5 Reasons Why Changes in the Pharmaceutical Industry Should Be Welcome
May 14, 2012|
We all know the pharmaceutical industry is going through a lot of changes due to the healthcare reform, the patent cliff, mature markets and the tough global economy. Big pharma is trying to find a new business model and the right business model for their company to survive. Change is inevitable, but change just means doing things differently. Here are my thoughts on five things that should be considered:
1) Everyone can’t be chasing after the same diseases/market and expect to be successful – Today, only two products can be successful in a market, due to regulatory (outcomes) and reimbursement (cost-effectiveness) changes. It has been said by a number of people in the VC world and the industry that “me too” products, that is products that possess only incremental improvements or offer no unique advantages over existing products are not going to survive in today’s market. Products must be truly innovative.
There are many diseases that have no cure or are severely debilitating that have a significant market potential. In my last blog post, I wrote about incorporating the systems biology approach, to understand diseases better. In order to accomplish this, we need to understand other diseases as well, since everything is either directly or indirectly related. Companies should refrain from merely following the crowd and learn to take calculated risks and look beyond the “popular” disease markets.
2) Its finally time to accept and incorporate approaches outside of traditional Western medicine – Let’s adopt a holistic approach to treating the patients as an individual (personalized medicine) rather than relying solely on lab values. Chronic fatigue and fibromyalgia demands a holistic, personalized treatment plan. For years, physicians thought that chronic fatigue and fibromyalgia were not clinical diseases, because patients’ lab values and clinical tests were normal. The symptoms were all in their heads, they said. Today we know these are very complex diseases and more progressive physicians are treating these patients not only with drugs but also with nutriceuticals (or supplements), acupuncture for their symptoms, even when their lab values are normal. Many have been successful in helping patients to be fully functional when they otherwise would not have been.
3) Doing things in a “cost-efficient” manner – to save time and money together. This does not mean cheap. When you hear about companies being lean or virtual, what this really means is spending money where it is the most productive. So as a start-up, you don’t need to hire a full management team and a lot of employees. It’s very expensive to have full time employees when you can hire consultants only when you need their expertise and you save money because they’re not on the payroll when you don’t need them.
When jobs were going overseas, outsourcing was labeled a “bad” word. But outsourcing really means hiring people outside of your company for their expertise when you need to accomplish something that can’t be done internally. Outsourcing can come from academics, consultants, contract organizations, and contractors here in the US. It doesn’t necessarily mean outsourcing overseas.
Yes, there has been a lot of outsourcing overseas, but the quality still has to be there and there are still major challenges with outsources overseas that comes with a cost. Innovation is still done internally in a company. With the cost constraints put on the pharma companies today from our government and other countries’ government, pharma has no choice but to outsource where they can to cut costs in order to survive, or they may have to cut even more jobs.
4) More partnerships, collaborations, and licensing agreements – a lot of people are risk averse today, and the best way to share the risk is through partnerships and collaborations. In today’s market, where only two products can be successful, partnerships and collaborations can benefit all 4 players. More of these types of agreements are being done today and it should be a growing trend.
We’ve already been hearing about companies co-promoting certain products in the pharma industry, but I think we may be hearing about more companies co-promoting each other’s products, especially where product lines are complementary. I’m already seeing this trend happening in the medical device industry.
5) Preventive medicines – Vaccines are preventive medicines that have demonstrated an enormous potential for products that can prevent diseases. There has been a resurgence of research to develop vaccines to prevent various diseases such as cancer, hepatitis c, herpes, etc. One of the reasons, our healthcare system is being burdened with rising healthcare cost, is because diseases that can be prevented such as obesity, diabetes, hypertension is costing the system significant dollars due to complications caused by these diseases. It is also one of the reasons payors are resorting to cost containment and pricing pressures.
If we can develop innovative products, in addition to vaccines to prevent or halt further progression of diseases, companies can make a profit and develop it faster. These products could involve nutriceuticals, devices, software, and even games. The “Wii game” is a good example; it was original developed for pure entertainment until someone discovered that this game helped in rehabilitating people with injuries. Another example is Casenet LLC, a Bedford, Mass. company that recently obtained $3 million for their software that helps healthcare professionals to identify individuals who need a greater level of managed care from wellness programs to caring for serious illnesses. The trend is moving in this direction, why not hop on this train, and take advantage of it.
Change can sometimes be good in developing new ways to help prevent or cure diseases. These changes can also help to blur the lines between industries in thinking out of the box to develop truly innovative products.
Join us in our upcoming FREE WEBINAR in which we’ll be joined by Industry Solutions Director KR Karu who will be explaining how you can embed Quality Management Systems to deliver safer and more efficient products and services, while boosting your ROI! http://www.wtgwebinar.com/webinar/protect-your-customers-and-your-profits-with-enterprise-quality-management/265 Making your pharmaceutical operations super lean is made EASY! Join us on 20th June 2012 as we reveal all!