Michael
White and David Coleiro surveyed pharma and other experts in the field to make
their forecast on the future of healthcare
We
are in the middle of a huge upheaval where everything we know is being turned
on its head. Welcome to the world of modern healthcare: a state of continuous
change. This is a major challenge for all stakeholders involved in healthcare, including
the pharmaceutical industry. Competition is increasing and profits are being squeezed,
while resources are increasingly expensive. Meanwhile the expectations for what
it takes for a product to reach the market and be successful are higher than
ever.
But
the question must be not simply ‘Can we survive?’ but ‘How are we going to thrive?’
The key to thriving is to take control rather than simply react to the changing
environment, so we have to look ahead to the future of our industry, its
direction of travel and its potential destination.
As
an embryonic business in 2010 we at Strategic North wanted to understand this future
world for our own success and that of our clients, so we undertook a comprehensive
research project to look ahead to forecast what healthcare will be like in
2025. Fundamentally, we wanted to identify the drivers of change, and provide
some potential answers to the challenges we face.
First
some historical context: the delivery of healthcare made huge strides forward
in the 20th Century. This was led by major advances in three core areas:
Health: Access to innovative medicines, surgery and anaesthetics,
clean air and water
Wealth: Minimum wage, employment opportunities, savings and pensions
Society: Education, welfare and labour
These
developments have saved, extended and improved billions of lives. For example, in
the UK average life expectancy rose from 49 years of age in 1900 to 79 in the
year 2000. Over the same period, the percentage of GDP spent on health rose
from one to nine 9 per cent. These are astonishing statistics and similar
trends have been seen globally. However these advances have also brought issues
of their own, as 20th century structures struggle to deal with 21st century
problems: populations who are living longer, with chronic conditions and they
have higher expectations for their health. To add to that challenge the
healthcare world is changing faster than ever before. Our research identified 13
drivers of healthcare change grouped into four key categories:
Appliance of Science
Science
and technology is fuelling a greater understanding of medical profile of the
individual and its impact on their health
Industry Squeeze
The
bar is being set higher for the industry on all levels: regulatory approval,
demonstration of clinical cost effectiveness and requirements for trust and
transparency
New World Order
The
growth of populations and income in emerging markets is increasing economic power
but also increasing issues of resource sustainability
Wealth to burden of health
The
advances of the 20th century are leading to real issues now for care for the
elderly and management and prevention of chronic disease
This
future world will emerge from the complex interaction of these thirteen
drivers, and others, as yet unknown. What that future world looks like is
dependent on which factors rise to the top of the pile and begin to predominate
over and influence the others.
Real-time wellness healthcare systems use new technological advances to maximise resource
efficiency, and put much greater emphasis on preventing illness and managing existing
conditions, rather than simply treating illness. We believe this is a highly probable
world, though there are a variety of possibilities in a 15 year time horizon.
Its manifestation globally will vary depending on the levels of income and
growth in markets around the world but this more integrated, interdependent healthcare
world in the future will require significantly more sophisticated marketing skills
than have historically been employed in the pharmaceutical industry and greater
emphasis on collaborative working with other corporations and healthcare
bodies.
A future model for pharma
There
are two core areas that will define the future model for successful
pharmaceutical companies. The first is the core competencies of pharma
companies themselves. So what are pharmaceutical companies good at? In recent
times the industry has been less successful at discovering innovative new molecules.
Proof of this are the current pipelines of the top 20 companies, particularly if
you consider how many molecules have been in-licensed. This core competency of
discovery now lies as much with smaller, more innovative scientific research
companies with whom the pharma industry partners successfully.
Pharmaceutical
companies are good at shaping late stage clinical trial programmes to meet
regulatory requirements and bringing molecules to market. They also excel in
commercialising those molecules and realising their patented lifetime value.
They have the resources and infrastructure globally to effectively achieve
these goals.
