Time to fix pharma’s outdated business model

The disconnect between payers and pharma companies is just one symptom of pharma’s outdated business model, according to Janssen’s company group chairman EMEA, Kris Sterkens. pharmaphorum spoke to him about the challenges facing big pharma and the importance of engaging with patients.

Janssen’s EMEA chairman Kris Sterkens is forthright about the industry’s failings – in an interview with pharmaphorum at this year’s eyeforpharma conference in Barcelona he urged the rest of the industry to start integrating views of stakeholders into its business model and adapting to the challenges of the digital age.

According to Sterkens, the ongoing issues with pricing bodies across the world are just one example of where things are going awry because industry is relying on an outmoded business model.

Sterkens said the evidence available from a range of organisations is unequivocal – the business model pharma has been relying on for years is outdated.

It’s no longer good enough just to come armed with trial data and expect a drug to sail past regulators and pricing bodies, he said.

Pharma companies must work harder and smarter if it they are to successfully develop drugs and get them to patients, but they are not alone. The same applies to all stakeholders in the healthcare industry – successful change will only be achieved if everyone in the system engages and works together to find the most effective models for the current and future challenges.

Sterkens said: “Take oncology pricing, there’s not a single country where we don’t face challenges  with stakeholders. Part of the problem is that the assessment systems used by regulators are not set up to deal with the overall survival benefits for medicines today that work over multiple years, yet this is something that cannot be demonstrated in a year-long clinical trial. From a payer perspective, they are not equipped to deal with multiple indications of drugs or combination therapies in an effective way yet. These are very practical realities that everybody in the system, be it patients, payers, government or pharma raises as issues, so we should accept this perception as a reality and work towards resolving it.”

Digital challenges

Digital technology is both an enabler and a threat, according to Sterkens, who reiterated previous warnings that conventional pharma companies could lose out to digital health newcomers if they continue with their existing practices.

“Just like any other industry, whether it’s media, travel, entertainment, we’re going to be subject to technology and digital making inroads. The challenge is, there’s always a chance you’re going to be disrupted because disruption rarely happens from within,” Sterkens warned.

However, the optimistic Sterkens views this new wave of digital tech companies as potential partners rather than enemies.

Pharma companies operating in areas such as mental health and diabetes have already been partnering with digital companies for years, and Sterkens sees this trend beginning in other areas of pharma too.

He said: “I see that marriage of tech companies and pharma companies going hand in hand really offers a lot of opportunities.

“We cannot wait on the sideline and see how the dust settles and see what’s the role we’re going to be playing, we need to be all in now, otherwise I think we do stand a chance of being disrupted as a pharma company.

“That’s I think where the future is going, and in the end, it’s going from treatment of disease to interception of disease to prevention and predictive medicine.”

Innovation in company culture

According to Sterkens it’s not just the nuts and bolts of the business infrastructure supporting pharma that must change.

He’s a keen proponent of changing company culture so that it can embrace innovation, saying that his team wants the company to operate like a “133-year old startup”.

“Of course, that in itself is an oxymoron but it’s really about that agility, it’s about not being bogged down by ways of the past and reinventing yourself, and it’s also about attracting different capabilities, people with different backgrounds.”

This involves attracting talent not just from younger adult workers, but also from a breadth of different disciplines.

Sterkens said: “Obviously like any company we put a lot of focus on getting millennials on board because they are the ones that are going to determine the future of our company.

“But it’s also about finding people with different capabilities, like data scientists and individuals  from other industries, not just the tech industry, that are used to working in different ways to those we are used to.”

Commercial technology

A priority now is to bring the commercial arm of the business up to speed with digital technology, which has become more readily used in R&D.

The benefits of using it in research were immediately obvious according to Sterkens, while the organisation has until now opted to make its more traditional marketing operation as efficient as possible.

This is likely to change now as all possible gains have been made with a more traditional approach to marketing based around face-to-face meetings with doctors and reps.

“I think we’ve run towards the maximum efficiency that we have with our traditional model. If we want to continue to build more efficient models going forward, we have no other choice. We have to really start thinking about how technology can do that,” said Sterkens.

Patient power

But Sterkens’ main observation is that pharma needs to take into account the view of patients even more today, who, thanks to the technology available to them, are becoming increasingly knowledgeable about their conditions.

This is both a challenge and an opportunity: ignoring patients will likely lead to unsuccessful products, or problems when it comes to working with payers who are increasingly using feedback from patients to inform their decisions.

“I don’t know how exactly we’ll play out, but I think the biggest impact is the emergence of the patients as an even more critical stakeholder than ever before.”

“Through the internet patients are so much more informed about their disease. They’re such a much louder voice because of social media as well. I think instead of working for the patients, which we always said, we’ll have to work much more with the patient.”

Sterkens’ view is that pharma companies must have to become much more than the clinical trial machines of old.

The only way for the industry to succeed will be to look outwards and understand the needs of the many organisations and groups it works with throughout the development process, and during efforts to bring drugs to market.

“I have ideas of where the future’s going to be, what the solution would look like, but the only way you can get there is by aligning and working together with all of the stakeholders, because otherwise everybody will have their own reality.”

About the Interviewee

Kris Sterkens has been the company group chairman of Janssen EMEA since June 2017, returning to his home country, Belgium after spending over three years in Singapore where he was company group chairman of Janssen Asia Pacific. Kris has a background in economics and financial management and was vice president, finance and chief financial officer for Janssen EMEA before he moved to general management. Kris has been with Janssen for almost 30 years.

About the Author

Dr Paul Tunnah founded pharmaphorum in 2009, which is a content and communications company offering industry leading publications (www.pharmaphorum.com) and a strategic consultancy (www.pharmaphorumconnect.com). He is a recognised author, speaker and industry advisor on content marketing, communications and digital innovation, having worked with many of the world’s leading pharmaceutical companies and the broader ecosystem of healthcare organisations.

Connect with Dr Tunnah at Linkedin or email paul.tunnah@pharmaphorum.com.

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