By DANIEL GARRETT 

Look at who is entering the New Health Economy: Amazon, with digital health applications; Intel, with a home health gateway; Google, with a fit platform, not to mention the news out of Cupertino last week.

Why? According to the 2013 PwC Global Innovation Survey, nearly half of drug and device companies are focusing on traditional product innovation rather than on breaking their efficacy and safety mold. And the stakes are high: As patients become value-seeking consumers, they want quick and easy technology connections to their health source.

It appears that the biggest barrier to transforming traditional healthcare business is culture. Most (89%) of the drug and device CEOs surveyed by PwC view technological advances as the global trend to follow. Yet three-quarters of these executives cite an inability to grasp new information technologies.

Many of these firms invested heavily in social media in 2012 and 2013, but then retreated, possibly awaiting further guidance from the FDA on what is acceptable conduct for “socializing” with consumers.

In fact, the FDA released draft guidance this spring outlining rules for interactive promotional media, including blogs, social networking sites, online patient forums, and podcasts. Some companies, such as Qu Biologics, already use social media to enhance trial recruitment. Companies can scan social media for information about adverse events related to their products. A recent study showed that social media had three times more adverse-event reports for 23 commonly used prescription medications than the FDA did during the same time period.

Any cultural transformation should begin at home. Although drug and device companies say they value social media as an important accelerator of innovation, the evidence is scant on how these firms use technology to promote internal communications that can better connect employees across traditional silos—from R&D to commercial business units.

The new neighbors on the healthcare landscape—profitable retail and technology companies—are largely enabled by their aggressive merging of social media data with other sources, such as sales data, for the purpose of innovation. These firms can capitalize on a newly engaged consumer and produce highly valued services grounded in information.

Some drug and device companies have already invested in open innovation platforms such as InnoCentive, Kaggle, and Salesforce.com to share research and development data that would otherwise be confined to individual organizations and researchers. More companies need to enable collaboration. They should invest in integrated, virtual networks that allow access to new sources of data and analytics that offer an entirely new way to interact and innovate.

Investments in mobile strategies that bring drug and device companies closer to their patients will be the most valuable. Right now, consumer education is the focus of most drug and device companies’ mobile strategies. Only 6% say they use it to gather and co-create new product and service ideas, indicating that most are missing opportunities to use the technology in ways that can bring greater returns.

There are signs of change: some drug and device companies are implementing consumer mobile apps that enable patients to better manage their care. New Zealand-based Nexus6 recently received FDA approval for its SmartTouch inhaler system, which records times of use and transmits that data to the patient’s mobile device. GlaxoSmithKline’s Diabetes HealthMate app allows users to track blood sugar readings and visualizes the relationship between physiological measures and lifestyle factors that users input such as mood, medication intake, activity levels, and diet.

These seeds of Cultural Revolution, however, cannot be widely cast without some signs of caution. Firms need to understand the needs of providers, insurers, and the customer. Often the quickest digital path to the patient is through the care provider. Insurers are important because they are looking for the best value. And firms must ensure that customers are ready for a new service.

Moving traditional healthcare into the New Health Economy requires meeting the needs and demands of the next generation of consumers. That means embracing a digital strategy that fuels innovation. If not, these firms risk being displaced by new competitors that will unveil patient-friendly products able to capture and dominate the market. For more information, read Digital accelerators for a new innovation era from PwC’s Health Research Institute.

Daniel Garrett is Principal and PwC Healthcare IT Practice Leader