The global healthcare market has experienced transformative change over the past decade with value creation for patients, healthcare professionals (HCPs) and caregivers becoming a crucial pillar of the system. In recent years, disruption in the sector has continued through increased private sector participation and record amounts of investments into digital health. The ever-growing speed of technological advances, the consumerization of care and new governmental policies are further reshaping the landscape, with some of these shifts accelerated by the Covid-19 pandemic.
This new environment demands organizations across the ecosystem to rethink fundamentally how they do business, engage with one another, and ultimately serve patients.
For life sciences companies, the convergence of these forces means it is no longer possible to rely on traditional models of safety and efficacy-based value in their commercial strategy. Therapeutics must now also demonstrate a strong health economic value case to win in the market.
Big pharma delivered 76 novel medicines to the market in the past five years but commercial success is not a given as can be observed with Biogen’s Aduhelm. Despite high expectations around the Alzheimer’s drug and FDA’s accelerated approval, its price was reduced by 50% this year to counter the slow uptake in the market. This illustrates how traditional models of paying for access and drug promoting are no longer be sufficient. The organizational structure most life sciences operate in will neither be enough.
What we see at Big Pharma
Life sciences companies are generally fully aware of the seismic shifts that are causing the healthcare world to change.
- From volume to value
- Changing care models and healthcare ecosystems
- The emergence of digital as a marketing must-have
- Technology as a means for achieving health outcomes
- The proliferation of data and new types of evidence
- … and many more trends that are causing the healthcare world to change.
Those continuing to deliver strong results are evolving their traditional commercial approaches to keep pace with the changing conditions and to stay relevant in the market.
Some of the initiatives aimed at aligning the life sciences commercial business model with market shifts includes:
- Digital health innovations
- Real world evidence
- Risk-sharing models
- Digital accelerators and labs
- Customer experience innovations
- Intelligent insights & data use cases
- New technologies such as AI or quantum computing
While life sciences companies have made significant investments in these areas, not all have been as productive in creating value at scale. This means there is an opportunity to accelerate, scale, and leverage the full scope of global innovation across markets.
It is also important to consider the unique dynamics of different geographies and marketplaces that allow some innovations to advance quicker than others. For example, the use of digital therapeutics in Germany has increased rapidly since the introduction of a law allowing the reimbursement of digital health apps, opening a new pathway for companies operating in the country. Life sciences organizations should continue to embrace this heterogeneity, allowing certain markets to be testbeds for commercial model innovation.
I. Access the market with value by embracing outcomes-based models
The value propositions of assets must be tailored to the needs of patients, HCPs, caregivers and other ecosystem stakeholders. They also need to be well evidenced and supported via innovative contracting approaches that engage both traditional and non-traditional partners such as Walmart Health or Amazon Care.
Successfully launching a drug largely used to be about doing the right things at the right time; a checklist, playbook, and launch office. However, in today’s world that traditional approach is no longer enough. Launch teams need to deeply understand the competitive environment, therapeutic nuances, and unique customer needs.
The shift to value is taking hold across many markets globally. Outcomes have become the new currency. New outcomes-based contracting models are becoming pervasive. With RWD becoming increasingly relevant but not being sufficient alone for access, the lines between medical, HEOR and market access are blurring further.
This additional complexity requires companies to even more align outcome data, evidence, new delivery model ideas, contracting innovation, and digital health assets. Many players are doing much of this in pockets, for example moving from volume-based to value-based contracts, but there is the opportunity to strengthen and scale further.
Between 2009 and 2021, the US saw 77 value-based deals, with contracts happening in nearly all therapeutic areas . Globally, our analysis of health systems shows that the proportion of value-centric care will increase further and extend to innovative treatment solutions.
II. Innovate the customer facing activities and personalize messaging
There is a need to further re-design and evolve the customer facing commercial model, recognizing that experience is just as important to customers as science. Amplifying it with the right digital capabilities will create future relevance and impact.
Reinvention means be more personalized and consistently focused on customer value and outcomes across all channels and marketing activities. Life sciences greatest top line impact continues to come from promotional activity delivered via field sales team. But the pandemic has dramatically upended this model, with reps visits to HCPs drastically reduced due to official restrictions. Virtual tools and platforms have flourished, with Boehringer Ingelheim for example experiencing doubling of remote meeting time in the first 12 months since the pandemic.
The wealth of customers’ data available at life sciences companies can be leveraged to deliver a more customized experience for patients, HCPs and other healthcare stakeholders – in a flexible and productive manner. For example, customer facing teams can use data to approach customers with a better understanding of their needs, segmenting customer groups in a dynamic way and aligning both products and services to those needs.
