Healthcare 2025: what the future holds for pharma
pharmafile | September 22, 2011 | Feature | Manufacturing and Production, Research and Development, Sales and Marketing | NHS reform, healthcare reform, healthcare spending, prescribing
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 pharmaceutical companies 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 too
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.
THE FUTURE OF HEALTHCARE
Healthcare systems adapt to cope with an increased burden
• The role of government is one of strong central control, regulation and monitoring of local approaches and is focused on increasing efficiencies, effectiveness and innovation
• Multiple, sophisticated measures are in place to contain costs and measure outcomes
• Health expenditure relies more on private contributions with (two-tier) insurance systems expanded in most countries (to meet costs and improve access)
Sustainability is all
• Pressures of rising global population (nine billion in 2025), climate change and finite natural and financial resources lead to a major focus on sustainability
• Emerging economies have increased healthcare provision, but changes such as ‘westernisation’ have increased the burden of chronic diseases, and infrastructure cannot keep up
• Increased migration of skills between developed and newly emerged markets
Real choice, but with responsibilities
• There is a prevention/wellness orientation where national strategies are integrated with social care utilising personal accountability for health, supportive self care, nurse led group care and peer and social support
• Disease area focused care is delivered with central commissioning groups responsible for the co-ordination of care across an entire pathway and this will involve various providers including new commercial entrants
• Patient participation is high in terms of choice of service providers and drug preferences
A new age of healthcare innovation
• Technology enables widespread use of remote diagnosis, health monitoring and self-management shifting the point of care
• Real-time data enables individual patient risk profiling and disease and medication alert systems combined with centralised health records enable true co-ordinated care
• Access to cheaper diagnostics, personalised healthcare and genetic screening
RESEARCH OVERVIEW
Comprehensive desk research of over 80 market reports focused on future macro, healthcare, consumer, policy and technology trends
Liaison with Manchester Business School Healthcare Management Team
Interviews with a range of key healthcare stakeholders including:
• Pharma Companies: AstraZeneca, Roche, Pfizer Health Solutions
• Health Policy: Kings Fund, NHS Alliance, WHO and EOHSP, Harvard School of Public Health
• R&D Collaboration: Manchester Biomedical Centre
• Patient Groups: ReThink, Diabetes UK
• Health technology: UK Telecommunications Council, Nokia, Durham Business School
The Authors
David Coleiro and Michael White are Partners at Strategic North (www.strategicnorth.com) a healthcare marketing strategy consultancy that works with clients to build inspiring, joined-up strategic stories.
David Coleiro, Partner: david.coleiro@strategicnorth.com
Michael White, Partner: michael.white@strategicnorth.com
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