A Brave New Path for Pharma - Pharmaceutical Technology

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A Brave New Path for Pharma
Personalized medicine and integrated healthcare delivery require new business and pricing models. This article contains bonus online-exclusive material.

Pharmaceutical Technology
Volume 33, Issue 9

Changing marketing tactics

Figure 2: An intertwined value chain including pharmaceutical companies, payers, and healthcare providers.
The physician-focused marketing practices that drove the industry's profits in the past have become increasingly less effective. As more companies develop specialized therapies, a differentiated approach to sales and marketing is needed. Also, new rules and regulations governing interactions with healthcare professionals and others will require pharmaceutical companies to change long-accepted sales and marketing practices. New technologies such as machines that dispense drug samples in physician offices will alter the nature of interactions between physicians and sales representatives (see Figure 2).

The industry already has reduced by thousands the number of sales representatives in the US. A change in focus to improving patient outcomes also will require sales and marketing teams to liaise more frequently and earlier in the product development process with their company's R&D department. They will need to actively engage the capabilities of their health economics function in the areas of pricing and reimbursement.

Collaborating on business models

As the industry moves toward broader collaboration with stakeholders, PricewaterhouseCoopers (PWC) sees two distinct business models emerging (1).

A federated model. Federations retain core functions such as intellectual property management, contracting, and information technology, in hub organizations. These hubs rely on internal and external resources to provide a full range of healthcare services. Two variations of the federated model are venture (based on a portfolio of investments and risk sharing) and virtual (a network of contractors managed by a hub organization).

A fully diversified model. A diversified company offering a full suite of healthcare products and services can give its business units a high degree of independence to encourage innovation and spread risk.

To prepare for these collaborative business models, pharmaceutical companies must employ staff well versed in healthcare delivery with skills to build brands, manage networks of external alliances, negotiate with governments and health insurers, liaise with secondary-care specialists, and communicate with patients. These new skills and business models will position the industry to revitalize R&D, serve emerging markets, and make the transition from a focus on medicines production to a focus on managing outcomes. The pharmaceutical industry has a rare opportunity to redefine itself and to redeem its public image while sustaining profitability. But industry must adapt to a brave new world of integrated healthcare delivery.

Anthony Farino is PricewaterhouseCoopers' US Pharmaceutical and Life Sciences Advisory Services leader,


1. PWC, Pharma 2020: Challenging Business Models—Which Path Will You Take?, April 2009, http://www.pwc.com/pharma2020/.


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