Resilience, Agility and Transparency will become even more vital.
The life sciences industry has been thrust to the front lines of the fight against COVID-19 by the provision of lifesaving drugs and medical supplies, as well as the rush to find curative treatments and develop a safe and effective vaccine against SARS-CoV-2.
Beyond the immediate urgency to cope with the current crisis, COVID-19 should prompt leaders to rethink past assumptions and long-accepted premises in a number of domains. Biopharma leaders will have to review their strategic decisions in many areas, from Supply Chain to Clinical Development to Market Access and Commercial, as well as rethink their Leadership and Organizational Model.
What are the key trends for a post-pandemic world?
Market Access: demonstrate value-for-money
First, the massive rescue packages currently being implemented in most of the developed world will lead to unheard-of budget deficits and levels of public debt. Although many economists (esp. proponents of Modern Monetary Policy) and policymakers (even in Germany!) are much more tolerant of deficit spending and public debt today than ten years ago, it is not hard to imagine that many governments will look long and hard at additional spending on new drugs going forward. The need for robust demonstration of value-for-money will become even more acute, even for oncology or orphan/rare diseases, where the pressure had been somewhat lower in the past.
Add to this the Democrats’ win of the White House and the Senate, in November 2020, we could see a high increase in the chances of universal health coverage in the United States, whether as Medicare For All or a more limited public option. This could have a devastating impact on the profitability of the pharmaceutical industry since the US pharmaceutical market represents about 40% of worldwide sales (IQVIA 2019) but probably at least 55-60% of industry profits: it is the only developed market that still has free pricing for all Rx drugs (both at launch and throughout the lifecycle of the drug).
At the same time, both governments and companies will have to face the fact that unrelenting pressure on the price of mature (patent-expired) and generic drugs has led to a dangerous overreliance on faraway sources of API (primarily India and China) for many essential medicines, and that key decisions made in the last 20 years (mandatory price cuts, plant closures, offshoring, etc.) may need to be revisited. Paradoxically, we may have a global environment that will be more lenient for generic drug prices and more stringent for pricing and reimbursement decisions of new (more or less) innovative medicines.
Supply Chain: build more redundancy & resilience
It is estimated that about 80% of Active Pharmaceutical Ingredients (API), and practically all generics, are sourced globally, with China and India the main countries of origin: China accounts for at least 40 to 50% of all API production in the world, and together with India (itself extremely dependent on Chinese suppliers), they represent 75 to 80% of finished drugs shipped to Europe and the US. Asia also produces more than 50% of all N95 masks and PPE manufactured in the world.
Life sciences companies had made enormous efforts in the past decade to reduce excess capacity, build a cost-effective supplier network, shrink their stocks, and generally rely much more on contract manufacturers, especially for their small molecule production. In light of the disruption caused by the recent pandemic and lockdown (production shutdown of plants in China and elsewhere, significant rise in (air)freight, delays in shipment and customs processing) and pressure from local authorities to ensure a robust supply of essential medicines and medical equipment, many companies will have to review the role of contract manufacturing and the architecture of their supplier network. Total landed cost may no longer be the key (or only) driver of supply chain decisions.
We can expect many companies to revisit earlier strategic decisions and create excess capacity, plan for dual sourcing (“second-source” API) and establish strategic inventory for their most sensitive products. The overall goal will certainly be to build more redundancy and resilience in their supply chain, meaning that classical efficiency mantras (lean manufacturing, just-in-time deliveries, maximum outsourcing, lower inventory levels, etc.) may be less fashionable in the short term. Increased risk mitigation will put a premium on more agile operating models.
Advanced data analytics, AI and digital inventory tools (automated warehouses, fully digitized stock management) will be critical capabilities to increase agility and transparency in flexible manufacturing and inventory management. The COVID-19 pandemic is also likely to accelerate the move from traditional, stepwise and time-consuming “batch manufacturing” to continuous manufacturing technologies, a move encouraged by regulators.
Finally, the recent pandemic and lockdown have seen a surge in drone delivery in remote areas, and significant investment by a number of start-ups (such as Flirtey, Matternet, Zipline) as well as major players -several of them with a clear eye on the direct-to-patient delivery of drugs (Walmart, DHL, Amazon with PrimeAir, Alphabet/FedEx/Walgreens with Wing, UPS/CVS Pharmacy with Flight Forward) as well as could drive a further revolution in healthcare product logistics.
