While growth is expected to accelerate in 2016, it continues to be polarized between a group of High Performers who have great science innovation and the capabilities to differentiate new launches with payers, and the remaining peer group, which struggles at various points in returning to sustainable growth. However, this innovation-driven growth boom comes at a cost. Sustained high performance in the sector will come from those companies that can drive operational change that can keep pace with innovation.
The challenge ahead will be turning science into value by developing new operating models that can deliver on the commercial promise of new launches in a changing healthcare economy. Pharma High performers outperform on seven important metrics:
Faster growth from stronger pipelines
Fresher portfolios, with more growth from new launches
More focused portfolios, smaller number of large products with dominant positions in their Therapy Areas
Higher R&D spend and fewer NME launches; higher sales and sales ROI five-years post Launch
Greater proportion of sales and growth coming from externally sourced products
A larger proportion of NME launches outperforming analyst targets
Higher Core Operating Margins that have performed better in recent years
In this more crowded and competitive market place, a company may not be able to differentiate itself on products alone. High Performers have greater product strength in their portfolios and pipelines. But importantly, their recent and upcoming launches are also better supported by more robust outcomes-value data versus the standard of care today when compared to the rest of the peer set, which are in varying stages on the path to new product-led growth.
Below are the operational attributes and capabilities seen by our High Performers:
Their portfolios are more concentrated around a smaller number of products, with dominant positioning in their disease focus areas. High Performers also lead in their deep understanding of underlying disease pathways and in identifying patient needs and incorporating solutions into their product offerings.
Pharma companies are adjusting their business models to the new market reality; some are restructuring their businesses to combine services with product to drive more value for the patient and the health system, some are building horizontal organizations across development, supply chain, medical and marketing to bring more tailored offerings to specific populations, others are focusing development, sales and marketing on specific patient populations in addition to the traditional KOLs and HCPs. The resulting changes are causing companies to operate differently than in the past, to collaborate with new and non-traditional partners and embrace technology in ways that have not been seen.
High Performers lead with smaller, more focused pipelines, a deep understanding of underlying disease pathways and identifying patient needs. They strive to drive the innovation agenda and pace in their disease areas and invest in substituting their own products with new innovations before others do.
They also master the art of “scientific marketing” by directly linking their product’s ability to contribute to improved outcomes in targeted patient groups by leveraging data, devices and technology. This enables them to do better targeting, provide flexible payment structures that improving market access and offer more services around the product to engage patients and their caregivers over the lifetime value of the treatment.
For more information, including client examples on these attributes, please read our latest High Performance Business Research: Affordability and value—the economics of pharma’s new science