Innovations coming from outside the traditional healthcare industry span a wide spectrum of products and services, but all take advantage of advances in digital technologies and the ability to analyze and present large amounts of data in new ways. From new biosensor technologies and smart devices to portals and physician guidance tools, there are numerous exciting breakthroughs that allow enhanced self-monitoring capabilities and patient adherence – and ultimately superior clinical decision-making and treatment success.

How should a pharma company act in the midst of this rapid change if it is to stay ahead? We have found that many companies are struggling to fully understand the new landscape. This is particularly due to the constraints of being vertically integrated organizations with business models that are essentially built around independence and self-reliance.

Traditionally, healthcare providers, payers and pharma companies have had a conventional supplier-consumer relationship. However, there are now increasing demands from payers and providers around the delivery of better health outcomes and greater cost-effectiveness. These provide a strong driving force for pharma companies to more actively engage in the opportunities arising from the digital revolution and patient-centred care. More than ever, regulatory bodies now insist on pharma companies demonstrating benefits and cost-effectiveness, with many countries introducing reforms that aim to restrain overall spending. Ensuring responsiveness to treatment and patient compliance, while minimizing side effects, are therefore key success factors if pharma companies are to meet society’s demands.

Figure 1

pharma 1

Figure 2 

pharma 2

The proven classical, product-centric approach with an indirect value chain (as shown in Figure 1) will not be able to embrace the required speed, new collaboration needs, flexibility and ability to learn quickly. Therefore, as a first step, the company needs to develop a vision of how it will earn money in the new digitalized world. A vision of how a transformed organization can be structured is shown in Figure 2. The “customer” is at the centre of this vision. This includes not just the patient/consumer, but also the practitioner and the payer. All products and services, as well as all administrative processes, focus on long-term customer value through customer group-specific journeys.

To create action plans and concrete initiatives, the transformational need has to be cascaded down to processes, data and technology requirements, and management capabilities. The major challenge to success is the need to integrate organizations, concepts, processes and technology. A successful transformation program typically incorporates the major pillars of the new vision within four fields of action, as shown in Figure 3: integrated offerings, customer management and coordination, digital touch-point integration and excellence, and analytics.

Figure 3

pharma 3

It is becoming clear that in order to stay relevant in the future healthcare ecosystem, pharma companies must look to business models that foster much more direct patient engagement than previously. New methods offer significant potential to increase the quality and efficiency of care. Digital health solutions could therefore solve the major long-term issues of pharma’s most important client groups – patients, providers and payers – all at the same time.

Ulrica Sehlstedt, Nils Bohlin, Fredrik de Maré, Richard Beetz for Arthur D Little & partners

For more information on the topics discussed in this blog, please contact Nils Bohlin bohlin.nils@adlittle.com