Clinical Development: virtual consultations, site audits and inspections
The lockdown had a dramatic impact on patient-physician interaction, not only in routine outpatient consultations but of course also in the ability of hospitals or outpatient clinics to run clinical trials. New patient recruitment and regularly scheduled visits were severely hampered by legitimate concerns about patient safety, especially among immunocompromised patients.
Evaluate Vantage reported that at least 170 industry-sponsored studies had been suspended since March 2020 with COVID-19 cited as the main reason. Medidata, which provides a platform on which sponsors run their trials, estimated that among its 4,600 active studies across 182,227 global study sites, new patient starts in March dropped 65% year-on-year, and this trend worsened to a 75% slump in the first two weeks of April.
Going forward, an unexpected crisis of that type will have to imply additional contingency planning for CROs and in-house Development teams, which will have to build additional risk mitigation into their trial success and timelines, including more balanced patient recruitment and site selection, and enhanced communication plans (in medium and content) with regulatory agencies, IRBs, investigators and patients.
To be less dependent on in-person visits to the site, clinical trial design and conduct may evolve, with virtual consultations, site audits and inspections. CROs and trial sponsors may support sites with advanced virtual communication channels or telemedicine platforms, pilot broader use of digital communication and monitoring tools for patients, and explore the role of home health services in data collection.
The incorporation of telehealth in clinical trial protocols could be accompanied by increased reliance on app-based digital tools and ecosystems, yielding more self-generated patient-level data.
Trial sponsors may also assume a more direct role in drug delivery, as we saw during the pandemic where CROs and pharma companies set up off-site clinics and infusion centers for biologics administration. As discussed earlier, solutions also exist to deliver drugs directly to patient homes, or have biological tests conducted in closer-to-patient lab facilities.
Commercial: towards a more varied mix of customer engagement
The lockdown has also had a dramatic effect on pharmaceutical reps’ access to physicians: most hospitals and private practices closed their doors completely to non-essential visitors, and the industry has been struggling for the past few months with a rapidly changing mix of modes and types of customer engagement.
Companies realize that going forward, successful interaction with their key prescribers and influencers will require multi- and omnichannel marketing (personalized digital interaction, virtual peer-to-peer sessions, conferences and seminars, patient services/support), increased reliance on a specialized nurse/MSL model rather than traditional specialized reps, as well as supporting physicians in interacting virtually with their own customers through telemedicine/digital diagnostics and patient monitoring.
This move to a more varied mix of customer engagement will require a highly tailored and personalized messaging approach, built around microsegment campaigns driven by precision targeting and segmentation, predictive and advanced analytics to generate unique customer insights and raise the company’s and the sales force’s digital IQ: What are my customer’s key challenges right now? How can I help her address her patient needs? What channel will she be more likely to prefer at what moment and for what issue? What value-added service or peer-to-peer interaction is most likely to resonate given her patient population, scientific interests, payer and provider environment, technology profile, etc.?
These new challenges may accelerate the move from brand-centric business units and field forces to work teams organized around customer types, but also from a “push”, brand messaging model to a much more integrated information/support/service provision model. Critical capabilities for these teams will need to be built around technical communications training, interactive conversation/consultation tools and skills, virtual coaching. Successful companies will also be able to offer their customers innovative models to support telemedicine and e-prescribing, address specific patient population needs and implement disease management programs.
The pandemic has generated some interesting new go-to-market models, for example cooperation with internet/social media providers to deliver information and content (e.g. China), and alliances between giant distribution companies and specialized pharmacies to deliver drugs directly to patients (e.g. in the US).
A key question is whether the crisis will have a lasting impact of crisis on healthcare systems, especially in the US: many independent hospitals are on the verge of bankruptcy, because the pandemic led to dramatic decrease in outpatient consultations and rescheduling of elective procedures, both of which are major sources of profit.
And the impact in specific business areas…
The life sciences industry will need to ramp up dramatically its IT capabilities to address some of the needs highlighted above:
- Create multi-channel digital platforms to support new modes of customer and employee engagement.
- Equip their plants and warehouses for real-time product tracking and inventory monitoring.
- Support their customers (hospitals and individual physicians) in remote monitoring and telemedicine consultations for their patients and clinical trial participants.
As the Financial Times’ innovation editor John Thornhill points out (week-end edition May 30-31st, 2020), smartwatches and other wearable sensors already monitor our “temperature, heart rate, (blood) glucose levels, menstrual cycles, blood pressure, sleeping patterns”, body motions and posture, as well as potentially detecting early warning signals of a pandemic recurrence… Rolls-Royce is generating more than 70 trillion (1012) data points per year from its fleet of installed aircraft engines. How much could we shift outcomes if we applied a similarly data-intensive approach to individual and population health monitoring?
