MedCity Influencers, BioPharma

Biopharma needs a new R&D, innovation model

Strategic partnerships are one way for biopharmaceutical companies to expand capabilities and offerings and proactively define their future versus having it defined for them.

light bulb, innovation, idea

Leaders within the biopharma industry have long enjoyed the pride of knowing that their work improves millions of lives and offers great benefits to humanity.  They share a collective sense of accomplishment around the eradication of diseases and improvement of daily living. They also hold the highest promise of eradicating cancer – the second largest cause of death in the world today – and significantly altering the course of diseases that remain a major burden to society.

Unfortunately, the industry is facing severe headwinds with the returns on the traditional biopharma research and development-based innovation model shrinking. Despite robust evidence to the contrary, in a highly fragmented healthcare system, the industry has become the poster child for high costs of healthcare. Overall, even though the global population continues to age, and disease burden continues to rise, the industry’s traditional growth engine is sputtering. And with the advent of technologies never before imagined and rapid changes to daily life made possible by a plethora of easy-to-use devices, apps and data-driven insights that are shaping the future of healthcare, drivers of our past success will fall short. Consumer choice and buying power will trump the trust, privacy and regulation that have long protected the biopharma business model.

Future of Healthcare: An Evolving Ecosystem
Encouraged by the opportunities created by a highly fragmented healthcare system where out of pocket costs continue to rise and general dissatisfaction levels remain high, multiple digital health start-ups and tech giants such as Apple, Amazon and Google are vying to participate and actively working to create a new healthcare ecosystem that features:

  • Medical grade consumer technology focused on both diagnostics (e.g., Apple Watch, Amazon Echo) and therapeutics (e.g., Calico and Verily)
  • Big data enabled by cloud computing and AI focused on prediction and prevention
  • A ‘clicks and bricks’ delivery system to offer convenience and an enhanced patient experience

Tech giants are unconcerned about the limitations that have long protected biopharma (IP, regulation) and are betting on a future where they own consumer relationships and become the preferred one-stop shop for all life services, from financial to insurance to healthcare. In response, large players such as CVS/Aetna, Cigna/Express Scripts and others are merging and consolidating to “own” the healthcare customer by providing targeted healthcare services informed by data; and improving the experience, whether by offering Uber services to transport patients to the nearest clinic, offering tele-consults, or by delivering prescriptions to patients’ homes. The competition to be the “orchestrators” of care is just getting started and new power structures are forming.

Looking further ahead, advances in biological sciences; including genomics, regenerative medicine and nanomedicine, combined with digital technologies; sensors and trackers, offer a vision of the future where each individual could become an autonomous health system. In autonomous vehicles, it is envisioned that sensor and other embedded driving and safety technologies combined with the power of edge computing would allow these vehicles to self-regulate, monitor and maneuver without the need for any human intervention. Similar to such a scenario, ‘bio-digital’ technologies could work to monitor, predict and even prevent diseases at an individual level – converting each individual into a self-governing health system. As autonomous vehicles will disrupt the current buying and insurance models in the automotive industry, a self-governing health system will render the current healthcare ecosystem centered around Integrated Delivery Networks and paid for through insurance obsolete. While such a future seems futuristic, the technologies exist today to realize this vision.

Future of Biopharma: The Rightful Heir of Healthcare
In the near-term, leaders in the biopharmaceutical industry must proactively position the industry for success amidst the new power structures being formed. Companies that are actively designing the future of healthcare will look at biopharmaceuticals as a tool within the ecosystem – and will strive to capitalize on matching products with patients based on the massive lifestyle datasets that are now being built.

They will look to ease the process of fulfilling prescriptions – either through home delivery or other mechanisms. They will look to engage patients in important endeavors such as medication adherence to keep them healthy and keep overall costs down. In such a future, it becomes imperative for biopharmaceutical companies to remain the driver of discovery and innovation, but to also step outside of their position as a mere supplier of products and become embedded in future of healthcare in lockstep with the new power players.

Tech players don’t limit themselves based on what they’ve traditionally offered the market, and nor should biopharma companies. Now is the time to biopharma companies to determine where they can compete beyond the norms of the past. Companies that wait and see what happens will be too late to capture the opportunity.

Looking further out, the biopharmaceutical industry today is well-positioned to realize the vision of an autonomous and diffused healthcare ecosystem given the industry’s deep understanding of human biology and long legacy of innovation. If the industry can embrace the advances in technology within its innovation model – it can create this future and in return drive immense value for society at large.

Shaping Your Legacy: A Matter of Choice
To capitalize on both near-term and longer-term market opportunities, the CEO agenda at biopharmaceutical companies needs to change from one that is focused on sustaining or growing current performance to one that is proactively focused on transforming the business model so that the company can be more than just a supplier of products in the future.

Today, the desire to protect profitability and meet investor demands keeps CEOs focused on improving efficiency of traditional R&D and commercial model, with limited experimental investments in digital health technologies and new business models as a driver of future growth.

While companies such as Novartis seem to be at the frontier of embracing the role of digital in driving value in the current model; Otsuka, in its partnership with Proteus Health, is clearly betting on the future where drugs and technology come together. Given our view of the future of healthcare, the CEO agenda must broaden beyond products and shift investments proactively and significantly to enable the healthcare marketplace of the future.

Strategic partnerships are one way for biopharmaceutical companies to expand capabilities and offerings and proactively define their future versus having it defined for them. In the process they will uncover new business opportunities and models that may be difficult to surface otherwise.

It’s a turning point for biopharma executives. Will they actively drive their organizations forward by seizing the opportunities and transforming their companies for the future, or will they stay with their current business model? I believe organizations that stay focused on the short term will miss out on future opportunities and find themselves without a place in the new healthcare landscape.

Ruchin Kansal, leader of the Digital Business Strategy Group’s healthcare team at Virtusa and author of “Redefining Innovation: Embracing the 80-80 Rule to Ignite Growth in the Biopharmaceutical Industry.”

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.