Predict the future by creating it
Sometimes some of the most important lessons can be learned by looking outside your own industry by taking a fresh look at your own problems through a different lens.
David Coleiro and Steve Padgett, strategy and insights consultants for Consult Complete, offered just such an opportunity at our recent Pharma Marketing Summit 2009 conference in Berlin.
The pair says the pharma industry is on the cusp of great change and warns that ignoring that change could prove deadly. Lets take a lesson from another industry about ignoring change and holding onto an outdated business model, Coleiro says. At the end of the last millenium, the record industry was dominated by a smaller number of big global players that had emerged from a period of consolidation.
Sound familiar??
As they point out, the music industry had a traditional model which worked, but where revenues were locked into a physical product. And radical changes occurred in the environment, which leading players fought against rather than adapted to.
This led to disenchantment from customers, a perception of the industry as profiteering, poor communicationand ultimately, as the world moved on without them, revenue growth not only stalled, it went backwards fast, Coleiro says.
The pair argues that the plight of the record industry offers some stark parallels with pharma. In fact, its a bit like looking in the mirror, isnt it? And its not a path we probably want to go down.
Instead of standing on the outside, jumping up and down shouting, its not fair, its not fair, Coleiro says pharma must engage with and lead the process, or the consequences will be the same as for the music industry. Padgett urges pharma to take a hard look at what business its in and what business it wants, or needs, to be in for the future.
The traditional business model of large global organizations focused primarily on developing prescription drugs from initial product discovery to in-market commercialization is unlikely continue to be the norm, he says. Pharma companies, Padgett says, will either become more specialized, focusing on specific types of therapy areas and/or parts of the drug development process, or broaden beyond prescription drugs and move towards becoming more diversified healthcare businesses.
To successfully evolve, the pair says, companies need to be very clear about where they want to end up. For inspiration, they point to another industry that was forced to tackle an intense transition the IT industry.
About a decade ago, the IT industry found itself in much the same place as pharma, they say. It was a fast moving industry that relied heavily on R&D, but whose innovations were quickly commoditized.
A new, complex customer and influencer network emerged that included, for the first time, both consumers and large, global, powerful retail organizations with tough procurement systems and product short lists, Padgett says. But the major players diversified to overcome these issues and thrive again.
IBM sold its PC business and successfully focused on an IT and business consulting and service model, while Dell re-invented the product specification and distribution model getting closer to consumers, he says. But what everyone that has survived and thrived in that industry eventually has come around to, Padgett says, is the need to: deliver value creating solutions, collaborate with customers, influencers and even competitors and government, and redefine their model to best support their business.
The best way to predict the future, Coleiro and Padgett urge, is to create it. And theyre right. Pharma need look no further than to other industries for examples of both how sticking your head in the sand can spell disaster and how to move forward by embracing and creating change.