Welcome!

The past year has been a formative one for blockchain in healthcare. After the crypto-fueled blockchain boom of 2017- 2018 popped our collective expectations needed to be reset: this was a transformation that was going to take much longer and be more difficult than we first thought. That is a prospect daunting enough to prompt soul searching among even the most ardent believers. And yet a group of dedicated early adopters have marched ahead and the past year was formative because of their efforts. In reviewing the past year it is apparent that there is a tremendous amount of activity and potential in this technology, and I’d like to recognize everyone that contributed to the events detailed in this review, and for the supporters, like yourself, that are here in these early days.


Table of contents

  1. Top posts of 2019
  2. New business networks were created
  3. New products were launched
  4. Interest and activity in privacy technology surged
  5. Blockchain technology rapidly became geopolitically important
  6. Momentum in Asia built
  7. Investment increased
  8. The first big security token offering was not a success
  9. Initial coin offerings continue to struggle

I reviewed the past year’s blockchain and healthcare activity and summarized it here. I have written at length about most of the things detailed in this review and I provide links to my previous commentary. There is a lot of content, so you are encouraged to skip around and dive deeper on things that you’re interested in as well as use this as a reference in the future.


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Top posts of 2019

The top posts of the year were almost all led with a story about healthcare incumbents. This is generally not surprising. “Random startup completes proof of concept” is much less interesting than “FDA seeks to support blockchain” or “Big enterprise is doing XYZ with blockchain.”

These were the top 5 posts of the year, in order of views:

  1. FDA seeks to support use of blockchain & Ethereum client submitted to Hyperledger

    This was the year’s most popular post by far. The acting CIO for the FDA gave a speech focusing on themes like the Learning Healthcare System, data sharing, data quality, traceability, and interoperability before teasing a modernization of the FDA’s infrastructure including the ability to support uses of blockchain technology, among other things. This came shortly after a data manipulation scandal and in parallel to the FDA’s ongoing DSCSA pilots. Also in the news that week: an Ethereum client was submitted (and later accepted) to the Hyperledger Foundation.

  2. Pfizer, Biogen led working group demonstrates proof-of-concept

    During this week’s issue details were revealed on the Clinical Supply Blockchain Working Group, which boasts an impressive roster of pharma companies and is creating technology to track supply chains in clinical trials. To announce their work they demonstrated a proof-of-concept and published a whitepaper. Also this week was a $5.2m raise by Patientory, and a startup settling with the SEC over an ICO.

  3. An ambitious new blockchain & federated learning project

    Owkin, NVIDIA, and King’s College London teamed up to create a new federated learning network under the also newly formed AI Centre for Value based Healthcare (AI4VBH). This will use patient data from several universities and hospitals and blockchain orchestrated federated learning to allow researchers in the AI4VBH to generate novel insights without the usual trade-off of patient giving up their privacy. Research partners in the AI4VBH will be able to train algorithms without having access to underlying patient data.

  4. Anthem is rolling out a blockchain health data product for its 40m members in the next 3 years

    Anthem revealed to Forbes that they were working on a pilot to use a blockchain for access management to patient health data and planned on rolling that out to 40 million of their members in the next three years. There are many unanswered details here, but notably this innovation is coming from an enterprise, not one of the many healthcare initial coin offerings that raised money for exactly this product.

  5. Novartis talks blockchain on CNN & Google's aggregation of health data comes under scrutiny

    Two executives from Novartis did a CNN Money interview to talk about their work with blockchain technology. The conversation touched on several repeated themes, including the desire to go live with production use cases in 2020, and highlighted Novartis’ role in the IMI blockchain and healthcare consortium, which is set to launch next month. This week’s newsletter also highlighted the usage of trusted execution environments to give users over autonomy over their data and privacy.


New networks were created

At this time last year there were two (publicly announced) blockchain networks with major healthcare organizations participating in them: ProCredEx and the Synaptic Health Alliance. A year later, depending on how you count them, there are roughly 10 new networks with activity from most parts of healthcare. Indeed, nearly all of the largest payers and pharma companies are participating in some network, with solid representation from providers as well as other stakeholders like PBMs and pharmacies.

These were the new business networks that were revealed this year:

  • Health Utility Network — Tackling a wide range of problems in healthcare, founding participants are Aetna, Anthem, Cigna, Health Care Service Corporation, IBM, PNC Bank, and Sentara Healthcare. No use cases announced publicly. Commentary here, here, and here.

