Transforming Commercial Models to Address New Healthcare Realities

Traditional commercial models for biopharmaceutical companies drew clear lines. A company’s audience mainly consisted of physicians. Its offerings stressed the clinical efficacy and safety of its products. Its channel strategy comprised mostly in-person contacts and direct-to-consumer advertising. But a number of well-known trends have made these models outdated. Chief among them are changes in technology, costs, and channels.

Technology advances enable patients and physicians to share and analyze both qualitative and quantitative data online for even very rare diseases. They provide tools that can supplement, challenge, or even replace the data and communications provided by biopharma companies. For instance, over 9,000 health applications are currently available for consumers holding iPhones. The market for mobile health care apps that link to enterprise information systems is predicted to reach $1.7 billion by 2014, a 17-fold increase from today. Half of the physicians in the United States are using full or partial electronic medical records systems in their offices, up from 29 percent in 2006. These technologies create new opportunities for biopharma companies.

The rising cost of health care changes treatment dynamics and shifts the relative influence of stakeholders. Physicians now have less decision-making power, while payers play a larger role. Products are increasingly assessed based on their economic impact and effectiveness compared to alternative treatments. As an example, cost pressures have driven up the use of generic drugs to unprecedented levels: in 2010, 78 percent of prescriptions written in the United States were for generic drugs.

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