The digital revolution has been transforming and disrupting different industries from media and retail to finance and automotive. It is now the time for the pharmaceutical industry to be disrupted. To stay competitive and bring value to patients, pharmaceutical companies need to have an understanding of what digital means for them, define long-term strategies for the digital era, and commit to implementing the strategies by shifting their mindsets towards more patient-centric approaches.
In this paper we first argue that the time is now for pharmaceutical companies to embrace digital, then help frame what digital means to them by identifying the relevant applications and areas of interest for pharma. Finally we provide a step-by-step approach for the successful implementation of digital initiatives.
The time is now
While digital means different things to different people, in the context of this paper we consider the application of information technology in its broadest sense (excluding internal administrative and accounting systems) to the pharmaceutical industry. By this definition, when considering deal flow, only few pharma companies have so far taken the leap to experiment with digital initiatives such as apps, wearables and combinations of smart devices and drugs. This can be explained partly by the fact that the pharmaceutical industry is highly regulated, traditionally very protective, and treats IP (Intellectual Property) as its main value-generating asset. By contrast the technology and digital companies are typically less regulated and generate value by moving fast into market rather than capitalising on their IP. This difference in mindsets and ways of working between these industries makes it harder for the pharmaceutical companies to take the leap into digital, or to see their tech counterparts as potential viable partners. Indeed, between 2010 and 2015 only a small percentage of the eHealth deal flow involved pharmaceutical companies, despite total deal volume increasing by 228% in that period according to a report by StartUp Health.
Few pharmaceutical companies have started experimenting with digital
Pharma is therefore clearly behind other industries and faces the challenge of bridging between early adopters and early majority. It must address this chasm if success is to be achieved.
Pharmaceutical companies have yet to cross the chasm with Digital
We can already see early adopters shaping the market. Next, the first movers (i.e. early majority) will contribute to shaping the market and will increase their chances of achieving important market shares. More risk-averse companies (i.e. late majority and laggards) are deciding to wait and see which initiatives are more successful. This positioning may avoid failure but at the expense of market position and competitive edge.
Digital starts with the patient
As the pharmaceutical industry ultimately serves patients, they should form the core of digital initiatives: from enhanced prevention and detection of disease through to R&D that is better focused on patient needs, to the provision of integrated patient services, and ultimately towards pricing drugs and services in a way that is affordable and provides real value outcomes that are approved by payers and reimbursement bodies.
All digital initiatives need to be centred around the patient
Based on Novasecta’s analysis and review, companies approach these four segments in a variety of ways, all of which can stimulate choices and inspiration in other companies:
1. Enhanced Prevention and Detection
Pharmaceutical companies can engage patients early on before their condition progresses and gets complicated. For example, through continuous monitoring using apps and wearable technologies diseases could be prevented and detected.
Furthermore, patients are increasingly willing to engage with their doctors through technology and are looking to monitor their health better. A recent online survey conducted by Ketchum on smartphone owners in the US has found that 58% of this group uses their phones to communicate with a medical professional.
2. Better R&D
So far, data available to clinicians and researchers is typically discrete and only gathered during episodic appointments. This makes it hard for researchers and clinicians to grasp the full picture of disease mechanism and evolution. With continuous monitoring there is a big potential to better understand disease progression and improve the quality of clinical trials or even find better ways to use existing treatments.
A new study presented at DPharm Disruptive Innovations by Validic based on interviews with 166 executives at pharma, biotech companies, and CROs, showed that 64% of executives have used digital technology in clinical trials and that 97% plan to for the next five years.
For Rare Diseases clinical trials, Aparito (a UK based digital start up) aims to capture meaningful patient-data and end-points to make clinical decisions easier, and to improve the outcome and speed of clinical trials. It also gives clinicians access to a source of data that contributes to the natural history of a disease, which is especially valuable where no therapies are currently available.
3. Integrated patient services
With increased generic competition, reduced innovation and limited new blockbusters, pharmaceutical companies can use digital technologies to repurpose their existing drugs or differentiate and add value to otherwise non-differentiated products. This way, patients will benefit from more valuable products and services that fully manage their condition.
This could be through a number of services such as apps to monitor adherence and/or a combination of drugs and smart medical devices
In this area, pharmaceutical companies can do more to develop integrated care services for patients. The initiatives so far are at very early stage and the gap needs to be filled by more innovative approaches for holistic patient care.
4. Value-based outcome pricing
Faced with increasing drug prices, payers and reimbursement bodies are rightly demanding evidence that pharmaceutical products deliver value for money for patients. Payers increasingly want to transition from a “Volume” based reimbursement (i.e. providers receiving a payment for providing a particular service or product, regardless of the outcome) to a “Value” based reimbursement structure. In this context value explicitly incorporates patient, clinical and functional outcomes. This new approach strengthens the incentive to provide care that only has a measurable positive impact on patient outcomes.
In line with these changes in the reimbursement space, digital technologies can help gather real-world data to demonstrate treatment value. Evidence can be gathered during clinical trials to support reimbursement dossiers and commissioning decisions. As an example, the Aparito app has these kinds of capabilities for Rare Diseases.
Set the foundations and secure the capabilities
Given that digital is a growing trend in the industry and that pharmaceutical companies have an opportunity to expand their services and footprint, the question facing many is how best to implement digital initiatives. Part of the answer lies in setting strong foundations and thereby enabling capabilities that generate value.
Novasecta’s framework for guiding the adoption of digital initiatives in Pharma
Develop a patient-centric mindset: All digital health initiatives should be centred on patients, while keeping the treatment and service outcomes in mind to demonstrate value to patients and payers.
Focus initiatives and set a clear strategy: To succeed companies should be crystal clear about the type of services they want to provide, and how these complement their existing products and thereby integrate into a clear long-term digital strategy.
Drive investment from leadership: Senior leadership should commit time and money for investments in digital initiatives. They must also ensure that the implementation is integrated across all departments of the pharma company from R&D, to commercial and BD. Companies should even consider having a digital officer seat at the executive table, to enable holistic governance across all departments.
Collaborate and partner: It is important to collaborate and partner with the new players rather than reinvent the wheel and attempt to compete directly with them. As the industry is being disrupted, the competitor landscape is also changing with non-traditional competitors emerging, for example technology and medical devices companies.
Stay on top of regulation: Companies should be proactive to reflect the regulatory changes related to health and patients data. The latest example is the new General Data Protection Guidance by the EU to strengthen and unify data protection for individuals in the EU with considerations for export of personal data outside of the EU. It will enter into application on May 2018, which will extend the scope of the EU data protection laws to all non-EU companies processing data of EU residents.
Take data protection seriously: Trust should be gained from patients and patient groups by demonstrating high standards of compliance for successful digital initiatives. Patient-related data is even more critical than financial data, which requires best practices and good governance. If not properly protected the risks to patients are high. For example Johnson & Johnson released a warning in October 2016 that their OneTouch Ping pump for diabetes is vulnerable to hacking, and may result in an overdose. However even if no attacks have been reported and the risk is “extremely” low, it may impact negatively on patients’ trust in the product and tarnish the company’s reputation.
In summary, the pharmaceutical industry is being disrupted by digital, and companies need to address this challenge to avoid future irrelevance. Putting the patient at the centre, and understanding the different digital applications and how these will complement their existing R&D and products will be critical for future success. Companies should therefore set their digital strategies, invest funds and build their capabilities now.