|The Future of the Pharmaceuticals & MedTech Industries
marcus evans Summits (ACN Newswire)
2012-05-22 London, May 22, 2012 - ( ACN Newswire ) - The pharmaceutical and medtech industry business models are speciating, and many companies will become extinct in the future unless they acquire some of the new capabilities essential for survival, says Professor Brian D. Smith, Adjunct Professor, SDA Bocconi & Visiting Research Fellow, Open University Business School.
A keynote speaker at the upcoming marcus evans PharmaBrand Summit 2012, in Munich, Germany, 11 - 13 June, Professor Smith talks about the future of the pharma and medtech industries, and what it means for marketing executives.
- What are your predictions for the future?
Speciation. Like other industries, the pharma industry is a complex adaptive system made up of different entities (i.e. companies) which have to adapt to their environment. The same way that evolutionary theory predicts that a group of animals would speciate in a new habitat, I expect the business models in the pharma industry to multiply. There will not be a single path to success.
When people ask about the future of the industry, they mean the future of the companies in the industry. The way to predict that is by first predicting what the environment will look like, as the business models will adapt to that.
- Therefore, what will the environment look like, and what implications will that have on the current business models?
There are two dimensions: social (including demographics, regulatory and economic systems) and technological (the technology that is available, including communications, and physical technology, such as nanotechnology). Both of these environments are evolving, polarising and changing how value is defined and created in the industry.
Value was historically defined by healthcare providers and institutions, the NHS, Medicare, Medicaid and so on. Increasingly, value will be determined by individuals, either mass market or very wealthy individuals. How value is created is also changing and will no longer rely on R&D departments. New technologies and ways of doing things will allow much more value to be created in operations - manufacturing and distribution - and in tailoring the pharma proposition to patients' needs. Personalised medicine and integrating pharma with mobile technologies are examples of that.
No single business model will be able to dominate or thrive in the 13 or so sub-habitats that I discuss in my book The Future of Pharma.
- What new business models will we see?
The increase in the number of business habitats means that the existing business models will either die our or evolve into very new forms. Further, we should expect to see many more variations in pharma business model that we see now and many of these will look very different to our current idea of a pharma company.
One is the Health Concierge, which is directly analogous to today's wealth management banks. These companies will manage the health of wealthy clients.
Another model is what I call the Disease Manager. For example, today, 70 per cent of healthcare cost is attributed to a relatively small proportion of chronic diseases, like asthma and diabetes, and companies are struggling to make money because of price pressures. If managing diabetes is costing the NHS 70 billion a year, an expert company may set up a managed health care system to do it for 10 billion less.
These business models will all be different from each other, with different structures and capabilities, and some would struggle to see how they are a part of the industry.
- What does all of this mean for pharmaceutical and medtech product marketers?
It means they have some decisions to make. We have not had change of this magnitude before. They need to ask themselves what parts of the habitat they are going to try to occupy, what species they are going to become, and how they are going to acquire the organisational capabilities, or genes, to grow their business. As an example, a company that would manage patients on behalf of governments would need actuarial skills that insurance companies have today.
Many companies will not be able to or will fail to acquire the new capabilities, and will become extinct. This is more than just copying industry best practices; they need to acquire the new genes. Their instinct is to look for evidence that those capabilities will be useful, but that is not the way to go. Pharmaceutical marketers need to prepare their companies for the new environment and not the one that has existed.
About the PharmaBrand Summit 2012
This unique forum will take place at the Four Seasons Kempinski Hotel, Munich, Germany, 11 - 13 June 2012. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations and discussion panels on the future of healthcare, digital marketing and stakeholder engagement that bring insight from pharma, medtech and biotech marketers, payer and patient perspectives, as well as out-of-industry case studies. For more information please send an email to firstname.lastname@example.org or visit the event website at www.pharmabrandeurope.com/BrianDSmithInterview
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