- Digital Disruption
Apple, Google, and Samsung are all vying to win over the health-conscious consumer. Will they manage to disrupt the healthcare business model?
- A.T. Kearney Pharma Supply Chain Panel 2014
Pharma supply chain managers should have complexity reduction, end-to-end inventory management, supply chain segmentation, and greater agility at the top of their agendas.
- mddionline.com, 10 July 2014
The structural trends impacting healthcare, and more specifically the medical device and diagnostics industry, today are unmistakable, disruptive, and transformational—more so than at any other time.
Health providers need to focus as much on influencing patients’ beliefs and behaviors as on treating their ailments.
- Chain Drug Review, 16 June 2014
Direct to consumer retail models are a potential threat to community pharmacies, but with their neighborhood locations pharmacies are positioned well to excel at home delivery.
By Bob O’Meara, Raj Kumar and Vishwa Chandra
Nutraceuticals represent one of the most exciting areas of health innovation, but achieving full potential will require all stakeholders to adapt.
Consumer healthcare has become the battleground where pharmaceutical and consumer goods firms compete for growth. With more people around the world dying from obesity than starvation, poor nutrition is now recognized as a major risk factor for chronic diseases. Most health systems are ill-equipped to deal with this trend. Increasingly, patients are being encouraged to take part in their own treatments, and a consumer market has been developing midway between the supermarket-based world of consumer goods companies and the scientific, pharmacy-based world of pharmaceutical firms.
The front lines of this battle are nutritional products that have been proven to help prevent or cure disease. These “nutraceuticals” present a tantalizing opportunity for breakthroughs to prevent and manage common health problems, offering consumer-focused solutions to issues that are currently addressed only by pharmaceutical interventions—or not at all. However, despite being a hot spot for growth, they still suffer from the same challenges as the rest of the sector, with market growth barely keeping up with the rise in gross domestic product.
In this paper, the third in our Winning the Battle for Consumer Healthcare series, we delve further into the nutraceuticals market to understand the opportunities and barriers to growth. We also look at the successes and challenges faced by both consumer goods and pharmaceutical companies as they strive to gain the upper hand in this promising new market.Close
- MDT, 27 January 2014
It is important to understand how to not only meet the requirements set forth by UDI, but also exceed them, properly harnessing transformation into opportunity.
View study abstract and view the full report.
Mobile health presents risks and opportunities for pharma and medtech companies.
With chronic disease on the rise in an aging population and advances in medical technology straining the system, Germany’s healthcare system is facing rising costs. Mobile health (m-health) is a technology that will not only help ease this situation for companies in the health industry, but also revolutionize patient care and bring long-term growth. A branch of the e-health market that includes the use of mobile technologies for health services, m-health is applied primarily in the remote monitoring of patients with chronic diseases.
As the Internet becomes ubiquitous through smartphone and tablet use, the hopes for m-health are high. This paper examines the true potential of m-health for various players in the German healthcare system—particularly those in the pharmaceutical and medical technology industries. Among the key questions answered are:
- What is the mobile health promise?
- Why is mobile health still waiting for its big breakthrough?
- How attractive will the mobile health market be for the German health industry in the future?
- How can the pharmaceutical industry profit from the mobile health market and what opportunities does m-health present for the medical technology industry?
The dominant theme of the coming era is likely to be innovation in the delivery and coordination of care.
The unconventional collaboration of the more than two dozen senior executives who participated in the Healthcare Innovation Roundtable—most had never met—prefigured the shape of healthcare to come. The roundtable, an A.T. Kearney partnership with the Center for Healthcare Innovation (CHI), brought together executives from multiple points in the healthcare value chain—payers and providers, big pharma, biotech, startups, academics, and venture capitalists.
The group’s animated conversation was given structure by the Healthcare Disruptor Study, an A.T. Kearney-led analysis conducted with executives across the healthcare ecosystem that identified the forces reshaping the industry, and their candid exchanges illuminated the product and process innovations cropping up in every sector of healthcare.
The dominant theme of the coming era is likely to be less a story of blockbuster drugs than of innovation in the delivery and coordination of care.
The new era of healthcare will be characterized by frequent, even bold, partnerships between established and nontraditional collaborators. The ferment of new thinking at the October 2013 roundtable raised many topics with rich potential for deeper investigation, forming the foundation for an ongoing series of roundtable discussions over the course of the next several years.Close
View study abstract and request the full report.
The pharmaceutical industry can unlock $135 billion in value by learning from leading CPG firms.
The competitive landscape of the pharmaceutical industry is changing dramatically. Sales are slowing, innovation is losing its punch, and complexity is rising in markets and technologies. The old pharma paradigm of a pure focus on innovation and markets is changing; price, cost, and service are beginning to matter more. As a result, the economics of the industry are changing, and operations is becoming a differentiating factor in the competitive landscape. Leading Big Pharma companies understand the new rules of the game and have started investing heavily in improving capabilities and shifting paradigms in operations. They are seeking to be first in this race. Pharma companies that want to be on the winning end must follow suit.