  • Coalesce Health Alliance — NASCO, Blue Cross Blue Shield of Massachusetts, Blue Cross Blue Shield of Michigan, Horizon Healthcare Services, Inc. and Express Scripts formed a consortium focused on improving the accuracy and efficiency of patient healthcare claim accumulations across different entities within the Blues ecosystem. Commentary here and here.

  • AI4VBH Centre — The AI Centre for Value Based Healthcare (“AI4VBH”) is a consortium creating a federated learning network with patient data from four hospitals and three universities. Research partners can train algorithms on this federated dataset. Commentary here.

  • MELLODDY— 10 large pharma companies, 5 technical partners, and 2 universities using federated learning to improve drug discovery. Under the Innovative Medicines Initiative. Commentary here and here.

  • Trust Your Supplier— Supply chain and credentialing focused business network with a wide range of enterprises participating, including GSK. Commentary here.

  • Remedichain — Consortium focusing on reducing prescription waste with participation from several universities.

  • DSCSA pilots — The FDA is piloting the usage of emerging technologies to comply with the Drug Supply Chain Security Act (“DSCSA”). There are several groups under this program that have potential to become formalized consortia later. I broke news about the participants in this a few weeks (by watching the link on the FDA’s website) before media outlets picked this up. Commentary here.

  • MediLedger — MediLedger is more like a group of business networks because it has different work streams going on in parallel with use cases and participants that don’t necessary overlap, though this might change in the future.

    Verifiable Saleable Returns — Uses a blockchain to help businesses comply with the first DSCSA requirement. Live product that has been integrated into SAP’s Collaboration Hub for Life Sciences.

    DSCSA pilot — Part of the FDA’s DSCA pilot. 26 participants made up of several pharma supply chain stakeholders. Commentary here.

    Contracting and chargebacks — streamlining the process of chargebacks in pharma supply chains. Significant because it expands MediLedger’s scope beyond just DSCSA. Commentary here.

  • Clinical Supply Chain Working Group — Focusing on track and trace use cases for clinical supply chains. Working group is led by Pfizer and Biogen with participation from a handful of other stakeholders. LedgerDomain, who is also a part of one of the DSCSA pilots, is the technology provider. Commentary here.

If you take away anything from reading my reflections let it be this: blockchain technology is already changing healthcare by enabling competitors to collaborate to solve common problems. This alone is remarkable. Expect these networks, and new ones, to deepen their collaboration and tackle ever-larger problems in healthcare as enterprises get accumulated to a new way of doing business.


New products were launched

Alongside these networks were several new products launches. Startups leveraged blockchains to do everything from securing our supply chains to insuring gig-economy workers to changing how drug development is funded. Some of these products were brand new companies launching their first offerings, others were startups iterating their way to product market fit. Nearly all of these products are in the early stages of their lifetime, but there are many more live experiments in market compared to this time last year.

Many projects are at the “proof-of-concept” or “pilot” stage, and for the purposes of this list I’m only counting products which are in the market:

Across these startups and the above networks we also started to see early signs of convergence on common business models and design patterns (shout out to John Bass for this insight), signaling an understanding of value creation and a level of maturity. Lastly, traditional fundraising by blockchain and healthcare startups was at an all-time high this year and, with a few exceptions, entrepreneurs are forgoing initial coin offerings after the disastrous experiences of their peers.


Interest and activity in privacy technology surged

Catalyzed by crypto and a renewed interest in privacy, there was been a Cambrian explosion of activity in next generation privacy technologies like zero-knowledge proofs, trusted execution environments, fully homomorphic encryption, and federated learning. These technologies are vastly different but share a common goal: enabling the usage of data without needing to give up privacy.

The implications are wide-ranging for consumers and enterprises alike:

These technologies will help us overcome the limitations of blockchains by enabling privacy, scalability, and trust in off-chain events, thus unlocking new use cases. They are also useful as standalone technologies, and have the potential to resolve the conflict between our dual goals of increased data sharing and increased privacy. These technologies have varying levels of market readiness, and some have hard technical barriers that need to be solved, but expect momentum around privacy technology to accelerate in 2020.


Blockchain technology rapidly became geopolitically important

With almost unbelievable speed governments around the world began to think about and act on their blockchain and digital currency strategy this year. The catalyst for this was twofold. First Facebook’s announcement of Libra, a new payments network and global currency built on a blockchain. Second President Xi announced that blockchain technology was a strategic priority of China. This announcement itself seemed to be a challenge to the US and Libra, as it came immediately in the wake of a contentious Congressional hearing on Libra attended by Zuckerberg.

