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In a digital world, vast quantities of data at hand are a powerful asset. Managing that information is key to seizing competitive advantage.
We live in the digital age, where information is abundantly available at a keystroke. Many industries have adapted to the revolution in information technology, but the healthcare industry still relies to a substantial extent on data capture and analysis methods that are outmoded or hobbled by proprietary formats that inhibit connectivity among data sources and technology platforms.
The good news is that the situation is changing as life sciences research becomes dependent on computational power, as governments invest in the healthcare information infrastructure, and as information-based innovators such as Microsoft and Google shape the way consumers and healthcare professionals interact with data. Research shows that effective use of information has become a driver of competitive advantage, provided that companies fulfill two key responsibilities: understanding the business impact of changes in the way information is collected and processed, and making wise tactical investments in the tools required to stay ahead of the technology curve.
Three transformative phenomena are the catalysts for defining both the new opportunities and the risks to existing business models. These include an information explosion, enhanced connectivity, and a shift in information advantage.
» Information Explosion. Not just the quantity of information, but also the types of information available to stakeholders is increasing exponentially. Leading the way are technological advances such as genomics data, digitization of patient data, and new techniques for taking diagnostic images. And the digital universe is expected to double in size every two years; major medical centers must be equipped to handle billions of terabytes of data (an information output equivalent to trillions of filing cabinets).
» Enhanced Connectivity. Through a proliferation of channels and networks derived from such developments as HL7-enabled Regional Health Information Organizations (RHIOs), Web 2.0 communities, and remote access to patients, stakeholders are interacting better than ever before. Connectivity is also improving via new forms of collaboration and emerging standards for interoperability, permitting a smooth flow of clinical information across clinical and research organizations.
» Shift in Information Advantage. Changes in the source and ownership of relevant information are creating a shift in the market. Healthcare is an information business, and the advantages from possessing the relevant information will open up as clinical data becomes more accessible and transparent to a variety of stakeholders, or as medical histories become more fully available to patients.
To control these three transformative forces, a biopharma company needs the proper strategy. Without a strategy, these forces will shift the relative influence and advantage toward others in the health system. Historically, a biopharma company could attribute its proprietary edge to the fact that it had more information about a product (efficacy, side effects, and optimal dosages for various indications) than other stakeholders. That familiar information advantage is partly responsible for the current model of developing and marketing medicines—from the design of clinical trials to the prevalence of sales representatives in doctors' offices.
But with the shift in information advantage, other stakeholders are gaining the initiative. Payers now have a wealth of outcomes information that they are leveraging to create treatment and reimbursement protocols. Physicians are becoming less amenable to the traditional sales rep, and more inclined to favor the "neutral, honest broker." Add the other two transformative phenomena—the information explosion (from research labs and elsewhere) and enhanced connectivity (rapidly spreading information not just within a company but also between companies and with other stakeholders)—and you have a blueprint for significant change: a set of new opportunities and the obligation to compete for them.
As the changing information environment opens up new opportunities, biopharma companies are eager to exploit them, but often unclear on the best way of doing so. Here are five broad actions to take.
1. Harness new data sources Payers, providers, patients, and suppliers have historically suffered information deficits. Increasingly, however, they are finding ways around this. As more diagnostics become digitized, physicians and even patients can make clinical decisions more easily and accurately. In fact, patients are taking a vastly more active role in their own healthcare, thanks to Internet search engines and the growth of Web 2.0 communities.
Providers and payers, for their part, are gaining access to clinical information from other care settings. And they are now able to monitor patients remotely for chronic conditions such as hypertension and diabetes, and track compliance. Treatment patterns will undergo some adjustments; so might biopharma's top line.
Meanwhile, the most prominent leaders in the "connectivity" space, notably Microsoft and Google, are becoming healthcare stakeholders in their own right. Tens of billions of dollars are going into refining IT infrastructure, and one effect will be to put patients in charge of their own health by pinpointing the relevant medical information for them. The impact on biopharma is on the customer model and how to develop new approaches to engaging with key stakeholders.
2. Blow open the boundaries Accessing information is a competitive necessity; it is also becoming easier and cheaper. New networks are being developed, both within companies and across organizational boundaries. One result is to further erode the rationale for biopharma's traditional vertically integrated structure. Some companies are already opting for diversity in allocating their fixed costs by externalizing selected activities within R&D, manufacturing, and the commercial space. Eli Lilly's PD2 initiative (Phenotypic Drug Discovery, pronounced "PD-squared") offers disease-state assays and a secure web portal that allow the company to evaluate compounds synthesized in university and biotech labs, in exchange for first rights to negotiate a collaboration deal.
3. Personalize and segment Personalized medicine is a product of the information explosion, which has made it possible to stratify the patient population for any disease, and fine-tune treatments for individual patients. The art of prescribing requires subtle combinations, substitutions, or variants of drugs. And these trends will only deepen as the human genome is investigated further and better understood, and as more biomarkers are discovered. For biopharma companies, this means an increase in challenges, such as less chance of developing mega-blockbusters. But it could also offer benefits, such as upgrading existing drugs by adding indications, or improving compliance and availability.
The future will see scenarios such as Web-based self-diagnosis, automatic drug dispensing, micro-segmenting of prices, and broader sets of OTC drugs. "Pharmacovigilance" will come of age: today's spontaneous system of adverse-event reporting—relying on individual physicians to notice rare events—will yield to a more reliable observational system based on the total data drawn from all sources. Biopharma companies once again have much to fear and much to hope to take from such developments, yet as a group they are responding too hesitantly, only just starting to invest in some of the new "connected" platforms.
4. Use data to demonstrate value. Relevant data is growing in volume, visibility, and accessibility. Data on clinical research and outcomes is now increasingly available thanks to new databases and information exchanges. The EudraCT database, for example, details all clinical trials conducted in the EU since 2004, and allows authorized stakeholders to access them. In the US, the National Cancer Institute is expanding CA-BIG, the Cancer Bioinformatics Grid, whose goal is to include all oncology trials online. Eventually oncologists should be able to upload their own patients' data and search for similar patterns and outcomes from other physicians.
The implication is that biopharma companies will have to make a reassessment of how they create and demonstrate value. The rules have changed, with pricing pressure intensifying from all sides (patients, media, health plans, and governments) now that more stakeholders have their hands on sophisticated outcomes and cost data. For example, United Health has a $1 billion subsidiary, Ingenix, that is dedicated to managing data and enabling real-time comparative effectiveness and postmarket drug surveillance. Other factors that biopharma companies will have to reassess are how to engage with regulators and payers; how to address privacy concerns; and how to optimize trial design, pricing, and commercialization.
5. Help reshape the information landscape. Biopharma companies are losing their information advantage. Other stakeholders are taking over various aspects of the information landscape in efforts to manage costs and shape outcomes, using a "best treatment" paradigm. Of course, "best treatment" depends on how "best" is measured, but it seems clear that biopharma is losing command of the definition. Companies not only have to create superior products, they must find new ways to demonstrate this superiority. They have to assess what investments they should make in infrastructure or capability, analyze and synthesize the data, and launch it into the information realm—and participate in setting standards.
For further information, contact the following representatives of the Boston Consulting Group: Peter Tollman (Senior Partner, Boston) and Alan Iny (Principal, New York), Philip Evans (Senior Partner, Boston), Simon Goodall (Partner, Los Angeles), Simon Kennedy (Partner, Boston), Dave Matheson (Senior Partner, Boston), Valery Panier (Partner, Boston), and Martin Reeves (Senior Partner, New York).