Making strategic sense of pharma’s new race for competitive advantage
The race for competitive advantage for pharma today is about far more than just innovative new molecules.
Cheaper, faster R&D matters hugely of course, but it is increasingly the case that commercial success will only follow if pharma can also deliver for patients and health systems.
Patients are increasingly active participants in their own care. They are becoming intolerant of high-friction, low-quality provision of care. Resource constrained health systems, meanwhile, urgently require partners able to help them do more with less.
Advantage in the life sciences, then, will increasingly go to those that can develop new products, services and digital ecosystems to make the most of this new competitive landscape.
When it comes to enterprise business strategy, that’s a lot to consider. How best to approach the process of addressing all this?
Dividing the transformation challenge into three categories - product, company and market - is a start.
Shape the product
The boundaries of therapeutic products are growing fuzzier. A medication or device is no longer the end of a healthcare intervention. The experience that surrounds it matters more than ever.
Delivering good outcomes should therefore no longer be just a purely ‘top-down’ R&D process. There is a growing recognition that for pharmaceuticals to be optimally effective, the patient and the care landscape need to be considered. “The pill is the necessary part of the solution but no longer sufficient. Patients and Healthcare providers want holistic solutions for economic value and convenience. Hence, shaping the right care pathway with orchestrated services around the pill matter increasingly more.” says Emre Ozcan, Global Head of Digital Health, Merck Healthcare.
The rise of digital health companions to drive better adherence, outcomes and patient experiences is therefore a clear area of potential for competitive differentiation for pharma.
Involving patients more in product design and working more closely with them to understand the total patient journey and care pathway context in which they take therapies is therefore becoming more important, says Ozcan.
Mastering omnichannel is another important arena of competition for pharma as it seeks to perfect its commercialisation approach in the post-pandemic, and increasingly digital, era. A real-time understanding of customer need and precision as to next-best actions is still very much a work in progress.
Shape the company
Modernizing the organisation internally to a more agile operating footing and transforming data capabilities will drive more effective launches. It will also enable faster insight gathering, enabling the organisation to respond faster to emerging market opportunities.
Leveraging multimodal datasets to understand patients more holistically and segment them earlier for swifter and smarter trial selection is one clear example of the dividends that an agile, digital-first approach can pay, says Shwen Gwee, digital health consultant and former VP and Head of Global Digital Strategy at BMS. “The ability to accelerate and enhance the discovery process could be huge.”
Helping take trials closer to the patient is another opportunity arising from these new organisational approaches, potentially increasing patient convenience, lowering patient burden and thereby driving greater trial retention and success rates, adds Gwee. “We will be able to collect data at a higher resolution with remote monitoring tools to drive an understanding of what happens between visits, offering new insights.”
Shape the market
Competitive advantage will increasingly also arise from thinking beyond therapies and moving further upstream in partnerships outside the organisation and across the healthcare ecosystem.
Recognizing this market dynamic is vital, says Merck’s Ozcan. “Our ability to differentiate [ourselves] comes down to the holistic solutions we work out with our partners. No one is asking for a single molecule anymore. They are asking for a care package with the right things done at the right time in the right way. We increasingly need to show that we are thinking beyond simply treatment and that we also think about the total patient journey end-to-end from prevention to diagnostics, treatment to follow-ups.”
An enormous area of opportunity for pharma here is broadening its conception of patient support programmes (PSP) beyond the existing reactive approach in which PSPs are tied to the moment when a drug is prescribed, says Vyom Bhuta, Global Head of Commercial Innovation, Life Sciences at Cognizant. “There is an opportunity for pharma to get involved much earlier in the journey to help patients and consumers understand where they might be at high risk of a particular disease.”
Pharma can play a much more active role in engaging people before they become patients, helping those at high risk get diagnosed early. But this requires a more strategic approach to PSPs, working more closely in partnerships with health systems and labs to mine and act on real-world data.
“Pharma has done brilliantly to master human biology. Now the attention needs to turn to mastering healthcare system complexities to create sustainable value, says Ozcan. “This is Herculean tasks that requires clever partnerships and new business models to counter the conservativeness and complexities of healthcare systems to embrace change through digital”
The opportunities, then, are significant yet addressing them requires every function within the organisation to work very differently. Addressing them also involves working across different time horizons. How do you optimise current revenues while building the next generation of products and the business models of tomorrow?
