Can new data aggregators shift the balance of power away from pharma?

The evolution of the pharmaceutical industry over the last 40 years has been punctuated by periods of erosion of its influence, usually catalysed by new regulations or new stakeholders with novel technology or business models. (In the latter case think biotechs and PBMs.) The industry’s strategic response has usually been jump-started by M&A, since organic growth driven by R&D-led changes were usually too slow to regain the initiative. The big push into developing markets in the last decade was an exception to the M&A solution, since rapid infrastructure expansion and approval of existing products was a relatively easy response to a slowing pipeline.

Today’s challenges are rather different; as we enter an age in which the acquisition and analysis of data becomes all-pervasive, the prospect of data aggregators entering the healthcare ecosystem could prove the latest challenge to an embattled pharmaceutical industry. Society appears to acknowledge a future in which the possession of data, rather than product alone, is gaining greater currency. Big pharma’s usual response is to acquire something to fill the product/knowledge gap but first it needs to acknowledge ‘data’ as a core competence, something it has singularly failed to do. The consequence of such insouciance in the face of the digital revolution that is underway everywhere else could be another shift in the balance of power.

The prospect of large technology-based data aggregators, such as Google or Amazon, becoming meaningful stakeholders within the healthcare ecosystem is an intriguing prospect. The opportunity to aggregate data across the healthcare treatment pathway for large numbers of patients in many disease areas has proved elusive thus far but significant pockets of useful data have been aggregated already. The best example is probably Jem Rashbass’ successful attempt to consolidate NHS cancer data through the National Disease Registration Service as part of Public Health England. Operating mostly under the radar this service has yet to market itself widely but the potential to identify cost-effective and clinically successful drug regimes is enormous. This could have far-reaching consequences for some players in the pharmaceutical industry who may find their product pricing to be untenable when the cost/clinical benefit calculus becomes totally transparent. How long before Google or others license the data-gathering process and apply it to other geographies where such disparate silos of data are stored.

Casual observers of the healthcare industry may be forgiven for dismissing a potential healthcare data land grab by technology players as fanciful. However, it was only 20 years ago that several genomics companies, led by Human Genome Sciences Inc, thought they could secure a monopoly position over unprecedented drug targets by filing patents on gene sequences emerging from their own human genome sequencing programmes. At the time there was a strong scientific belief in the central dogma, that is ‘one gene codes for one protein’. If that had been true then one or two companies securing intellectual property rights over what was considered to be a finite resource, ie 100,000 genes, potentially could have controlled access to the flow of future drug targets for the entire industry. As it turned out the central dogma was too simplistic; genomics is way more complex than was thought at the time. Besides this, it was not possible to secure IP on gene products.

Futurists constantly remind us of the rapid pace of change and that those companies who close their minds to new ideas run the risk of being left behind. The fact that innovation outside the core drug discovery business is considered to be anathema by pharma companies has been explained by the need to adhere to strict rules and regulations. However, the acquisition and analysis of healthcare data is too important a game in which to be merely a spectator. Partnering and exploring where pharma companies can add value must be a priority if they are to avoid being a single component supplier in a commoditised business with a transparent risk/reward trade-off. Maybe Roche’s $1.7bn acquisition of Flatiron Health is the first foray into such an exploration of healthcare data. Whatever the pharma response may be, it does need to be based on a greater understanding of the management and analysis of data. Making ‘data’ a core competence will not infringe on the current rules of engagement but would at least give pharma the ability to respond rapidly and with understanding to whatever changes the data revolution should bring.