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Changing Times

A transforming model of healthcare could make its way to the core of the pharmaceutical industry

20.08.2012 -

Technology has changed many industries over the past decades. Rapidly developing computers made complex arithmetic possible and the spread of social media connected the world. The biopharma and healthcare industry is also currently preparing for some massive changes, which could lead to an era of ‘connected health'. McKinsey recently published a report titled "How the new connected era is reshaping biopharma", which made clear that due to better connectivity via the internet, improved diagnostic tools and the dissatisfaction of patients, healthcare and biopharma are now facing a transformation from centralized medical distribution to a more personalized approach. The ambition of this ‘connected health' approach is simple: Identify the right treatment for the right patient at the right time.

The current model for healthcare around the globe is characterized by inflexibility, centralized distribution and high costs. Medical mass production generates standardized drugs with variable quality and the outcome monitoring is at least questionable. Often data are monopolized by the suppliers, which leads to an unsustainable imbalance between supply and demand. Since the world population is growing constantly many countries are observing an aging, the demands toward the pharmaceutical industry change and the pharma companies need to react. The idea of ‘connected health' was born out of this challenging situation, trying to revolutionize the model for healthcare. "Connected health will give rise to a number of new business models that have the potential to transform healthcare," says Kristin Peck, Pfizer's executive vice president for worldwide business development and innovation, in an interview with Sam Marwaha and Steve Savas from McKinsey.

Consumers will demand more information transparency and especially more value. It is their right to do so, since technologies improve rapidly and offer the possibilities. ‘Connected health' offers a wide variety of advantages, especially for consumers and physicians. The biopharma industry on the other hand is not yet ready to serve this new market. Even though the industry's commercial model already started to change, there is much to be done to face the upcoming challenges. "Pharma companies will need to be able to overcome the commercial and market-access risks that could accompany this shift," guesses Kristin Peck. "The Implication is a shift away from highly innovative treatments toward highly effective solutions, especially solutions that shift accountability toward the consumer." If ‘connected health' becomes reality, the biopharma industry and all its suppliers need to reposition themselves within the market.

Even though the situation for biopharma companies is challenging, there are also lots of opportunities for improvements. Especially R&D can profit from a better connected pharmaceutical industry. Virtual workplaces, set up via the internet, offer the chance for open collaboration among biopharma companies, academics, clinical-research organizations and contract manufacturers. It is crucial for long-established companies to see new business models as a chance and not as a threat for the status quo. Pfizer, Merck and Lilly already cooperate and use such precompetitive platforms to guarantee better data sharing and knowledge synthesis. Other pharma companies are already following this example.
Of course, online platforms are not the only way for companies to benefit from the era of ‘connected health'. "More openness will also arise as companies set up industry-wide "utilities" and advance collaborative-innovation research models that bring world-class institutions and talent closer together," says Kristin Peck.

The biopharma industry will become faster, better connected and more flexible in the sense of ‘connected health'. For pharmaceutical companies it will be challenging to meet these new requirements. Partnerships and new collaborations can help to share risk, improve capital efficiency and speed up business-process evolution across the value chain. Unusual partnerships need to be made to benefit from the fast developing technologies of social media, mobile health and data-transparency. The model of healthcare is adapting to the needs of the consumers and pharma companies should do exactly the same.

CHEManager Europe asked experts from the pharmaceutical ingredients and custom synthesis industry to share their opinions on this topic prior to the industry global networking event, CPhI Worldwide in Madrid, Oct. 9-11, 2012.
Read what they think about the prospects for their businesses given the challenges - and opportunities - ahead.