Comparing pharma’s operations with that of the consumer goods industry shows significant opportunities for pharma to improve in all major operations areas, including service, inventory levels, efficiency, quality, and innovation speed. By taking a page from the operational practices of consumer goods firms, the pharmaceuticals industry can unlock billions of dollars in value. They can make a step change in performance without reinventing the wheel, while still continuing to support the pharma industry’s economics.
The value of this endeavor is enormous. Assuming an operational transformation that merely cuts the performance gap with the consumer goods industry by only half, a typical pharma company could increase its earnings margins by 7.5 percentage points and free up inventory worth roughly 11 percent of one year’s sales. A firm with about $24 billion in sales—the average sales for a top-20 company in 2012—could unlock roughly $1.8 billion in yearly earnings and $2.6 billion in cash from working capital reductions. Over the whole industry, this would equal $135 billion in additional cash.
There is no silver bullet that magically brings results. Reaching world-class performance in pharma requires a holistic transformation based around a four-pronged “battle plan”: operations strategy, planning and reporting, execution, and people management. Within each theme are the moves pharma executives can make to create an immediate impact on their results and build a growing, long-term advantage.Close
Digitization could be a major opportunity for healthcare industry players—if they take the right steps.
Forecasting the future of any industry is difficult, none more so right now than healthcare in the United States. There are countless reasons why healthcare will look different in the near future, not least of which being the country’s movement toward national coverage. However, digital transformation—the cumulative change that comes when digital technologies are introduced wholesale into an established industry—is poised to have an even bigger impact. For the U.S. healthcare industry, digital technology will be transformational, cutting healthcare delivery costs, eliminating errors through improved electronic medical records, and establishing routinized, evidence-based approaches to treatment.Close
Digital forces are pulling at the industry and significantly altering services, products, innovation, delivery, and remuneration (see figure). There are digitally integrated healthcare providers, digital medical devices and technologies, and digital delivery and monitoring of home healthcare. In addition, new ideas are emanating from developing markets, agile competitors are embracing technology, and a digital-friendly federal administration is pushing innovation. And don’t forget the digital consumer who is used to digital banking, digital retailing, and digital education, and expects digital healthcare.
Digital represents a tremendous opportunity—and a significant threat—for the various participants in the U.S. healthcare industry. No one in this industry can afford to fall behind. This paper examines how the healthcare industry can capitalize on digitization.
Pharmaceutical companies that effectively engage pharmacies and wholesalers can increase mature drug sales by 5 to 25 percent.
Retail pharmacies are no longer mere dispensaries of whatever a physician cares to prescribe. In many markets today, pharmacists can determine which laboratory’s product they will offer a patient with an INN prescription and which companies’ generic products they will stock. Gone, then, are the days when pharmaceutical companies could safely dedicate the bulk of their sales effort to sales calls to doctors and delegate their commercial relationship with the pharmacy to wholesalers.
In many countries, drug companies are taking a page from the playbook of consumer goods manufacturers, pulling closer to the retail pharmacy by developing and delivering a value proposition tailored to its needs. An effective, pharmacy-centered strategy relies on a studied mix that includes sales representatives, online tools, and call centers.
But although the retail pharmacy is the main target of a commercial trade channel (CTC) strategy, a full approach must also consider wholesalers and other stakeholders that intervene in drug dispensation, such as hospital pharmacies and dispensing physicians—and also patients.Close
As healthcare systems begin to pay for outcomes rather than products, smart patient-centric services will play a key role.
The pharmaceutical and medical technology industries survived the recent financial crisis relatively unscathed, but they are being transformed nonetheless as healthcare systems switch their reimbursement model from paying for products or services to rewarding clinical and health-economics outcomes. The task the industries face—demonstrating value based on a product focus—is far from simple.
For one thing, there are inherent limitations to the value a single drug can bring to the management of complex, chronic diseases. Moreover, providing better health outcomes in exchange for fewer resources means that medications and interventions must be targeted to the right patients. Most importantly, perhaps, recent value-based price negotiations have revealed a dramatic lack of trust on both sides of the table.
The outlook may be muddled, but one thing is clear. Players will need to radically adapt—or lose margins in defense of an old business model and leave the next wave of healthcare innovation to others.Close
- Mass Device, 12 September 2013
As the FDA’s new UDI program rolls out, A.T. Kearney consultants discuss the competitive advantage for the medical device industry.
- Chain Drug Review, 5 August 2013
With patient compliance at an all-time low, the medical industry is shifting its research from the science of chemicals to the science of human conduct and focusing on the powerful role that pharmacists play in solving this problem.
- Chain Drug Review, 5 August 2013
As the traditional commercial model becomes obsolete, pharmaceutical companies must use innovative measures to regain solid footing in a world of generic drugs, where the power has shifted from physicians to payers and commissioning bodies.
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