Countries worried about ceding ground to Libra, China, or crypto-upstarts can be seen defending their territory in real-time as government pass blockchain strategies, create blockchain investment funds, denounce Libra, and experiment with their own digital currencies. These actions are deeply important as they affect levels of investment, attract talent, coordinate activity, and create favorable regulations. As result this conflict will have a large impact on enterprise verticals like healthcare, indeed, President Xi explicitly called healthcare out as an area of focus. Conspicuously the US, sans a presidential tweet, has been asleep at the wheel but there have been signs that it is waking up to the threat that is being posed to its monetary and technical dominance worldwide. Expect a flurry of activity to come in 2020 and for these actions to have a big impact for years to come.


Momentum in Asia builds

In my semi-annual report I noted the flurry of announcements coming out of Asia and how they differed from the ecosystem in the West because there was more health data activity. Since that time momentum has only increased in Asia, with a string of health data and insurance related announcements, and catalyzed by a very strong endorsement of blockchain technology from Chinese President Xi himself, which will accelerate the space even further.

Nonetheless it is difficult to analyze blockchain activity in Asia. A significant amount of information proliferates through word of mouth, WeChat groups, and Mandarin-only social media properties. Case and point: a multibillion dollar crypto ponzi scam with millions of participants went unnoticed in the West for months! If I can’t get more information on that then you can imagine how difficult it is to get information on, say, pharma supply chain initiatives. A goal of mine in 2020 is to find solutions to these structural information flow problems.


Investment increased

Startups began the first half of this year by raising capital at a pace twice as fast as the previous year. This tempered some in the second half of 2019 and $38.4m was raised in 2019 in total, up ~55% from the previous year’s total of $24.8m, and ~380% from 2017's total of $10.1m. Moreover, fundraising has shifted away from ICOs and back towards traditional venture capital, after funding to ICOs eclipsed traditional investments by an order of magnitude in 2017 and 2018. These were the blockchain and healthcare startups that publicly announced they were raised venture capital investment:

  • Chronicled, who is the steward of the blockchain for pharma network MediLedger, raised $16,000,000

  • Embleema, who makes health records, raised $3,700,000, was accepted into TechStars and MassChallenge

  • Veratrak, a startup digitizing pharma supply chains (not track and trace!), raised ~$1,000,000

  • LunaDNA, a community-owned genomic and health data platform, raised $4,600,000

  • Patientory, the startup which previously had an ICO and is building health data infrastructure, raised $5,200,000. Commentary here.

  • BlocHealth, a startup making credentialing solutions, raised between “$500,000 and $750,000”

  • BurstIQ, which makes health data infrastructure, raised $5,500,000

  • Owkin raised an undisclosed amount in a Series A

  • Genomes.io used a crowdfunding platform for a ~$1m seed round and received $100,000 as part of the ConsenSys accelerator Tachyon

To put this number in perspective $8.3 billion dollars was invested in digital health startups in 2018, with roughly ~$1 billion (full disclosure: extrapolating from a RockHealth graph here) going to early stage (seed or series A) companies. Regardless of what number you prefer, blockchain and healthcare startups are a small part of the overall digital health funding. It is remains very early days for this exciting industry.

In other industries with other technologies you might be able to raise a few million dollars by just building some cool technology. But, for the most part, blockchain solutions in healthcare will require a network of participants for them to be useful. Creating this network is like threading a needle: you need the right business model, governance rules, and technical solution (again, shout out to John Bass for articulating this) and if one of these aspects is misaligned then the whole solution will not work. Startups that are able to demonstrate that they have traction with forming a network are less risky and therefore will be able to raise more money. Given Chronicled’s role in forming MediLedger this is one potential explanation for why they were able to raise ~$10m more than their closest peer.

Lastly on this note, there were two acquisitions this year, matching the two acquisitions that happened at the end of the last year. Providence St. Joseph Health acquired Lumedic, a blockchain-enabled revenue cycle solution, and Hu-manity.co acquired Betterpath Health, which created health data infrastructure. It is difficult to make inferences from this, but this is broadly a good signal, and should encourage investors that there is a path to making their investment back.


The first big security token offering was not a success

After the massive bubble and bust of Initial Coin Offerings in 2017-2018, it became fashionable to say that the market would transition to security token offerings (“STOs”), basically sales of normal securities (mostly shares in a company) but with ownership of those securities recorded and traded on a blockchain.

