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  • Thriving in an Era of Disruptive Change

    Thriving in an Era of Disruptive Change

    The dominant theme of the coming era is likely to be innovation in the delivery and coordination of care.

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    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.

  • It's Time for a Step Change in Pharma Operations

    It's Time for a Step Change in Pharma Operations

    View study abstract and request the full report.
    The pharmaceutical industry can unlock $135 billion in value by learning from leading CPG firms.

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    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.

  • video Are You Really Ready for UDI?

    Are You Really Ready for UDI?

    Learn more about FDA UDI compliance.

    Rajeev Kapoor and Chris Paddison, A.T. Kearney partners, describe how the medical device industry will be transformed by the enhancement of products and packaging with Unique Device Identifiers.

  • Digital Healthcare or Bust in America

    Digital Healthcare or Bust in America

    Digitization could be a major opportunity for healthcare industry players—if they take the right steps.

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    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.

    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.

  • Less Detail, More Retail

    Less Detail, More Retail

    Pharmaceutical companies that effectively engage pharmacies and wholesalers can increase mature drug sales by 5 to 25 percent.

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    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.

  • The Modern Retail Pharmacy and mHealth

    The Modern Retail Pharmacy and mHealth

    Chain Drug Review, 30 September 2013

    The pharmacist’s role is changing with the introduction of mHealth, increasing their ability to incorporate mobile and wireless devices into their daily toolboxes to support patients and promote health.


  • Building Value-Based Healthcare Business Models

    Building Value-Based Healthcare Business Models

    As healthcare systems begin to pay for outcomes rather than products, smart patient-centric services will play a key role.

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    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.

  • Unique Device Identification (UDI): From Compliance to Competitive Advantage

    Unique Device Identification (UDI): From Compliance to Competitive Advantage

    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.


  • The Evolving Role of the Pharmacist as Adherence Coach

    The Evolving Role of the Pharmacist as Adherence Coach

    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.


  • The Journey Back To Health for Drug Manufacturers

    The Journey Back To Health for Drug Manufacturers

    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.


  • CEO Roundtable: The DNA of Disruptive Innovation

    CEO Roundtable: The DNA of Disruptive Innovation, July-August 2013

    A.T. Kearney partners participate in a CEO roundtable to discuss the change in healthcare's value chain and the factors driving disruption. 


  • Reconstructing the Customer Engagement Model from the Bottom Up

    Reconstructing the Customer Engagement Model from the Bottom Up

    It's time for pharmaceutical firms to start from scratch, with a focus on customer value.

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    Pharmaceutical companies in Europe have had a grim time over the past few years. Declining revenue, traumatic cost reductions, and a nagging recognition that further action will be necessary before long have demoralized staff and thinned its ranks.

    The industry is finally facing up to the fact that its traditional go-to-market models in Europe are too expensive and, in any case, no longer capable of driving significant revenue growth. Since no one is really sure what should take their place, most companies have been "salami-slicing" their sales models to lower costs and play for time. But the fact is, the pharmaceutical world and its environment have changed so dramatically that the industry needs to take a step back to reexamine the fundamentals of what it is doing and why. It must go back to basics and reconstruct its go-to-market model from the bottom up, with a singular focus on creating value for its customers.

    A transformation on this scale will be huge; it is a challenge that the industry has been avoiding for at least the last decade. In this paper, we discuss how pharmaceutical companies can start again and what this new world will look like. Moreover, we analyze the uncomfortable lessons to be learned and the yawning capabilities gaps that must be bridged.

  • Unleashing Pharma from the R&D Value Chain

    Unleashing Pharma from the R&D Value Chain

    Quick fixes won't solve the pharmaceutical industry's innovation crisis.

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    A cure for the pharmaceutical industry's innovation crisis has yet to be found. During the past decade, new molecules output decreased steadily from ~30 NCE per year to ~25 NCE per year while R&D costs more than doubled. Many of the attempted remedies may even be responsible for the high attrition rate of pharmaceutical R&D projects. Open innovation, currently trapped in an unsustainable coexistence of both end-to-end in-house capacities and extensive partnering, has yet to deliver its promise. What will future pharma business models look like? In this study we take a fresh look, with a focus on the R&D value chain, and offer five key insights gained from the study's analyses:

    • Quick fixes, such as outsourcing R&D services, have not saved productivity.
    • Constant changes in R&D portfolio prioritization reduce creativity—and destroy pipeline value.
    • There is a clear breakpoint in the R&D value chain between front-end discovery and late-stage development.
    • Pharma value-chain reconfiguration will result in two main new business models: "Discover Molecules" and "Implement Therapies."
    • Pharmaceutical companies will need to actively select and sharpen their business model before uncontrollable market forces drive the change

    For companies that adopt a wait-and-see approach, the combined and increasing difficulties in both market access and R&D will bring margins down and create much bigger problems in the years to come. In other words, the time to act is now.

  • Implementing a New Service Model

    Implementing a New Service Model

    Chain Drug Review, 20 May 2013

    The implementation of the Affordable Care Act will challenge providers with productization and require a radical shift in the way doctors approach both their patients and partners.


  • A Healthy Dose of Data Analytics

    A Healthy Dose of Data Analytics

    As healthcare providers feel the squeeze they are turning increasingly to analytics for solutions.

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    Gone is the comfortable era of near-zero price elasticity when a well-negotiated fee schedule and a heavy patient volume were enough to guarantee healthcare providers a comfortable existence. As payers, both public and private, require demonstrable value for their money, and cost containment becomes the order of the day, pressured providers around the developed world are increasingly deploying value-driven analytics, a systematic, business-led framework designed to build out the necessary skills, processes, and infrastructure for a successful business data analytics capability that can lead to transformative improvements in healthcare praxis, economics, and outcomes. The paper discusses the three practical guidelines governing the operating model of a value-driven analytics capability: identifying the value drivers of the business; developing a complete, mutually reinforcing set of capabilities to extract insights; and quantifying the value to the business.


In the News

Read insights from A.T. Kearney consultants quoted in the media. 

Global Leaders

Jonathan Anscombe
Jonathan Anscombe
Europe, Middle East, and Africa
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Keith Lostaglio
Asia Pacific
David Hanfland
David Hanfland