About the AuthorRichard Meyer is a passionate Internet DTC marketer with over 15 years of progressive experience in consumer marketing who`s worked on top pharmaceutical brands like Cialis, Prozac and Sarafem, as well as two years with Medtronic Diabetes. He is currently consulting for his own company, Online Strategic Solutions, and writes a DTC column for PM 360 magazine and blogs for Eye for Pharma in addition to his own blog, World of DTC Marketing.
Innovation succeeds when it is oriented to customer needs rather than to internal performance standards. Is big pharma listening? Customer needs not performance (sales) standards ! One could argue that the reason that big drug companies are in such a sorry state right now is their failure to see that the global economy is changing rapidly and the centers of economic value creation are multiplying worldwide.
Provide value to the customer and make a profit doing so. It sounds simple but at its heart it is very hard to communicate and execute. The auto companies learned this lesson at taxpayers expense when they failed to foresee the crash of the SUV market and thus their cash cows. Drug companies business models has relied too much on an unchanging regulatory environment, consumers who are not proactive with their health concerns and questions and legislative body that was willing to overlook “sales first, patient safety second”.
The theory of the Long Tail implies that the days of single blockbuster products are over and the companies would be better serviced providing a range of smaller products with lower sales. This maybe in fact true however pharma models are still contingent and developed around the one product that is going to provide the biggest ROI. This has become even more true as R&D costs are being squeezed by limited financial resources and increased costs to bring new drugs to market. Payers are now asking drug companies to provide proof that new drugs provide better outcomes that generic drugs and the chairman of the FTC has been saying that we can save billions of dollars by switching patients to generic drugs.
So with all this going on I have to ask; “Where the hell is the CEO and what the hell has he been doing to innovate and change business models?” I mean isn’t that the reason that they get millions of dollars in salary? If they say that they could not have seen the changes coming then they are blind, deaf and dumb. Biotech companies are great at innovation as Amgen is proving with the imminent blockbuster of their osteoporosis drug which seems to be raising the bar for osteoporosis treatments.
Instead of innovation it seems that the new business model is merge or purchase the pipe line of smaller biotech companies. Sales forces are still too bloated and are becoming more and more ineffective and little effort has been allocated to digital marketing which could reduce marketing budgets while making overall marketing more effective.
Innovation..a lot easier to say than do especially when it comes to the drug industry…
Tags: around-the-one, better-outcomes, better-serviced, chairman, change-business, companies, customer, health, increased-costs, raising-the-bar, Regulatory, smaller-biotech
Business Week – Drug Marketing
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Clinical Trials.gov
FDA on Twitter
Pharma Live
Pharma Voice
Business model innovation is the key to transforming not only the pharmaceutical industry but for the entire health care industry. In fact one will not happen with out the other which makes it so difficult. While it won’t be easy it is essential given the imminent silver tsunami as baby boomers are about to explode on the scene.
Our entire health care industry must be redesigned around the patient to deliver higher quality outcomes for less money. Tweaking the current system will not work. We need to design a new wellness and health care system and the pharmaceutical industry has the potential to lead the way. It is unclear if any of the current industry players are up to the task.
We have been talking about a “personalized medicine” revolution and the shift from sick care to well care for a long time. The enabling diagnostic and treatment technologies are emerging to make it possible. It is not technology getting in our way it is us humans and the organizations we live in that are both stubbornly resistant to change.
The current players in the ecosystem are pedaling the bicycle of the current system very hard each protecting their relative position and current business model. It looks like a rugby scrub with all of the players waiting for the ball to pop out. Everyone is pointing at each other saying it is the other guy’s fault and nothing changes.
In order to transform health care accelerated by new pharma business models we will need to experiment at the systems level to demonstrate that we can recombine existing capabilities across silos to deliver value to the patient. We need to bring the voice of the patient into the innovation conversation and than arm them with PCRs and the ability to take more control over their own wellness and care. Incentives and financial models will need to align with new system configurations.
It will take active experimentation. R&D for new business models and systems the way we do R&D today for new products and technologies. Check out the work we are doing to enable system level experimentation at http://www.businessinnovationfactory.com.