Agenus Bio, a publicly traded biotech company, started this year with an announcement that they were using a STO to raise $100m. I wrote at more length here, but in short, Agenus proposed that each token would represent a share of potential future profits derived from a particular drug in their pipeline. Similar to the difference between investing in a single stock versus an index fund, investors could get exposure to this particular drug without investing in the broader company, and this STO would allow Agenus to raise funds for the purpose of developing that specific drug.

By the end of the 3rd quarter of the same year Agenus had ended their STO, and not in the good way. One line tucked inside of the risks section of their Q3 filling revealed that they had not issued any security token and had no intention of doing so (ctrl+f "token"). It is hard to tell exactly what happened here, but Agenus probably wasn’t able to raise enough money for it to be worth it for them to move ahead with their STO.

So, what are we to make of STOs? On one hand, financial infrastructure built on a blockchain has genuine benefits over the status quo. Further this particular offering had unique financial benefits: investors could get exposure to a particular drug. But these benefits were likely overshadowed by a complex structure and a relatively undifferentiated underlying product offered by Agenus. I don’t think that we should read this as STOs have no future per se, but instead that their usage today will be more niche than previously expected, and that the market for these things will take some time to develop. A related development that I am watching is the usage of novel economic mechanisms make drug discovery better, pioneered by Molecule.


An update on initial coin offerings

Name Raised Listing Price Price 12/23/2019 Return
modum $13,400,000 $0.4874 Dead -100%
shivom $35,000,000 $0.0486 Dead -100%
timicoin ? $0.0589 Dead -100%
nam-coin ? $0.0014 Dead -100%
patientory $7,000,000 $0.6482 $0.006 -99%
medicalchain $24,000,000 $0.3185 $0.003 -99%
aidoc $23,000,000 $0.2311 $0.003 -99%
curecoin $6,800,000 $0.7986 $0.033 -96%
ambrosus $32,000,000 $0.1972 $0.014 -93%
medishares ? $0.0313 $0.003 -90%
dentacoin $3,000,000 $0.0003 $0.00004 -89%
lympo $14,000,000 $0.0174 $0.003 -85%
medibloc $6,000,000 $0.0206 $0.003 -84%
farmatrust $20,000,000 $0.0066 $0.002 -75%
encrypgen $1,000,000 $0.0474 $0.017 -65%
docademic $1,100,000 $0.0096 $0.006 -40%
Solve.Care $20,000,000 $0.1427 $0.106 -26%

I have long been tracking the performance of healthcare ICOs, you can read my seminal analysis with Vince Kuraitis here and a follow up here.

The methodology I used here is the same I have used previously. Prices were last updated on 12/23/2019. Several tokens are, for all practical purposes, dead. The teams behind these tokens may continue shipping updates, but make no mistake, their tokens have bleak futures with little to no volume and no way for consumers to reach them, as they have been delisted from major exchanges. If tokens are a “breakthrough in network design” then these tokens have failed to create the networks necessary to sustain them. A few tokens on this list were like zombies: dangerously close to death themselves or difficult to tell if they were really alive.

Moreover, the funnel of projects that could succeed is getting more thin. Several new healthcare projects had ICOs this year. Only a few were successful in raising meaningful amounts of money and only one I’m aware of, Solve.care, has been listed on a large exchange this year (which is why they are on this table). Getting listed means a project has a chance at success but doesn’t guarantee them success.

There is no single proven model for creating sustainable value with a token so far, but some are certainly more promising than others. MakerDAO’s MKR and Binance’s BNB have pioneered a model where fees generated by the system are used to buy tokens on the open market and destroy them, thereby generating demand as well as forever reducing the supply. Some other observations: tokens that aren’t attached to a live product generally suffer and mechanisms that lock up tokens are becoming more popular. Healthcare ICOs that remain should focus on three things: developing a sustainable community, launching a useful product, and iterating beyond the medium of exchange model.



Disclosure: In the course of this review I discussed Agenus and a number of tokens, all of which are publicly traded. I have no financial interest in any of these, either long or short.

That ends my review of blockchain and healthcare in 2019. I hope you enjoyed it. My content is free, but if you would like to support me, you can do so on Patreon. If crypto is your thing this is my wallet: 0x2cb1d2b4c134Ee1ae768cF52C9A0804Ab71a7915.

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Every Sunday I send out a free blockchain and healthcare newsletter with top stories and ideas that you need to know about. Join leaders from the Mayo Clinic, Kaiser Permante, Optum, Amerisource Bergen, ConsenSys, Hashed Health, Pfizer, Goldman Sachs, and more by subscribing today.


I would also like to thank Phil Baker, Sean Manion, Vince Kuraitis, and Ray Dogum for providing their thoughts on this review before publication.