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A new era of collaboration

Looking at the factors driving this change and assessing the benefits
A new era of collaboration

Collaboration is increasingly becoming a feature of the business landscape and pharma is no exception. It's entering a new era in which companies are increasingly partnering not just with governments, payers and academia, but also with competitors and patient groups. There are multiple factors driving this change but perhaps what's most important for pharma is to understand how this newly collaborative environment could benefit the industry, the economy and public health, and for pharma to be prepared to adjust its ways of working accordingly.

The current landscape
Collaboration is beneficial to the industry's reputation and public health but it is also simply becoming the natural order of business. But what is driving this?

Firstly, there is decreasing tolerance among investors for high levels of R&D spending, prompting companies to acquire products and gain access to innovation through acquisitions, asset swaps, alliances and joint ventures - while in-house discoveries continue to fall.

Additionally, as pharma seeks to move 'beyond the pill' and deliver a range of complementary patient care services, collaboration can play an important role in accessing the external capabilities that will be required.

Furthermore, as big data becomes ever more important, pharma businesses are increasingly collaborating with patients and healthcare providers to capture and make use of this, in order to inform drug discovery, or even outcome-based pricing. In addition, new players developing diagnostic tools to capture data directly at source are entering the market and becoming valuable partners.

Widespread benefits 
In some respects, it's fortunate that investor sentiment seems to have turned against previous levels of R&D spending, because the resulting focus on collaboration could significantly enhance public health, benefit governments and improve the reputation of pharma.

A study by McKinsey found that if spending on health increases at the current rate, it will reach 50% of the GDP in most Organisation for Economic Cooperation and Development (OECD) countries by 2100. That would be an unsustainable level of spending, with huge ramifications for governments' abilities to fund other services at their current level.

Collaboration can play an important role in accessing the external capabilities that will be required

There are more conservative projections than this, such as those published last year by the OECD, but even these suggest average spend as a percentage of GDP could more than double across the EU, increasing to as much as 14% of GDP in the absence of effective cost containment.

Furthermore, it's simply not possible for cost containment to be so effective that it prevents a whole host of drivers putting pressures on health systems, from ageing populations to the prevalence of chronic diseases. Because of this, partnering with the pharma industry and gaining insight into how to deliver optimum patient health outcomes in a cost-efficient way should be considered a priority for governments.

Recent examples
So how should this collaboration look? One particularly notable example is ViiV Healthcare, a joint venture between Pfizer and GlaxoSmithKline (GSK) in the development of HIV treatment. Besides the fact that two businesses that are typically competitors are working together, this partnership is notable in that it is continuing the not-for-profit pricing schemes that Pfizer and GSK had already started, and is covering low and middle-income countries, including the whole of sub-Saharan Africa.

On top of this, it's now the second largest healthcare company by market share in the global HIV market and has been the highest-ranked pharmaceutical company in terms of overall reputation for the last three years in the annual PatientView Survey.

Full benefits 
The era of collaboration is happily one that not only ushers in new revenue streams and innovations, but also enhances the perception of pharma, placing new emphasis on ethical best practice, transparency and a willingness to share information, as well as underlining the vital role the industry has to play in tackling some of the biggest health, economic and social challenges of our age.

This is key because, as a socially important industry, pharma businesses must proactively work to protect their licence to operate. As we have seen, such companies are highly vulnerable to reputational damage or financial penalties as a result of high-profile instances of bad practice.

While, for instance, the likes of the proposed Pfizer-Allergan merger, a tax inversion deal which many believed made little sense beyond delivering returns to the shareholders, might paint one picture of pharma, collaboration offers a different perspective.

Instead of expending efforts to reduce tax liabilities, businesses are working with their competitors, academia and public health organisations to create life-saving drugs and ensure these reach some of the least economically developed parts of the world.

The opportunity to create new revenue streams, bring new innovation to market and improve public health - all while enhancing the industry's reputation - should be seized. It's time to create operating models that allow businesses to become ever more open and collaborative - or risk being left behind. The era of collaboration is an exciting one - approached in the right way, everyone wins.

Article by
Stephen Vinall

is a partner at the business transformation consultancy Moorhouse

13th September 2016

From: Healthcare

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