In line with that, the role of brand teams and marketeers shifts from being rather simple and annually to something dynamic and sometimes hyper-personalized. At the same time, marketeers have greater responsibility to drive growth with an amplified scrutiny on budgets. With brand objectives more closely tied to patient outcomes, marketers are now forced to solve for value models influenced by patient affordability, access and education
Marketers OLD role:
Understand customers and segments
Define brand value propositions and messaging
Invest in the right marketing mix
Build a tactical plan on an annual basis
Marketers NEW role:
Understand fast-changing health systems and customers
Acknowledge complex challenges in promotional models such as digital and multi-channel
Address liquid customer experience expectations in micro-segments and related content requirements
Develop new digital health models to augment therapies
After using data analytics to improve engagement, life sciences companies must continue the digital journey by amplifying the field with multi-channel models that actually create value – hence being wanted by their customers. For example Novartis has partnered with tact.ai to achieve its ambition to reimagine customer engagement for the “new normal.” Along those line the role of brand teams and marketing to support this change need to be evaluated.
In the same direction the role of the brand teams and marketeers have to be transformed to support the changing environment – looking for non-traditional methods of growth, personalization and innovation.
III Reimagining teams and operations to respond to complexity of new model
The commercial model of life sciences companies remains underpinned by laborious processes. Complex models and large teams are often used to define field force alignments, perform basic segmentations, determine the right marketing mixes, manage customer data, among other day-to-day tasks. Instead of focusing on improving each of these activities individually and moderately, it is time to radically simplify them in order to free resources to fund innovative, personalized approaches driven by digital technology.
Commercial operations need to be radically transformed. Cross-functional teams in and beyond commercial operations need to strengthen the core capabilities in sales & marketing; but focus of all activities needs to be on partnerships and (digital) innovations. Being ready to re-wire the front office while sustaining growth and realizing value for patients, HCPs and pharma itself
Key activities to require the pharma commercial model and make it future proof are:
- Generating outcomes through science & experience
- Defining new value approaches to capturing the market
- Developing new competitive approaches to launch and commercialization
- Enabling (hyper-)personalized marketing and content approaches
- Enhancing the go-to-market model across channels with value-adding digital innovations and not just prototypes
- Realizing efficient commercial operations by using technology and insights to support all commercial offerings (e.g., patient analytics, experience orchestration, launch management, novel therapeutics, market access decisioning, field force interactions) and getting the right commercial platforms in place
Despite transformation, the commercial model in the industry continues to build around complex processes with lots of effort being spend to define field force alignments, perform basic segmentations, determine the right marketing mixes, manage customer data, and other day-to-day tasks iIt is time to start asking if companies cannot just improve these moderately, but radically simplify them?
Examples
- We still see a lot of investments in pharma into the web channel despite its questionable value to capture and retain customers beyond simple indication and treatment information. If all this could be streamlined and instead be reinvested into channels, that individual HCPs and patients actually demand, the respective ROI could instantly higher. But, for that to consistently work, a coordinated insight generation across all the available data on customer preferences need to be in place.
- Another example is incentive compensation. Historically pharma has spent huge efforts on sophisticated approaches to boost value creation through incentive models. Given the change in channel utilization and new digital approaches to customer interaction, this can be radically streamlined. At least companies must consider transforming these legacy processes and whether the risk of change is really outweighing the benefits.
- Other simplifications could come from fully automating segmentation and targeting, the marketing mix modeling a or customer master data management given the amount of relevant data all companies hold nowadays.
Even if the answer to some of these questions is no, leaders must challenge themselves to radically simplify and utilize digital technology for true value creation.
How to get started
Life sciences companies looking to stay ahead of the market must begin to bring innovations into their commercial models in a cohesive and scalable way, and they must start to plan for that now. One way to start is by rallying teams around the organization’s vision while setting objectives that are concrete and factual so innovation can be brought together to its fullest extent. Management needs to shape clear pillars of how to achieve aspirations and align investments in parallel.
- Describe the ongoing transformation across the commercial model pillars (Market Access, Customer Facing Model & Marketing, Operations) and identify what has clearly resulted in value creation over the past years
- Define very clear short-term and long-term objectives in line with your strategic direction and make value measurable!
- Align ongoing/planned investments and innovations required for the transformation with the commercial model pillars. If value cannot be realized or a strategic target is not fully supported, ditch the respective activity
- Define clear value levers/use cases and how digital technology can make a difference. We have seen a lot of hype and prototype in recent years – now is the time to capture value and focus on these activities only (revenue increase, costs efficiencies, reach of new customer segments,…).
1. https://www.evaluate.com/vantage/articles/insights/nme-approvals/novartis-leads-and-bristol-lags-novel-drug-approvals
2. https://www.fiercepharma.com/pharma/samsung-group-talks-to-buy-biogen-a-deal-could-be-worth-42-billion
3. https://www.bfarm.de/EN/Medical-devices/Tasks/Digital-Health-Applications/_node.html
4. https://www.pharmexec.com/view/value-risk-and-reward-taking-stock-of-value-based-contracts-in-pharma
5. https://www.veeva.com/resources/boehringer-ingelheim-makes-rapid-shift-to-digital-engagement-with-veeva-crm-engage-meeting/
6. Tact.ai