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Building a Foundation for the Future: Reflecting on the State of the Pharmaceutical Business Model
Successful companies — even entire industries — have a lifecycle. All of them eventually reach the point where their business model approaches the end of its lifecycle and is no longer viable. Companies that recognize the shift early on, assuming they execute the successor model effectively, become leaders as the next stage emerges. Sometimes the transitions are incremental and gradual; more often, they involve discontinuity and dislocation. Outlines of the transition are always clear in retrospect, and most of our wisdom about such transitions comes from retrospective analysis. But what’s the appropriate advice for companies in the middle of a transition — when the old model still appears to have life and the new model is underdeveloped and unproven?
The global pharmaceutical industry faces this situation today. It’s well known that pharma’s been going through tough times. It’s now fashionable among politicians, pundits, and journalists to criticize all the ways in which the industry’s pursuit of profit conflicts with the healthcare needs of patients. The industry has had to bear greater scrutiny and skepticism from all its stakeholders than it has known for decades. The tangible impact has taken the form of patient lawsuits, governmental invest-igations, increasingly aggressive efforts of third-party payers to influence pricing and utilization of branded drugs, a more cautious approach to clinical evidence and new drug approval on the part of regulators, and new constraints on sales and marketing practices.Read More
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