“Seismic shifts” in the pharmaceutical market

I received last week a great study published in January/2017 by KPMG entitled “Pharma Outlook 2030: From evolution to revolution”. The report deals basically with what the authors call the two “seismic shifts” that currently affect the pharmaceutical industry. It also includes a quick but interesting comparison of the impact of technology on two mature industries: pharma and automobile, showing that the emergence of technological startups focused on mobility (not cars) like Uber, Tesla and even Google, is a sign of what will surely occur with the pharmaceutical sector as well. The understanding of how technology broadly will affect current business models is a big challenge for industry executives.

But let\’s get back to the seismic shifts. The first is the pressure from health plans and governments for drug price cuts. More than simply a price negotiation, there is a tendency to change the usual fee-for-service model by payment for the success of the products and procedures in the treatments and reductions in the cost of the system. The study shows some cases, such as the one involving the Cigna health plan with pharmaceutical companies supplying cholesterol control drugs. The insurer has a discount if the patients\’ cholesterol levels are not reduced.

The second change involves shifting the paradigm of the industry with the increase of a medicine based on prevention rather than the focus on better treatments. New diagnostic technologies, especially molecular ones, coupled with improved patient data management, will have a huge impact on the drug industry. Genetic tests that identify the chance of developing diseases, such as the known BRCA1 and BRCA2 for breast and ovarian cancer, make possible to target preventive measures such as mammography, prophylactic surgery and preventive chemotherapy. Several apps have also been developed to monitor and educate people and patients, and to inform doctors in cases of urgency.

The perception of these two trends is among the reasons for the launch last week of the BioStartup Lab round (open registrations!) in partnership with Interfarma, an association of more than 60 pharmaceutical research companies. This program seeks to identify and support entrepreneurs and scientists with an idea or project that can have an impact on the daily lives of people, patients, professionals and the health system itself. The selected projects will receive assistance in defining their business model and training in relevant aspects of the sector. In addition, they will have access to industry mentors since the beginning, increasing their chances of getting a business deal with one (or more) of the associated companies.

For every seismic shift, new solutions!

PS1. Which are the Brazilian health startups with high potential? I would like to gather a list of suggestions and opinions. Please send us your nominations.

PS2. These articles are written by me, with the goal of informing and discussing subjects of entrepreneurship and innovation in life sciences. Feel free to submit comments, cases and suggestions.

Eduardo Emrich | Director President 

President & CEO since 2003. Has over 25 years of experience in identifying and analyzing opportunities as well as in structuring and managing businesses and projects aimed at promoting the Life Sciences sector.

eduardo@biominas.org.br