Pharmaceutical Executive Europe - June 2008 - (Page 15) Pharmaceutical Executive Europe June 2008 Corporate Strategy 15 ● from individual products to product bundles/portfolios ● from product to healthcare services ● from direct to indirect influence on prescribers ● from physicians to accounts ● from full in-house control to flexibility/outsourcing ● from a focus on sales channel to an emphasis on other channels How a company positions itself in terms of these dimensions defines the characteristic attributes of its new business model. For example, the company can choose to focus either on accounts or on prescribers. Similarly, it can choose between the two extremes of individual product offerings or product bundles. The company’s choice has a formative influence on its sales approach and offerings, and thereby on the business model that is ultimately adopted. Below we discuss and analyse two different business models in terms of these six dimensions, with regard to benefits, requirements and risks. Define your new business model Example 1: Cardiology centre. Despite its complex medical guidelines, the cardiovascular market provides plenty of opportunities for new business models, provided that reimbursement can be secured. In the hypertension market in particular, they are already in place, as we can see with Takeda UK’s cardiology franchise. The cardiology centre model focuses on the following dimensions: portfolio, healthcare services, accounts and outsourcing (see Figure 1). The centre is the pharmaceutical company’s franchisee, and potentially collaborates with medical devices companies. As the franchiser, the pharmaceutical company provides the cardiology centre with products and protocols, specialist medical know-how, service support and marketing tools. In return, it receives product revenues and a franchise fee based on the centre’s performance (e.g. number of patients treated, outcome, etc). This model applies to companies where the specialist (cardiologist) is the dominant stakeholder. Ideally, such companies offer not only patented brand name drugs, but also mature products and generics. Furthermore, it is assumed that specialists/hospitals will open up dedicated cardiology centres to attract lucrative patients for invasive outpatient treatments. From the pharmaceutical company’s perspective, this model offers several benefits. Market leaders with a competitive commercial position can benefit from applying their company brand as an umbrella brand, fully leveraging their sales presence. A broad and comprehensive product portfolio is turned into a key success factor that smaller companies cannot easily duplicate. Moreover, the business model is much more resistant to damage from expiring patents. However, it requires new competencies and skills such as franchising, evidence-based medicine for the provision of healthcare services and collaboration with medical devices companies. Example 2: Diabetes disease management. The market for diabetes treatment is one of the most promising for new business models. The number of people with diabetes is expected to double from 171 million in 2000 to 366 million in 2030. Yet despite this skyrocketing demand, various challenges are creating a strong need for change. Expiring patents and an empty pipeline are forcing innovation leaders to take action. Furthermore, the diabetes market is fragmented into individual value chain segments, making it difficult for players to control patient flow and improve overall patient results. A potential new business model for managing the diabetes epidemic involves offering more integrated services. In this model, companies no longer function as pure product suppliers, but as holistic value providers. The diabetes disease management model (Figure 2) represents a radical change from the traditional business model across all dimensions. The pharmaceutical company guarantees superior diabetes treatment to patients that decide to participate in the disease management model. This could include, for example, access to the latest measurement devices and drugs, continuous monitoring by qualified physicians using automated regular data transfer, hotline services, regular visits by medical staff, lifestyle counsulting, etc. In return, the patient pays an out-of-pocket fee to participate in the disease management programme. This business model assumes that the wealthy population forms a significant market in which patients are the dominant stakeholders and are willing to spend more on healthcare. Furthermore, it is assumed that patients can be made aware of benefits resulting Figure 1: Cardiology centre business model.
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Europe - June 2008 Pharmaceutical Executive Europe - June 2008 Contents From the Editor News and Analysis Calendar Brussels Report - Tell Us Something We Didn’t Know BioFutures - Friends, Acquaintances and Strangers IT Matters - The High Cost of Swimming Upstream Strategy Fundamentals - Hidden in Books Corporate Strategy - New Dimensions for New Business Models Special Report: Making the Leap Sales Force Incentives - The Goal: Setting Goals Last Word Pharmaceutical Executive Europe - June 2008 Pharmaceutical Executive Europe - June 2008 - Pharmaceutical Executive Europe - June 2008 (Page Cover1) Pharmaceutical Executive Europe - June 2008 - Pharmaceutical Executive Europe - June 2008 (Page Cover2) Pharmaceutical Executive Europe - June 2008 - Contents (Page 3) Pharmaceutical Executive Europe - June 2008 - From the Editor (Page 4) Pharmaceutical Executive Europe - June 2008 - From the Editor (Page 5) Pharmaceutical Executive Europe - June 2008 - News and Analysis (Page 6) Pharmaceutical Executive Europe - June 2008 - News and Analysis (Page 7) Pharmaceutical Executive Europe - June 2008 - Calendar (Page 8) Pharmaceutical Executive Europe - June 2008 - Brussels Report - Tell Us Something We Didn’t Know (Page 9) Pharmaceutical Executive Europe - June 2008 - BioFutures - Friends, Acquaintances and Strangers (Page 10) Pharmaceutical Executive Europe - June 2008 - IT Matters - The High Cost of Swimming Upstream (Page 11) Pharmaceutical Executive Europe - June 2008 - IT Matters - The High Cost of Swimming Upstream (Page 12) Pharmaceutical Executive Europe - June 2008 - Strategy Fundamentals - Hidden in Books (Page 13) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 14) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 15) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 16) Pharmaceutical Executive Europe - June 2008 - Corporate Strategy - New Dimensions for New Business Models (Page 17) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 18) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 19) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 20) Pharmaceutical Executive Europe - June 2008 - Special Report: Making the Leap (Page 21) Pharmaceutical Executive Europe - June 2008 - Sales Force Incentives - The Goal: Setting Goals (Page 22) Pharmaceutical Executive Europe - June 2008 - Sales Force Incentives - The Goal: Setting Goals (Page 23) Pharmaceutical Executive Europe - June 2008 - Sales Force Incentives - The Goal: Setting Goals (Page 24) Pharmaceutical Executive Europe - June 2008 - Last Word (Page 25) Pharmaceutical Executive Europe - June 2008 - Last Word (Page 26) Pharmaceutical Executive Europe - June 2008 - Last Word (Page 27)
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