Value innovation realized through services
As we enter into the "Value Era", innovating and delivering value is about understanding critical connections, gaps, and potential solutions or alternatives to each. Jeff Elton discusses the exciting emergence of a truly global health services solutions market.
The traditional mission of life science companies is generating insights into the biological process of a disease state, identifying drugable targets, advancing programs through clinical development, and then entering a period of product commercialization for a decade or more. It is a business model often characterized by risks in discovery, risks in clinical development approval, and then risk in reimbursement at commercialization – with less than 10 percent of programs initiated reaching the market, Accenture research finds.
This can be viewed as a high-risk, product-centric business – one where the economics of the product is based on maximizing clinician use mediated by those uses for which payers or risk-bearers will reimburse. Product-centric life science companies traditionally measured success through ‘volume’ – improved category share and improved NRx to TRx ratios.
Value drives decisions
However, we are firmly in a new era – one where providers are consolidating and taking on more influence in the decision of what their physicians will prescribe and see as benefit to their patients. It is an era where ‘value’ drives decisions – a combination of beneficial patient outcomes and benefit to the risk bearer (e.g., payer or risk-bearing provider).
Accenture calls this the Value Era and it requires more than innovating around the therapeutic alone. In the Value Era, products will be considered part of a solution or system. The solution needs to provide insight and tools to define the highest responding patients and how providers can assure that the maximum benefit is realized in a practical clinical setting. This represents a broader canvas for innovation – beyond the therapeutic – where algorithms, clinical decision support tools, active remote monitoring, and patient engagement platforms may all be within scope of a company’s specific ‘solution.’
The first step for any life sciences company wanting to be a value innovator in the Value Era is to have a deep and profound understanding of the problem they are addressing – not the biological problem, part of the solution for sure – but the entire therapeutic solution context. This requires understanding the current standard of care, what it’s delivering and its current shortcomings.
A company that embraces this can be considered a Value Innovator and is one that is confident in its insights into the roles of different participants in realizing outcomes and value today – clinicians, other health professionals, the patient, the patient’s family, and potentially others. This represents a combination of clinical, process, social and economic understanding. The insights are at the patient care management ecosystem level and highly dynamic. Innovating and delivering value are about understanding critical connections, gaps, and potential solutions or alternatives to each. This can be thought about as a patient journey illustrated and understood through rich longitudinal data, such that key synchronized factors driving treatment changes and critical decisions become apparent, ultimately predictable.
Why do diabetic patients only interact with health professionals or interactive tools three percent of the time they are managing their disease state; why do 20 percent to 40 percent of first diagnosed diabetics not initiate therapy; why do 40 percent become non-adherent after their first eight months on treatment?
At a foundational level, the Value Innovator will be an analytics-driven organization – making decisions to innovate and establishing an operating model powered by real-world data and proprietary analytic insights. For example, why do diabetic patients only interact with health professionals or interactive tools three percent of the time they are managing their disease state; why do 20 percent to 40 percent of first diagnosed diabetics not initiate therapy; why do 40 percent become non-adherent after their first eight months on treatment?1The Value Innovator will monetize insights that go well beyond biology and the pill, presenting the patient and their health care providers solutions increasing the effectiveness and confidence of value being realized by both.The Value Innovator will take on operating approaches that are more partnered with both.
Value Innovators will be service syndicators, creating beneficial sets of partners most appropriate for different patient populations being treated by different provider and regional systems. The same capabilities that resurrected the industry’s R&D productivity – working across biopharma, biotech, disease foundations, and others to advance new areas of novel science – will be required for value realization during commercialization. The different range of potential partnerships and approaches are just beginning to form. We are seeing large technology companies providing sensors and platforms (e.g., Apple, Google, Samsung, Philips, etc.), broad scale connectivity and engagement platforms (e.g., Qualcomm, Bosch, Salesforce, AT&T, Verizon), and clinical platforms extend outside the walls of the institution and create new functionality (e.g., Epic, Cerner). This is to say nothing of the explosion of new venture back entities and entry of non-traditional players into health services that will be persistently disruptive. The definition, management, and ongoing evolution of these ecosystem solutions will be a key requirement for the next generation commercial executive – generally not within the scope of today's regionalized brand or franchise executive.
A global health services solutions market
Because value innovation is advancing in the US and Europe in relative lock-step, the ‘size of the prize’ of being a steady element of different ecosystem solutions is large. Accenture believes this is almost unprecedented in health and life sciences – the true emergence of a global health services solutions market.
Still the challenge for companies in the short-term will be operating in both product and value worlds. In the short term, companies will need to extract the rents remaining in the current model while regions and customers in the US and Europe transition. At the same time, companies need to reorient their target operating models towards Value innovation and management. This can mean adding service elements to a current commercial model, having a key account level plan for how the relationship will be value-centered or multi-channel managed, or even looking at different therapeutic areas with holistic and forward-looking lens to create whole new global operating models and entities. Most important is that a choice is clearly made, the new foundations built, and real-world value-management experience accelerated.
1. Source: Verispan/McKesson
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