The pharmaceutical industry remains behind the times in all things digital. It needs to get creative, break away from the pack mentality and take some risks in order to join this digital revolution that’s rapidly changing the face of healthcare, according to a rich new report from McKinsey & Company.
Big Pharma “may be doomed to fail unless it transforms itself,” the report says. But “what such a transformation looks like is an open question that depends on several factors.” Here are a few:
Digital health is driving transparency across the healthcare industry – which is a touchy prospect for the pharmaceutical industry. For pharma companies to stay relevant and competitive, they’ll have to open the floodgates of clinical trial data and start collaborating. They’ll have to build up consumer trust, which is at a serious low. And they’ll have to reimagine their models entirely:
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“For pharma, there comes the question of whether they can tie digital to the assets they have,” says Dr. Krishna Yeshwant, a general partner at Google Ventures. “There is an interesting broader conversation to have with pharmacos about moving from a products-and-pills company to a solutions company.”
But pharma’s challenges are not about the technology hurdles. Khosla says he struggles to see what the tactical limitations of integrating electronic health records are from an IT perspective.
Big Pharma’s major challenge is to work lithely in these changing digital times – but at present, it really operates in a peer pressure model: It changes when it sees competitors changing, but no sooner. Legacy structures could really impede them from working proactively. More agile, smaller pharma players that could take to this digital revolution much more easily.
What’s pharma up against?
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Patients are engaged and want more control over their treatments. Connecting with patients is crucially important on all levels of pharmaceutical development: Understanding where there’s a need for more therapies informs early stage spending and R&D. Gauging what a consumer wants out of a medication impacts a pharmaceutical company’s marketing approach.
“Many pharmacos are trying to engage patients,” Li Ma, vice president of strategy and investment at Alibaba Health Information Technology, says in the report. “But it is difficult because they don’t often know exactly who their patients are and also have a hard time determining exactly what engagement model resonates with patients.”
Clinical care is getting more electronic. New skill sets are being demanded of physicians as their world gets more digital – in the form of electronic health records, telemedicine, quantified self data from wearables, and the panoply of health apps.
Brand loyalty is dwindling; patients care more about costs. It’s not just the patent cliff that’s a threat to pharmaceutical revenues. People are far more conscious – and educated – about the dollars they spend on drugs, favoring cheaper alternatives over name brands. This extends beyond medications to insurers themselves.
Pharma companies will no longer have exclusive control over outcomes data. External measures for a drug’s success are coming into play. It’s no longer a matter of a pharmaceutical company conducting follow-on studies to evaluate a drug’s longterm efficacy – this job’s being taken over by providers, insurers and even patient groups themselves. This digital autonomy is removing an important way for pharmaceutical companies to prove their value, the report says.
“The healthcare industry will start to merge, and the lines across stakeholders will blur very quickly,” says Dr. Wolfgang Lippert of Salesforce.com’s Healthcare and Life Sciences Industry Business Unit. “Payors will become increasingly like providers in offering interventions and home care, and increasingly like pharma in analyzing data and pressure-testing value.”
What must pharma do to catch up?
Go beyond the pack mentality by embracing experimentation and risk. The report says that consumer expectations are high these days, thanks to the significantly better digital performance seen in other sectors, such as banking.
“It is difficult to encourage experimentation in departments that are driven by compliance,” says Johan Grahnen, who was the former prinicipal data scientist at analytics company Ayasdi. “Strong leadership buy-in and support is required to set a unified vision.”
Create a collaborative culture and challenge barriers to sharing. Pharmaceutical companies must open up their data coffers – despite the fact that there may not be immediate incentive to do so. Open sourcing data is the way of the future – and is the way to integrate the pharma world with the digital.
It’ll also come down to reimagining compliance issues, and finding more creative ways to move forward with issues as touchy as HIPAA.
“Health information is highly regulated, and the regulatory context has not always kept up with the pace of innovation,” says Inder Singh, CEO of Kinsa Health. “Pharmaceuticals will need to actively work with regulators to find a path forward.”
Reinvent companies by integrating nontraditional approaches into new operating models.
“Attracting, engaging, and delighting consumers requires a deep understanding of how to deliver a customer experience – far beyond just selling a product, pill or diagnostic test,” the report says.
However, “most healthcare innovation gets smothered in preference for something that drives the bottom line immediately,” says Aimee Jungman, a tech innovator who has worked in healthcare startups as well as big pharma. “There’s a lack of commitment to building something new, which could disrupt current cash flows, and something lasting, for the patient and physician to improve care.”
To drive meaningful change in the pharmaceutical industry, and bring it to the digital era, the old model simply must be flipped on its head and new blood must be allowed to enter the arena.
“Whether pharma companies choose M&A, strategic partnerships, or organic incubation and experimentation, they must find a way to adapt and evolve quickly,” the report says. “If they don’t, third-party players more willing to take risks, chart the course, and listen to consumers could supersede them.”