The
second area are the external drivers of change as discussed above; Appliance or
Science, Industry Squeeze, New World Order and Wealth to Burden of Health.
These drive a two tier world of high growth, low individual income countries
and low growth, high individual income countries. Both tiers have a common
unifying need for more cost effective healthcare, though for different reasons.
A continuum of change
The
future model for pharma can be visualised as a continuum at one end of which is
the company that is about delivery of molecules to market that generate
revenues through profits from providing therapeutic solutions to ill people. At
the other end is the integrated industry that focuses on maintaining the health
outcomes of individuals. It works collaboratively with healthcare providers and
professionals, and uses healthcare data to provide greater efficiencies and generates
revenues from multiple sources other than from branded molecules. One end is
product centric, the other is outcomes centric.
We
all recognise one end of that continuum is approximately where we are now. It
is a world where regulatory hurdles will get higher and legal constraints will
get stricter while profits are eroded. It appears to be a difficult world to
thrive within, and even survival will require fundamental re-structuring. From
a corporate brand and reputation viewpoint, as we have also learned from our
own and other industries, one end of the continuum is easy to dislike and
demonise and the other provides opportunities for customers to feel compelled
to trust and see as a partner.
What does an integrated world look
like?
This
is a world where pharma companies focus on getting molecules to market and commercialising
them, and where new solutions are developed in long-term partnership with
smaller, more innovative research organisations. In this world, pharma
companies facilitate capture of real time patient data from in home and mobile
monitoring systems, and this is used to predict and proactively manage the
health outcomes of patients.
This
could allow regulatory organisations to lower market access hurdles because of the
ability to continuously monitor in-market, and for the benefits of real time management
to increase the efficiency of healthcare. Pharmaceutical companies have partnered
with software companies like Microsoft, Google and IBM to make integrated healthcare
a reality and to share scientific knowledge openly to improve health for all.
In
this world, patients can purchase service packages to support their treatment
regimens based on their personal preferences, thereby creating new revenue
streams. They also feel greater affinity for pharmaceutical corporate brands as
they receive relevant feedback on their health and advice and support on how to
manage their conditions.
The
wealth of anonymised data generated would allowed pharma companies to cater to the
needs of sub-populations, and to predict the level of investment needed for the
future. It will also give them far greater insight into the needs of patients,
healthcare professionals and payers. This wealth of data becomes a revenue
stream in its own right.
Communications must be integrated
Integrated
communications that can be used in real time will play a key role in
communications with healthcare professionals and patients. The rise of social
media and the use of video as a learning medium mean that communications will
need to be more flexible and responsive to anticipate customer preferences.
This will also mean that pharma will need to rethink its promotional approval processes
to meet these needs. In the future, there will not be the luxury of lengthy
multiple person processes.
Multiple
channels will be critical in the future, as fragmentation of media continues and
people get their information in a variety of formats and platforms, and expect
to have a meaningful relationship with the companies they purchase from. The
limited attention time that any single communication will gain means that
visual identity and brand recognition will be vital to maintaining awareness
and interest. So communications will need to have more impact, be relevant and
add value to the individual as well as enabling dialogue rather than monologue.
Impossible is nothing
Many
people will think “that is impossible” or “we can’t do that” and in the context
of current regulatory and legal frameworks, they are probably right. Our
response is this; for too long the industry has been too passive and accepting
of the regulatory, clinical and structural status quo. We must be far more active
in creating new approaches. Other industries are far more adept at shaping the future
– companies such as Microsoft, Google and IBM are all engaging in the future of
healthcare. You can spot the market leaders of tomorrow in an industry by those
who are shaping that future today. Where are the voices of global
pharmaceutical companies in that future?
Perhaps
words like “can’t” and “impossible” should be removed from the pharma lexicon
and replaced with “what if we” and ‘how could we..’. That might enable us to shape
the future we want to thrive in.
David Coleiro and
Michael White are Partners at Strategic North