This data revolution could have extraordinary effects on the efficiency of preventative and curative medicine, but the massive data protection and privacy challenges it implies can only be resolved (in democratic countries) through intensive cooperation between tech/healthcare industry, regulatory bodies and governments, and civil society to establish international standards and appropriate safeguards.
Business and Organizational Model
Operational agility had already been a buzzword in organizations years before the COVID-19 crisis, but the pandemic has further heightened the need for fast response to outside shocks and extreme flexibility in operational model and resource allocation.
In a context of crisis, an extra premium will be attributed to organizations that can demonstrate true leadership alignment, above-average change management capabilities and the right talent mix of experience and innovation. Advanced operating models will rely heavily on insights-based, real-time, customized, scalable digital strategies and iterative, cross-functional scrum approaches.
Strategic planning will also be reviewed dramatically, with extra emphasis on risk evaluation and mitigation, and in an industry driven by innovation, launch readiness will become even more critical, in particular generating options and risk-benefit analysis in areas such as timing, rollout plan and media mix. Customer-centric approaches and organizations will be essential in delivering true value-added services and content to audiences that in many cases are already under environmental and financial stress.
Corporate leaders have been acting under extreme conditions of stress and uncertainty in the past few months: with no clarity as to the extent of the disruption the pandemic was likely to cause, and still with no clear timeline as to when life and business are going to return to normal, management teams have been forced to make changes in their usual decision-making and leadership styles.
The fact that decision-makers have access to information does not necessarily mean they are truly informed, or that they are able to derive the necessary insights. Extremely fluid situations compel organizations to update their market intelligence capabilities, and use experts and models/forecasting carefully. Situation analysis needs to be reviewed regularly and critically.
In this context, leaders should demonstrate important cognitive behaviors that Maitlis and Sonenshein call ‘doubting’ and ‘updating’ i.e. the ability to accept that all information is imperfect and temporary, and still be willing to act decisively on it, but also be ready to challenge assumptions and seek new information in order to review regularly core beliefs and decisions. This posture “avoid extreme confidence and extreme caution, knowing that either can destroy what organizations need most in changing times, namely curiosity, openness, and the ability to sense complex problems.”
Senior managers need to develop a network of lean teams to evaluate and decide on key priorities for the company (such as employee safety, supply chain protection, customer engagement and business sustainability), and use what Reeves and colleagues call ‘resilience principles’: redundancy, diversity, modularity, evolvability, prudence and embeddedness.
It is extremely likely that the 2020 COVID-19 crisis will have profound impacts on our way of life, and not just in the areas of travel, entertainment, use of online services, face-to-face interactions (such as hugging and kissing, so ubiquitous in Southern Europe). Life sciences companies should anticipate key changes in their environment and their key stakeholders’ behavior in order to emerge from this crisis stronger, more agile and more competitive.
Article by MCE Senior Associate Francois Meurgey
MCE works with 100s of clients in the Life Sciences industry. Here are the most popular modules that are part of Learning Solutions. What solutions for post-COVID?
Post-Covid Sales for Life Sciences
Pharma and MedTech have relied on a highlight successful sales model, built on trust, relationship, and evidence from investigators, payers, to sales representatives, prescribers, and ultimately patients. But with Covid-19, consultations have been put on hold, elective procedures have been postponed, telehealth has exploded, and sales teams massively adopted remote interactions with health professionals. Does this mean the traditional sales model is obsolete? Should all Representatives, Key Account Managers, Medical Science Liaisons be replaced by chatbots? Or can life science companies adopt a flexible, seamless customer-centric omni-channel new normal?
Post-COVID Key Account Management for Life Sciences
For years, representatives visiting prescribers have been able to increase demand for Pharma and Medtech products. But the “share of voice” model does not really apply for specialty medicine or expensive biologics. While mature products are commoditized, prescribers lose decision power, and payers and budget holders gain it through professional BtoB procurement. In group purchasing organisations or pharmacy chains, decisions are taken by multi-disciplinary teams. Life Science has adapted commercial roles, but true Key Account Management is now required, from adapting marketing offer, to coordinating field resources based on account needs and strategic plans.
