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One of the major disconnects in the pharma industry, for a variety of reasons (historical, regulatory, organizational) is  the one between product development and the marketing which follows. Products have always been developed mostly tailored to functional specs, with the needs and convenience of patients who end up taking the medicines a secondary, or marginal, factor (beyond a basic, obvious level). Indeed, such product-related elements such as formulation, vessel and packaging design are purely functional – syringe, self-inject pen, pill, gel-cap etc. etc. Marketing these products has mostly been conducted post-hoc, based on a finalized set of characteristics, which the market itself had little effect on, aside from the initial basic medical need.

Or, should I say, that was the way things have always been.

A widely used phrase in healthcare is the “consumerization of patients”. Indeed, they/we are seen as becoming much a more prominent factor in recent years, expecting more of our doctors but also more from the medical products that we (and our health insurance) are paying for.

Thus, the evolution of medicines from the conventional products we’ve always known into more sophisticated consumer products is set to change the way pharma companies develop and market their products and, of course, the way patients consume them . In order to meet the increasing expectations patients have of their drugs, based on patients’ increasing power and voice, medicines will be designed to be more friendly to patients, more useful, more comfortable, even more interactive where possible. All this, despite restrictive regulations and the very slow pace at which the legal framework surrounding the industry moves. With R&D naturally not dealing closely with non-medical patient needs, the natural move will be to interface marketing and product development.

Adding user-friendliness and the will to meet expanding patient needs will touch a variety of fields which are central to the industry’s business, including packaging, formulation, medical monitoring, patient adherence to name but a few. For patients, the solutions offered should touch upon all phases of the treatment journey, from the product received at the pharmacy, to routine usage, to re-ordering and result monitoring.

Some examples for possible different capabilities are:

  • More convenient packaging for patients with motor issues; waste disposal and collection services for used syringes.
  • Extended use of environmentally-friendly materials.
  • Integrating medical follow up and result assessment with medicine taking: pills and/or syringes which measure and indicate the patients’ condition (e.g. blood or other internal parameters) upon injecting /digesting.
  • Pillboxes which calculate the number of pills taken out and automatically remind the patient of the dosing regime, or syringes which include RFID broadcasters to indicate via computer-linked receivers to the doctor when patients have self-injected.

Manufacturing these medicines, making them more appealing to consumers not only for their health benefit proposition, but also on associated extra added-value as part of the empowered patient’s self-disease management, will require not only new skills and innovative ideas from product development people, but, equally as important, a linking of market knowledge prevalent in marketing & sales departments with the product development and design capabilities which exist in R&D departments.

This, of course, will require much closer work between these two important segments of pharma companies – the relationship between which has historically been non-existent, weak, or even one of mutual suspicion. Different staff profiles, a different work cultures and routine, a completely different “language” have all contributed to this internal gap. However, if companies want to really meet their customers needs, if they want to innovate, grow and succeed, making these two meet will be crucial.

Many who are unfamiliar with the pharmaceutical market see it as a homogeneous grouping of huge companies entrenched in pursuing a traditional, little-changing business model. This may have been correct for several decades, in which healthcare costs were manageable and little changed in the market itself. However, this industry, like all others, is forced to change with the times, and these years are seeing significant shifts. These relate both to the market itself and to the nature of the products which the companies are offering to patients. They have already altered the way pharma companies conduct the entire scope of their business, from R&D to sales and marketing, and will continue to do so in the coming years.

pharma-300x286On the R&D side, the well-known slope of dwindling blockbusters and increasing research and development costs have forced companies to seek new revenue stream sources, from new product classes such as biologic drugs (treatments based on molecules synthesized using organisms and not chemical reactions) and stem cells, through partnering with other companies to achieve at least some cash inflow, to scouring the academic and small and medium enterprise (SME) field in search of promising novel therapeutic developments. In most cases, several of the above strategies are employed simultaneously. I will examine the future of pharma R&D in an upcoming post.

