Planning that Thousand Year Future - Pharmaceutical Executive


Planning that Thousand Year Future

Pharmaceutical Executive

Innovations along the supply chain. Toyota, Dell, and Wal-Mart have all demonstrated that supply-chain innovations can be cornerstones for revolutionizing their industry business models. Last year, for example, Wal-Mart booked $419 billion in revenues during its 2011 fiscal year by keeping its costs to customers low and serving more than 200 million customers each week. Toyota used supply-chain innovations to revolutionize automotive manufacturing and become the world's pre-eminent car company. Dell employed different sorts of supply-chain service innovations to build a more direct model of serving customers. What value-adding supply chain services and innovations would enable BioPharmaCo to better serve patients, payers, hospitals, governments, research partners, commercial partners, or other customer segments? How might BioPharmaCo's business model evolve if it were to revolutionize the healthcare supply chain?

Providing value directly to the patient. America's current healthcare model is highly dependent upon health insurance companies negotiating prices on behalf of consumers and then reimbursing patients for all or part of their treatment costs. What opportunities exist to provide services and create value directly to the patient—thereby avoiding the requirements of third-party reimbursement? How might a health company add value for patients and make money without depending on a payer-reimbursement model? What treatment areas lend themselves most readily to direct patient service and transaction?

Innovating around healthcare records information. Innovations in healthcare records promise to change healthcare delivery in the United States. Already Microsoft, Google, AT&T, Oracle, Verizon, Cisco, Mayo Clinic, IBM, Kaiser Permanente, and others are jockeying to play a role in this emerging frontier that promises to reduce healthcare costs and improve care quality. How can a company add value through being essential to health records? If e-records become a part of the future, how can a company add value through superior therapy, service, or process for the e-record to reduce costs, avoid side effects, or improve adherence and outcomes?

Optimizing the value of intellectual property. Innovation-driven companies are often rich in intellectual property. However, some are more creative at monetizing their intellectual property through commercialization, outsourcing, partnering and tax-optimization strategies. IBM, for example, has routinely exceeded $1 billion in annual revenues generated through royalties from IBM patents and intellectual property (IP) that IBM elected not to further develop. Consequently, IBM actively licensed this IP to other companies. What innovative approaches might BioPharmaCo take to monetizing the value of BioPharmaCo IP inside and outside the company? What new approaches to collaboration or partnering would help further leverage BioPharmaCo IP or help create new opportunity frontiers?

Every business model seems to carry with it unique insights and blind spots. In the past, biopharmaceutical company business models have provided great benefits. In this time of turbulent change—for our company and the industry—the blind spots are increasingly evident. An ancient Japanese proverb long ago noted: "There are many paths up the mountain, but the view of the moon from the top is the same." There will be many paths into the future of global healthcare. Ours is not the only one. Arguably, it may no longer be the best one.

Darwin noted that "It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change." This insight has relevance for healthcare and for corporations—those companies most adaptable to change will be best suited to survive and prosper. The question stands before BioPharmaCo: Is our company agile and flexible enough to adapt to a rapidly changing world? Surely, adaptability will be essential if BioPharmaCo is one day to become a 1,000-year-old company.

Daniel Pascheles, PhD, is Vice President of Merck & Co, responsible for Global Competitive Intelligence. He can be reached at
. Chris Bogan is CEO of Best Practices, LLC, a leading consultancy on biopharma strategy, commercial excellence, and change management. He can be reached at


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