Post-COVID Marketing for Life Sciences
Pharma and MedTech have successfully built on Product, Price, Promotion, Place and People, adapted to a highly regulated environment. However, prescribers have lost some decision power, while payers and patients increased theirs. The impact of digitalization and well-informed patients has put pressure on the traditional marketing model. With the COVID-19 outbreak, telehealth consultations have exploded, impacting the treatment pathway. Health professionals now ask for integrated solutions, impacting the very idea of product management. Should we move to customer management or channel management instead? Ultimately, how should marketing capabilities be redefined?
Post-COVID Go-to-market for Life Sciences
Go-to-market is critical Life Sciences: what to sell, to whom, where and how. Defining commercial goals, prioritizing channels, mapping stakeholders – payers, prescribers, pharmacists, patients…-, understanding their needs, building relevant value propositions, required roles and capabilities, building execution plans and measuring their success is particularly critical when launching new products or offers, entering new markets, or when the market is disrupted. In a multi-stakeholder, omni-channel, post-Covid world, Life Science companies need to review and adapt their GTM urgently.
Omni-channel Sales & Marketing for Medtech
Medtech companies have built digital presence for some years to inform investors, clinicians or patients. But few have really deployed integrated, synchronized omni-channel. In a post-Covid world, where clinical studies or visits to operating rooms have been put on hold, MedTech need to integrate and synchronize their digital activities with clinical and commercialization efforts across channels, mapping stakeholders and their communication preferences, building adapted channel mix to support evidence generation, launches, sales or customer support in a synchronized and seamless way.
Omni-channel Sales & Marketing for Pharma
Pharma companies have established their digital presence for some years and are becoming active or social media, to inform investors, clinicians or patients. But few have really deployed integrated, synchronized omni-channel. In a post-COVID world, where clinical studies have been put on hold and rep visits replaced by webinars, Pharma need to integrate and synchronize their digital activities with clinical and commercialization efforts across channels, mapping stakeholders and their communication preferences, building adapted channel mix to support clinical studies, launches, product detailing, ordering or patient support in a synchronized and seamless way.
Omni-channel Sales & Marketing for Biotech
Most biotechs have built web or social media presence, to attract investors, communicate clinical results or support early commercialization. But few have really deployed integrated, synchronized omni-channel. In a post-Covid world, where clinical studies have been put on hold and industry conferences replaced by webinars, Biotechs need to pursue their funding, clinical and commercialization efforts across channels, by mapping stakeholders and their communication preferences, building capabilities to support off and online pitching, clinical studies, commercialization strategy in a synchronized and seamless way.
Resource Allocation for Life Sciences
Life Science companies have enjoyed margin levels significantly higher than other industries, enabling both massive investments and R&D and Commercial Resources. Pharma and MedTech are also among the most resilient industries in post-Covid, although the impact of delayed elective procedures has been significant. However both Pharma and MedTech need to review allocation and right-size their marketing and sales resources. Diversification of stakeholders, communication channels, increased knowledge and decision by patients, digital transformation accelerated by COVID all increase need for fact-based cross-functional scenario-building.
Portfolio Strategy for Life Sciences
For decades, Life Science has relied on scientific innovation, clinical data and commercial resources to drive their portfolio, moving products from launch, to expansion, life cycle management and substitution. Now genomics, AI, wearables, or RWE are shortening innovation cycles, and Health Professionals expect integrated solutions rather than products. Covid-19 has halted thousands of clinical studies, and will drive massive pressure on healthcare budgets. In this context, how should Pharma and MedTech review their portfolio strategy, re-allocate risks and resources and review launch plans?
Launch Excellence for Life Sciences
According to IQVIA and PWC, only 15% of Life Sciences Launches are successful. How can Pharma or MedTech improve launch success ? Launch Excellence starts with strong market understanding: identify unmet medical needs, quantify market opportunities, prioritize portfolio based on competitor benchmark, company strategy and strengths. Building a cross-functional innovation engine, combining idea generation, prototyping, funnel prioritization or parallel development with based business cases.
Launch Excellence for Life Sciences
Segmentation and targeting in Pharma or Medtech have improved over time. First, asking sales team to qualify prescribers into high, medium or low potential. In more sophisticated approaches, possible in data-rich countries, prescription data could be bought, at a more or less granular level, combined with field intelligence to build coverage and frequency plans. Qualitative models were also added, including behavioral personas such as innovative/conservative, data/patient-oriented… But in a multi-stakeholder, multi-channel environment, with stricter compliance and data-privacy regulations, how can Pharma and Medtech move to dynamic, multi-dimension segmentation and targeting?
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