The evolution of U.S. healthcare gained pace and clarity as marked by some key events in 2015. Specifically, more than 100 announced hospital mergers, three multibillion-dollar payer mergers, the successful defense of federal insurance subsidies in King v. Burwell, and the heated debate on drug prices point to an evolution with a clear direction that has important implications for life sciences companies.
To understand how life sciences companies are responding to this change, the ZS Institute for Healthcare Evolution and Scenario Planning conducted a survey of nearly 70 pharmaceutical, biotech and medical device executives. This survey found that these executives have different opinions about the immediacy of change and how quickly their companies need to respond.
Our research found that executives who are more knowledgeable about evolving healthcare trends expect that changes within the ecosystem will occur within two years, but executives who have less information think that the changes will occur as much as 1.7 years later, suggesting that they believe that they have more time to prepare before taking action. (See chart below.) Follow-up discussions with survey respondents confirmed that the more these executives know—and the more detail they have—the greater their sense of urgency.
Healthcare Executives’ Perspectives on the Evolving Ecosystem
These market events are a call to action for life sciences companies to adapt soon if they want to remain involved in the value discussion.
Of course, healthcare companies have to decide not only when to change, but also what to change. Our survey found that most life sciences companies have implemented at least one program designed to adapt to these changes, but the nature of these programs varies significantly.
The challenge of determining exactly what to change reflects the geographic heterogeneity of the U.S. market. In response, companies will need to think locally, rather than nationally, to determine how best to adapt to changes to their local ecosystems.
I covered some important elements of this local commercial model in a recent article that I wrote for Pharmaceutical Executive. This article details three key trends that shape this new commercial model: the customer landscape is changing, the perceived value of medical products is more diverse and evolving, and local markets have considerable variability. We anticipate that the first companies to understand the emerging power structures in local ecosystems and respond with customized value stories and commercial models will capture significant advantages over their slower-moving competitors. Even more importantly, they’ll be better positioned to market and sell their evolving portfolios of products.