Disruption in healthcare is happening now, what can the industry do to keep up?
Since 2000 digital disruption has demolished 52% of the Fortune 500, with tech disrupting many industries such as music, publishing and retail. There are many cases already of established players who failed to ignore customer demands and reacted too slowly. Remember Blockbuster? We now have Netflix. Other examples abound:
- Companies like Amazon, Volkswagen and McDonalds are all at the top of their game through fostering and leveraging innovative, even disruptive, supply chains built around strategic relationships and mutual trust
- In four years, Airbnb has completely disrupted the hotel industry and today has more than 100 million users
- Robotic process automation helped an international insurer cut down reporting times from 90 to 12 minutes, with 100% accuracy
- Electric carmaker Tesla, which produces a fraction of vehicles compared with major US automakers, has achieved a higher market capitalisation than any — based on its prospects, not profits. It uses personalized digital marketing, as opposed to a dealer network, to drive sales.
The pressure is on the health sector to catch up and keep up and it is just a matter of time before it impacts the pharmaceutical industry.
Why pharma is ripe for disruption
Industry disruption usually occurs for three reasons:
- Technological meteors, such as when science creates breakthrough technology
- Wasteful, outdated business models
- Economic or policy changes
All three of these factors are present in the pharma world.
Nearly $140 billion is spent on pharma R&D each year and yet results in only 30 to 40 new drug approvals. The R & D process, including how clinical trials are conducted, is inefficient and needs to change. Things are starting to progress- the FDA has been progressive in the adoption of health technology in clinical trials, and pharma is turning to ‘value based’ care models.
But tech disruption will provide a smarter and quicker path for drug R&D, industry regulations and new tools. For example, blockchain technology could help pharma adopt the Falsified Medicines Directive – a direct response to the enormous financial and humanitarian cost of fake pharmaceutical drugs in the supply chain (10% of market share and an estimated 1 million deaths). Companies like Qad.re use the inherent audit trail and security that comes with blockchain to assign a tamper proof unique identity to pharma products, which can be tracked with a smart phone for a secure supply chain management solution.
Technology driving change
Other innovative start-ups use artificial intelligence to mine and analyse biomedical information, from clinical trials data to academic papers to identify molecules that have failed in clinical trials and predict how these same compounds can instead be more efficient targeting other diseases. For example, Benevolent AI uses the predictive power of its AI algorithm to design new molecules, extracting a new hypothesis based on a knowledge graph composed of over a billion relationships between genes, targets, diseases, proteins and drugs.
Developments in technology will also change how patients engage in research and in their own care. Patients who participate in trials will expect trial results and treatments to be available more quickly than the current system. As more patients finally gain the ability to download their own data from electronic medical records and other sensors, patients will be more likely to share their health information – especially from wearable devices – and will want transparency and expect the system to be both convenient and personalised. If that data can be shared, more services and technology will become available to consumers.
A new health ecosystem
The arrival of technologies like blockchain, which has started to change the face of banking and financial services, is now coming to disrupt healthcare. Blockchain and distributed ledger technologies will enable people to have complete control over their medical records and share their data with whom they decide, and even be paid for it.
Could this be the start of a health ecosystem where citizens, as the gatekeepers of their own data, could be incentivised to share it with pharmaceutical companies who could then use the insight from this data to develop better drugs, more quickly, at lower cost and reward people for healthier lifestyles? Could this be the start of pharma moving from a sickcare model to a preventive health paradigm? It is already happening in Estonia, and predictions are that other developing nations, for example, in Africa, will leapfrog the developed world using these new technologies without being constrained by legacy systems, wedded mindsets and cultural inertia.
According to John Nosta, the digital health guru who sits on Google’s strategic health advisory board, pharma has relied on line extensions and extended release drugs as the source of income and innovation for too long. The wake up calls for pharma are coming from a wide variety of industries, like retail, as well Google and Apple (recently in the news for its dermal sensor for measuring blood glucose and managing diabetes).
The arrival of the tech giants
For traditional pharma companies, the arrival of Google and Apple on their territory is unsettling. Only a fraction of the value of a drug is in the physical pill or injection itself. Could new entrants from Silicon Valley and beyond take over like everyone is predicting? Will Google become the next pharma? Beyond getting patients to take their pills properly, could pharmaceutical companies ever compete with the tech companies who excel at getting close to the customer and leveraging insights from their data?
