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Are Pharmaco’s the horse shoe makers of the 21st century?


28 October 2016 : Blog issue N°17

Who was the most frightened when the first Ford model-T rolled off the production line? Who should have been? Were these the same people?

Henry Ford may not have meant to, but he broke a lot of things – for one, the horse shoe industry. His innovation was so radical – of a consumer centric and affordable mode of transport – that those he ended up putting out of business didn’t even necessarily think of him as a competitor. How many people ride horses [for transport] now? 

The world had changed – mass transport has made it smaller. While this may not be exactly repeated, it is important to bear in mind that any industry, however big, is neither immutable nor immortal.  Even the telephone & communications market, once so dominant, is now battling with others eating it. In the world of VoiP and over-the-top services, and ever heavier regulation on business models, perhaps they have already been digested. 

Pharma finds itself here in the crux of these two trends. The era of blockbusters and comfortable relationships with payers is gone, never to return, and there are new, fresh and lean firms wanting to eat profits and customers. The platform is on fire, but where to go next – and how to get there?

Innovation for its own sake is not a silver bullet – and a pivot away from traditional models is a painful wrench. But controlled, acknowledged and meaningful changes are crucial to any future in which the highest share of the value chain is owned by the traditional incumbents: pharmaceutical companies.

Where can, and does, this necessary change come from? It is becoming increasingly apparent that this the same source as these new competitors – and raises the question, how best can this be harnessed? In a world in which there is very real uncertainty about what the future will bring (quantum computers? Genuine artificial intelligence? Mars colonies? All by 2025?), organisational sustainability is now connected to being embedded in resilient and adaptive ecosystems and networks. 

How best to go about engaging? 

There is no one answer, and every situation is different. But there are some models which have been seen to work, and offer guidance about how to bring competition ‘into’ the building. 

Peter Hinssen, author of ‘The Network Always Wins’ and Tour guide for the 2017 Healthcare Disruption Tour, suggests three major families of approaches in this space – buying other companies, partnering smartly, or incubating ideas internally – or a combination of these three. None are easy, and there is no definitive answer.

In this blog series, we will look at all three models and their applicability to pharma. All three are a pre-read to the Healthcare Disruption Tour (Jan 2017), and the Virtual Healthcare Disruption web series (starting in February 2017) which will focus on living, breathing examples of (sometimes radical) organisational adaptation.

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