ll expand to a globally-specific program,” Beal says.

*This case study and many more can be found in our special report: Healthcare Innovation — Case Studies from the Leading Edge.