New approaches needed
Pharma has seldom taken the right approach to aligning people to the cultural and mindset changes required to address these opportunities. Process, people, mindset and culture all matter here, not just the technology aspects, says Gwee. “When you think of it as a business transformation it is more than ‘how we do what we do now, but using a digital platform.’ More than 50% of the job is culture change. What we are actually doing is a business transformation powered by digital.”
Deciding where digital leadership resides in the organisation is key to driving the kind of change needed here. Unfortunately, the answers to where digital transformations should be led from within the organisation are not simple and will vary by company.
Pharma is still trying to find what works. The chief digital officer role offered mixed results and now pharma is experimenting with the chief technology officer role, says Gwee. Is this just another two to three-year transformation drive that will fail to deliver the hoped-for outcomes?
Part of the answer for many will be in how well they can devolve much of the digital transformation effort further down from the C-suite, says Walid Mehanna, Group Data Officer at Merck Group. “Transformation is not something you can easily centralise. Transformation needs to be global and encompass the organisation. You can’t do it out of digital ivory towers.”
Another challenge in building the new digital and data infrastructure is optimising it to fit competing global and local requirements such that it frees business teams to focus more on customers and patients, adds Mehanna.
“You centralise what makes sense to centralise. I believe it needs to be a combination of mix and match with a lean corporate hub and then for every business and function we have a local hub with a local data and digital officer.”
Building a data ecosystem to optimise these competing requirements may take a bit more time to get right, since local parts of the business may not be as free to source their own discrete solutions from vendors, but it is likely to be worth it, says Mehanna. “In the long run it will make you massively faster.”
Embedding digital capabilities
Creating broad and deep digital and data capabilities and the right mindset to leverage their potential throughout the organisation is also vital, says Mehanna. “My CEO once asked me-what is my dream and I said: ‘my dream is that you don’t need me anymore because 60,000 Merck employees are digital literates’. Data and digital is a key skill for the 21st century.”
One significant challenge here is that the culture change and mindset change required to embed the necessary digital capabilities and to drive effective digital transformation over time is hard to effect in existing corporate structures.
The leaders of the future have too strong an incentive to follow traditional pharma career structures, says Gwee. “There is very little incentive to focus on a vertical like digital. There’s no digital career path, therefore it is hard to do well and that is why we see people move between companies to build a career path.”
Dissolving siloes by working in collaborative ‘pods’
The far more collaborative context in which pharma operates both internally and externally demands significant changes in the way teams are configured and incentivised, says Bhuta.
For example, while most pharma organisations have been investing in the technological and data capabilities needed for omnichannel, most have yet to master omnichannel’s far more collaborative operational requirements.
“To drive through omnichannel, you need tightly integrated, multidisciplinary commercial teams to support global markets, countries and franchises. Commercial sales and marketing groups have to work closely with market access, patient services, and medical affairs to drive a co-ordinated customer experience while accounting for compliance. Integrated within this team should be the business insights and digital technology group within the organisation.”
Business insights and digital technology teams have an enormous contribution to make since they will be key to driving and making the most of increasingly real-time customer interactions.
The key to unlocking this challenge is an organisational one. Internal silos need to be taken down to enable cross-functional technology, data science, medical, clinical, commercial and marketing teams to be convened. “It needs a deep, strategic restructuring. One of things we are proposing is that these [multidisciplinary] teams should operate in pods organised by franchise and brands,” says Bhuta.
Such teams can operate on a national, regional or even district level, each with the resources they need across functions. This requires not just an investment in people but also in automation and AI, he adds. “To create a data insights ecosystem you have to invest in analytical bots, so to speak, so that an insight generation and recommendation engine works on a real-time basis.”
Bringing talent in from outside healthcare and the life sciences as well as being prepared to bring in external partners to complement internal teams is another worthwhile consideration.
Life beyond launch
This direction and co-ordination also need to go beyond the moment of commercialization. Pharma is not used to supporting products post-marketing and it must develop product teams capable of embracing the entire journey of digital products, including when patients use them.
Digital therapeutics, for example, follow a different lifecycle to molecules or even software. The software-as-a-medical-device lifecycle requires different management and even regulatory processes, says Gwee.
“We need product teams that see the end journey of the digital product. Often their work starts at launch. Understanding those pieces is important. Having product teams to oversee, guide and manage it especially post-launch is required here, not just handing off to IT for maintenance.
“The organising principle should be: ‘how are we helping the product and helping enhance its value? How are we coordinating across the business units as that product is developed and commercialised?’”