At a recent EyeforPharma Patient Summit in London I caught up with Guy Yeoman, Head of Patient Centricity at AstraZeneca, and asked him some of these questions and whether ‘pharma disruption’ will be good for patients and for citizens more broadly. Yeoman was decidedly upbeat: ‘Disruption that empowers people to engage with their disease and enables them to manage that disease more effectively will change the healthcare landscape. Technology will be the key enabler to make this happen and AZ is trying to make this happen in asthma. The sooner the Googles of today or tomorrow’s world engage in healthcare, the better.’
There are still some hurdles. Most activity so far has been limited to fitness apps providing motivational information rather than truly medical-grade data. The apps for chronic diseases so far have not been trailblazing successes, being poorly designed, not user friendly and ineffective in addressing the complex behavioural issues at stake. To provide real research value health apps need to be connected to electronic patient records and there remains significant systemic barriers to this happening in most countries, not to mention public concerns over data privacy.
Partnership & collaboration
The healthcare ecosystem itself could use a boost of collaborative innovation. This was the top take away from the Patient Summit. Pharma is tussling with how to deliver value based care and showing benefits to patients. Trust is still a major issue with the general public over lack of transparency and concerns over corruption – and the debate at the Summit was on the need for more equal partnerships and pre-competitive collaborations with patients and the public in a sustainable way that delivers positive outcomes to society.
What sort of partnerships and collaborations in the next five years will specifically address wider societal benefits and truly empower people in a sustainable and scalable way to improve health? Yeoman says, ‘I see no limit to potential collaborations – why not banking, telesales, supermarkets? Data is being merged from across all these industries today. . . .’
At the Summit there was discussion around ‘transcelerators’ – a sort of cross- company innovation vehicle- and the need to be bold and aspirational working together as an industry to solve major global problems, akin to what we have in energy with the Kyoto agreement to addressing climate change through lowering carbon emissions.
But who will drive these sorts of collaborations in pharma? Yeoman admitted, ‘we need to address fundamental issues such as trust first and work out what wider societal benefit we deliver, before we can make a credible agreement. Some of us say we should absolutely just deliver medicines, others that we embrace much broader society impact. The agreement must be aspirational, based on unifying principles and we need measures to demonstrate delivery.’
The big questions
Pharma is only just now starting to ask these questions of itself and of its role in society. In a very interesting recent conversation between Richie Etwaru, Chief Digital Officer at Quintiles, leading contract research organisation, and Milind Kamkolkar, Chief Data Officer at Sanofi, it seems the industry is starting to question its very own survival too.
Etwaru states ‘I love that metaphor. . . on the comet and the dinosaurs that you’re talking about. The crux of the matter today is not so much how I engage with patients, or how I discover drugs, or how I figure out my pricing, or my analytics. Those are all individual problems. But at the core of the problem is the notion that the business model of the pharmaceutical manufacturer is starting to expire. If the three of us were given $3 billion today. . . to go start a pharma company to manufacture treatments for those that are disenfranchised by health, I’m not sure we would pick the model we have today that takes 8-10 years to discover a molecule and bring it to market.’
Kamkolkar says in turn, ’we are at a point now where there are technology paradigms that are allowing us to have data that is protected but shareable at the same time. . . we have a reality in front of us with the invention of the blockchain, with asymmetric cryptography and distributed ledgers to truly start to build business models where data can be protected but shared at the same time. And that, I think, is opening up a lot of opportunities. . . we’re really making a conscientious effort to break down some of those silos and really tackle these issues from a patient-centric perspective and also, from a physician and caregiver perspective, as well. It’s really looking at the holistic care package.’
This is where the debate is starting to go in pharma- transformation of the business model taking learnings and ideas from other industries:
- Technology companies are using social and consumer engagement platforms, coupled with data analytics and mobile health solutions, to develop personalized, actionable insights on a population health level.
- Retailers are driving insights into patients’ lifestyles and behaviors and becoming the future of health care service.
- Consumer product companies are introducing user friendly technologies from other industries and making big bets on nutraceuticals and superfoods.
- Start-ups are accelerating the industry’s speed to market, spurring fresh thinking and forcing traditional players to move fast.
Innovation in today’s disruptive digital economy can come from anyone and anywhere—inside and outside any enterprise. This means companies must fire up and fuel co-innovation like never before across all functions, grade levels, geographies, partners and customers within, without and among their four walls. And often, the most novel solutions often come from outside the industry silo.
Pharma had better get going before it is too late and Google takes over. . .
Tina Woods is founder of Collider Health, a health innovation catalyst that works with organisations to think and do differently and transform health with meaningful impact. She also heads up the Future Health Collective, a cross-industry, interdisciplinary group to foster collaboration and radical innovation in areas of unmet need in health and social care.