BLURRING BORDERS, NEW CITIZENS IN THE LIFE SCIENCES AND HEALTH CARE WORLD – IS YOUR TERRITORY SAFE

The golden era of the Life Sciences industry was undoubtedly the early half of the ‘90s. Anti-infectives,
anti-inflammatories, anti-hypertensives dominated the approvals; this was significantly aided by the
relatively easier disease targets, easier access to formularies, high demand (patient population with
ailment) and the restrictive conditions for newer entrants. The industry was quite aware that the sailing
would soon become rough; getting new medicines in the future would mean finding targets for more
complex diseases. The industry opted for short term fixes to sustain the bottom line, with the key
among them being reduction in costs through targeted synergies from mergers – GSK, Novartis, Pfizer
being a few examples. Before any significant and sustainable cost benefits could be realized from such
mergers, other influences weighed in on the industry – Payers demanded Value and were not willing to
pay for “Me too drugs”, Regulators raised the bar with additional scrutiny prior to approval and
increased oversight on commitment for Phase IV studies, newer entrants from the Hi-Tech and
Consumer Industries vying for market share – to name a few.
Amidst this, the industry is also witnessing significant promise in technology that can aid in drug
discovery and development – understanding disease progression, ability to target therapy based on the
genetic construct, ability to extract and process data from disparate sources to draw insights – to name
a few. However, the promise of such advancement is yet to be realized as the technologies are still
emerging; the industry is yet to settle on a cost-optimal effective model for discovery and
development. Further, the incumbents also realize that the newer entrants may possess an edge if the
new discovery and development models rely on aided technology and not just on human resources.
Amidst the current challenges, the most important stakeholder in the eco-system, the patient or the
consumer, provides opportunities not just for survival but also for defining new business models for the
industry. Affordability and empowerment has made the patient ask for more beyond just treatment –
prevention, overall wellness, better quality of life, instantaneous assistance – are some of the demands
that the patient has. This is true of patients not just in the Western world but of those in emerging
economies too. Akin to “on demand shopping”, health care is also expected to be made available on
demand. It is the confluence of multiple stakeholders and advancement of technology that can make
health care on demand a reality.
That brings up a few interesting questions – Who is best equipped to deliver health care on
demand? Who does the patient or consumer trust to deliver? How do companies plan to address this
current need, while not losing focus on the long-term strategy of improving discovery effectiveness and
costs?
The questions above make it abundantly clear that the Life Sciences and Health Care eco-system, as we
know today, will morph. What make this change challenging are two things: the technology
advancement is expected to be so rapid that new S-curves are likely to evolve every 2-3 years and
business processes and models need to be nimble enough to adapt to such S-curves seamlessly. Clarity
on what should be retained as core within the company and the ability to engage with partners for
building a sustainable eco-system are critical.
Life Sciences companies may choose to retain drug product development and manufacturing as their
core business. The extended eco-system may include, among others, development and manufacturing
of devices for diagnostics to aid personalization or devices for delivery, building sensors and other
communication devices for monitoring and communication by health care providers, building capability
to extract and process big data and derive insights. Should the Life Sciences companies pick drug
product development and manufacturing as their default core business? Are they building sufficient
capabilities to build a differentiated pipeline in the future or are they just taking the easiest route to
survive today, essentially mortgaging the future?
On the other hand, should a new entrant be satisfied with providing peripheral capabilities such as data
extraction, data processing and data analysis? The externalization of R&D and the ability to source
products and services provide any new entrant with ample competitive opportunities to compete with
traditional Life Science companies.
Decisions should be made not based on the past capabilities. There must be a clear vision on the
identity for the future and the confidence that such an identity will enable innovation as well as
flexibility to adapt to changing S-curves or creating new S-curves themselves. Only leaders can carve
their identity and territories; followers could survive if they are nimble enough to adapt. May be, size
does not matter, or does it… smaller and nimbler the better?