Healthy Skepticism Library item: 17220

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Grogan K
Pharma needs to work with non-traditional partners to survive
Pharma Times 2010 Feb 11
http://www.pharmatimes.com/WorldNews/article.aspx?id=17374

Full text:

Pharmaceutical companies should be working with IT companies, mobile phone firms and other non-traditional healthcare firms if they are to successfully make the switch from being product-focused to customer-centric, claims a new report from Ernst & Young.

The report, entitled Progressions, Pharma 3.0, claims that IT companies, large retailers, and telecommunication firms “are strategically poised to capitalise on rapid changes” taking place in health care and pharma is “increasingly looking for innovative ways to collaborate with these new players to reach and improve outcomes for patients”. However, despite “near universal agreement” among pharmaceutical industry executives that these non-traditional companies will help reshape the sector, “most feel unprepared to address the challenges these new creative alliances will bring”.

Carolyn Buck Luce, E&Y’s global pharmaceutical leader, says that “despite the tumultuous changes over the last few years, executives realise the road ahead will become even more complex with the entry of new players”. In this environment, successful companies will find new ways “to combine their unique assets and attributes with those of partners through dynamic collaborations focused squarely on patient outcomes and the consumer experience”.

The Progressions report describes the shift from the industry’s “long-standing vertically integrated blockbuster-driven model’, dubbed Pharma 1.0, to today’s Pharma 2.0 business model. The latter has seen companies pursue more targeted therapies, broadening their portfolio of products and establish “more independent and flexible R&D units”, due in part to partnerships with biotechs and universities. They are also outsourcing many non-core functions.

However the report claims these efforts may be overtaken by a Pharma 3.0 “ecosystem” “comprised of established industry members, nontraditional companies and an increasingly informed data- empowered consumer”. It believes that pharmaceutical companies “remain largely on the sidelines of this revolution, hampered by a regulatory framework governing patient interactions which has been slow to evolve”.

The E&Y study also notes that as pharmaceutical companies expand into emerging markets, “they are increasingly considering alliances with non-traditional partners – from micro-lenders who could bridge the affordability gap to food companies with existing distribution and infrastructure networks to help manage supply chains”.

E&Y surveyed “key business-development executives” from 24 companies, including 11 of the 15 largest global pharmaceutical companies. Among the key findings, 92% of respondents believe new entrants will enter Pharma 3.0, with e-health, mobile-health and new medical technology firms being the most likely new entrants, but 67% said they are “not well prepared for valuation and modeling potential deals with nontraditional partners”.

Patrick Flochel, E&Y’s Europe, Middle East, India and Africa’s life sciences leader, said that “while this has always been an innovation-driven industry, the winners in Pharma 3.0 will approach innovation in new ways”.