The person who will live to be 150 has already been born, thanks to continuing advances in health care. It’s staggering to contemplate—at the turn of the 20th century, the average lifespan in the United States was just 47. The life sciences industry is responsible for much of this increase in longevity. By nature, life sciences and health care are dynamic, and advances over the next decade have the potential to transform health care as well as the pharma industry. Companies that can spot and capitalize on these trends will enjoy long-term competitive advantages. So here’s a quick look around the corner.
Let’s look at the three pillars of health care: the patient, the treatment decision and the system of interconnected players within which all this happens. The patient is a reluctant customer, and the decision is inundated in choice and complexity—in the United States alone, there is a choice of about 16,000 diagnoses, 6,000 drug therapies and 4,000 procedures. And we all know the change the system is going through, especially today (Oct. 1)! The pharma industry needs to figure out how it fits into this ever-increasing complexity.
Trend 1 is about the patient: New treatments for key disease areas will surge—and not all of them will be pharmaceuticals.
Cancer, diabetes, cardiovascular diseases and obesity account for 75% of all health-care costs in the United States, so naturally drug pipelines are focused on these four areas. In oncology alone, there are about 530 molecules in the pipeline, and if you count indications separately, there are about a thousand possibilities. While not all of these indications will come to fruition, enormous launch potential exists in this one area alone. But keep in mind that not all treatment innovation is from a pill—for instance, bariatric surgery, an elective procedure, has eliminated Type 2 diabetes in patients who underwent the surgery. Future cures may not always be pharmaceutical products but procedures—a broader portfolio focused on total health may be the key.
Trend 2 is about the decision: In targeted therapies, not only is the arrowhead getting sharper, but the bow is getting stronger.
Innovation in the health-care technology around the pharma product is at a slower pace than new launches, but in some sense it’s more significant because it will change when and where treatments are delivered, and to whom. This will lead to a change in the governing decision on treatment. For example, a handheld scanner can now determine if a lesion is cancerous in less than a minute. Not only is this is a far less invasive approach to diagnosis, but it makes it easier to spot melanoma earlier, changing the trajectory of who is treated, when and how. And the revolution in genomic profiling has the potential to deliver targeted therapies for individual patients, now that the genome can be decoded in a few thousand dollars and minutes instead of years. Considering how and when treatments are applied, and to whom, changes the way the treatment should be commercialized.
Trend 3 is about the system: Sick care will become health care.
Payers are demanding that health care truly embody its meaning: Instead of paying for activity, they would prefer to pay for outcomes. The push is moving from volume to value. Providers are focusing more on chronic care and disease prevention by moving care upstream. This has enormous implications for the pharmaceutical industry, where the emphasis has traditionally been on treatment rather than prevention. The challenge so far has been that the system has been fragmented and the players’ incentives have been at odds with each other, but integrated payer-provider models, explicit long-term incentives to providers and the consumer’s self-interest are beginning to line up to truly enable health care as opposed to sick care.
Trend 4 brings us full circle back to the patient: Health care is increasingly becoming “consumerized.”
All the trends listed above will eventually affect patients, but they’re not going to be passive about their role—quite the opposite. Choices will become more transparent in health care, resulting in much more patient input on treatment decisions. One health insurer has a smartphone app that ranks providers in terms of availability, cost and impact on the consumer’s pocketbook. There continues to be a push to explain the impact of medicine in terms the patient can understand—simplicity, not scientific complexity. There is a direct payment being proposed by CMS to those patients who can keep key health parameters under control. Patients are getting in the driver’s seat, switching on the ignition and taking control of the car. But it’s not clear that pharmaceutical companies have the right sales and marketing models, or even R&D to adjust for this change.
The tip of the iceberg?
There are many more trends, of course, that could potentially affect the pharma industry. (I haven’t touched upon globalization and emerging markets, for instance, or the Affordable Care Act, which will have saturation coverage this week.)
To help us kick off The Active Ingredient, let us know your thoughts on these trends and what you think they will mean for the pharma industry or your company in particular, or if others come to mind.
About the Author
Pratap is ZS’s Managing Principal for Pharmaceuticals and Biotech. He has advised many pharmaceutical and health-care companies on a wide range of sales and marketing issues, including multichannel marketing, marketing mix, promotion response measurement, managed-care issues, sales force strategy and incentive compensation.