While these trends in R&D strategy are quite well known and have been written of extensively, the changes occurring in the way pharma companies market and sell their products, their relationship with the wide range of stakeholders in the healthcare market, and above all the very nature of what they as an industry offer to society looks set to change. This aspect of the changing pharma market has so far not received sufficient attention.

The focus of this change revolves around the pharma industry being pushed by healthcare market conditions to add more and more value to their products, beyond the intrinsic benefit which each drug represents. Companies are thus being pushed to compete not only on their products’ safety, efficacy and cost-effectiveness, but  also on what value they can add to their two key customer groups – patients and physicians.pharma_pills

In contrast with the changing R&D field and resultant product map, these changes are not dramatic – no government will one day announce that pharma companies must offer comprehensive support and information services on top of their products (indeed, many will balk at the idea) – however subtle shifts brought about by a number of factors are pushing towards this outcome. Even within the industry itself many are unaware of the magnitude of these changes and the necessary alterations in the way pharma companies do business.

The aforementioned factors are:

  1. Increasing pressures on healthcare budgets which bring about increasing governmental pressure on drug prices
  2. Overloaded doctors with time for little beyond minimal consultations and an inability to remain up-to-date in fields containing an ever-expanding amount of scientific data
  3. Increasingly empowered patients looking for healthcare ‘experiences’ and comprehensive health solutions, with some willing to pay extra for such service package

These factors result in companies  being ever more pushed to offer to both doctors and patients solutions built around and on top of their drug products. A natural development in this respect is the companies becoming directly involved in Medication Therapy Management (MTM) and lifestyle packages built for patients using their products. The added value which companies can bring to MTM and similar programs stems from their deep understanding of diseases and the drugs used to treat them; their “deep pockets”; their wide ranging and close contact with large numbers of physicians, in particular prominent ones; and finally their ability to effectively interface with a large number of healthcare system stakeholders, bridging ones which do not normally touch eachother, such as pharmacists, specialists, payers and government.

2003122901100301Particular programs and initiatives by pharmaceutical companies which are included in such services are,  among others:

  1. Patient support programs: use of nurses, call centers, remote telemedicine and other means to give the patients much more information, support and  assistance than their doctor can, to confidently take their medicine as prescribed and achieve their medical goals set.
  2. Solutions for doctors: trainings regarding improving communication and patient management techniques, software solutions to facilitate improved clinic efficiency, making it easier for doctors to keep up to date with rapidly evolving fields.
  3. Tailoring together with payers enhanced treatment packages with tiered pricing levels, including a range of informational, technique-related sessions and tools or those which pertain to related aspects of the drug or disease in questions. For example, for multiple sclerosis patients pharma companies may be drawn to help with information sessions on the disease and it’s treatment, seminars on advances in research, and, importantly, augmented nurse services to support patients with drug taking and related issues.

In many ways, the pharma industry is in a similar situation to companies in the numerous other business areas which have been forced to pile solutions and services on top of products. However, a significant difference is that in the pharma business strong regulation exists to keep the companies separated (to varying degrees) from their customers. This will mean that, in some countries, the expenditure, creativity and changes that may be necessary for companies to survive will be substantial and may put a significant strain on these companies’ viability.

In almost all cases, pharma companies will be forced to undergo the same changes experienced by companies in other fields when faced with such shifts. They will be required to develop internally, or outsource, competencies they have never had to have or make use of before, such as management of IT tools, healthcare support services, specialized training and much more.

The need for these services, coming from the healthcare stakeholders which pharma companies interface with, means that the companies and the parties they work with will be pushed further and further towards eachother, not being able any more to continues working in a mostly isolated fashion.  Those who will be most open and able to collaborate on win-win projects will emerge the big winners, and those who remain focusing on their products alone will slowly degenerate with the changing of the market and the tightening of healthcare budgets.

Sources:

  1. Byron G. Auguste, Eric P. Harmon, and Vivek Pandit:  The right service strategies for product companies
  2. Glen Allmendinger and Ralph Lombreglia: Four Strategies for Smart Services



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