Partnering in a Volume to Value Transformational Environment

In the shift from volume to value as the underlying driver in health care, pharma has only scratched the surface of possibility for new and non-traditional arrangements with a broader variety of partners with healthcare interests, writes Pharm Exec Editorial Advisory Board member Cliff Kalb.

It's been clear for some time now that a major underlying trend facing pharma is the volume to value transition that forces the players to rethink their business models and adapt to compete effectively. Pharma has done a comprehensive job of internal partnering over many decades within the industry in the form of product licensing deals, therapeutic category entry/exit/sharing, co-development and co-marketing, branding, branded generics/generics, joint ventures and mergers and acquisitions.  But in the shift from volume to value as the underlying driver in health care, this only scratches the surface of possibility for new and non-traditional arrangements with a broader variety of partners with health care interests.

Every stakeholder in the 21st century healthcare system is rapidly becoming connected through technological change. Real time exchange of data, visualization technology, mobile devices, and the ability to capture, store, retrieve and analyze health care mega-data require pharma to redefine the scope of the players with whom they must become engaged, and partner in unique and innovative ways.

These include:

• Patients - For collection of real time data on health through wearables at all possible points along the pharma life cycle- from early human trials through full scale clinicals, into the commercial Rx phase and ultimately in over the counter use of certain molecules.

• Pharmacy – The pharmacist is one of the traditional "learned intermediary" groups who intervenes between pharma and patients for prescription drugs. Their role has changed and they now wield new and more important roles in market access, dispensing of walk in care, and as trusted advisors.  Both domestic and international consolidation has altered the business models of the major players as well, creating a broader patient services portfolio.

• Diagnostic and Device - Pharma must recognize their place in the health care value chain, and how diagnostics and device firms can act as collaborators or competitors, often referred in the literature  as "co-opetition.”  If the value derived by patients, payers, or providers is derived from a combination of players who contribute together to improve outcomes, a holistic customer centric view of value and new ways of measuring it will favor the pharma firms that recognize it and partner accordingly.

• Healthcare IT - Those who capture, store, and conduct real time analysis of mega-data supporting  optimal health care interventions will become real players with whom opportunity for partnering is boundless. Firms like Google, Apple, IBM, Microsoft, Samsung, GE and Siemens have a perspective of the health care space that includes pharma as a modest component.  However, they have the power to cause major shifts in the way health care interventions are researched, analyzed, stored, retrieved and controlled, and even how medicine itself is practiced. Pharma needs to see it from their viewpoint and work with these innovators, and not be made obsolete by revolutionary change that these technology leaders have wrought on other industries. 

• Government - Rather than view government as a regulatory adversary and gatekeeper, pharma needs to understand their real concerns in the volume to value shift, and work with them to accelerate the delivery of value through government sponsored programs. Multi-national pharma has a head start here with ex-US governments who control national health schemes around the world.  But the US focused pharma players are only seeing the beginning of the shift in the direction of single payer systems. Their very survival may depend on effective new ways of collaboration with government at multiple levels.

• Academia - Traditional proprietary boundaries between pharma firms in the sharing of early stage discovery and development findings are changing.  Consortia of pharma company groups where pre-competitive information is shared are becoming more common, especially in areas of high unmet medical need like cancer, immunology, and CNS disease. Not only does participation in these consortia make drug discovery and development more efficient and effective, but it can help engage academia and thought leaders in collaborations that makes them feel more comfortable building bridges to business.

• Providers - Delivery of health care to patients has already morphed from being MD centric to health care practitioner (HCP) centric. Groups like nurse practitioners, physician assistants, nurses, therapists, and others have grown in their prominence in the delivery of care. Protocols, guidelines, formularies, and other forms of access controls affect them as well. Pharma must not only partner with these HCP groups and recognize their increasing role in care, but anticipate new and different types of health care professionals that will emerge as medicine's evolution demands it, e.g., diagnostic and precision medicine specialists, geneticists, herbalists, natural products advocates, etc.

• Futurists - This is a small but influential community of strategic thinkers that pharma has mostly shunned due to traditional legal and regulatory concerns.  Neglecting the opportunity to paint scenarios of how health care may evolve in the next several decades can become a blind spot for pharma.  Other stakeholder groups who are entering the health care space recently have not necessarily avoided futurist's strategic views of the possibilities of "what could be next."  Pharma will benefit from working with leading edge futurist thinkers to stay abreast of the changes they anticipate coming in health care, its pace and how durable competitive advantage can be built through open minded lateral thinking.

Cliff Kalb is President of Kalb & Associates and a member of Pharm Exec's Editorial Advisory Board. He can be reached at ckalb55205@aol.com