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1 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets?
The Source for Critical Information and Insight TM
2 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
The fast-changing dynamics of the pharma industry require re-evaluation of analytical models and streamlining of insight-development processes to ensure sustainability .................................................. 3
Stakeholder value expectations are the highest in the cardiovascular therapeutic area, where insight will play a vital role in future growth models ............... 4
Growth Model 2.0: Analytical processes that integrate portfolio management, competitive intelligence, and stakeholder engagement will be central to future sustainability. ................................... 5
Function: Market Access .......................................... 6
Function: Competitive Intelligence / Strategic Planning ..................................................... 7
Function: Research & Development .......................... 8
New commercial models integrating insight- development processes will be the cornerstones of success ................................................................ 9
Meet the Author ...................................................... 11
The IHS Global Insight Healthcare and Pharmaceuticals Practice ................................. 11
How can IHS help you? .......................................... 11
Contents
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The Source for Critical Information and Insight TM
3 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
The pharmaceutical industry is going through a period of significant change driven by the rise of generic drug markets, payer-centric commercial models, the growth of pharmerging markets, and outcomes-based decision making.
In 2009, the industry grew at a rate of 7% to $837 billion1, largely because of both horizontal and vertical consolidation. Key growth factors included the increasing demand for major therapies in emerging markets and the rise of specialist-driven markets.
The pharmaceutical industry typically consists of many independent, highly concentrated sub-markets aligned to therapeutic categories. Companies compete aggres-sively in each category, often using a dual strategy:
� Market dominance in one particular disease class
� Risk-benefit-based portfolio diversification for the remaining disease classes
Market leadership in each category is largely governed by a company’s depth of technological capability and the market penetration of its existing portfolios.
“ Evolving analytical
models need to
harness consolidated
information sources
in order to allow
efficient, intelligent
decision making.”
So What’s Changed?Over the last 50 years, intrinsic innovation was the main driver of industry growth. During this time, pharmaceutical companies typically invested around 15% of their net revenues in Research and Development (R&D), relying heavily on the success of single blockbuster products.
Escalating R&D costs, declines in productivity, and failures of many late-stage pipeline assets have raised doubts about the traditional blockbuster-dependent approach. Many industry experts foresee a payer- centric growth model driven by coordinated insight- development processes as the next frontier of success.
Although industry growth is expected to continue, the nature and structure of growth is evolving rapidly. On one hand, there are tremendous opportunities in the emerging markets, and on the other hand, there is a tightening com-petitive and regulatory landscape in developed markets.
What Does It Mean?In order for pharmaceutical companies to successfully navigate the opportunities and challenges of this evolv-ing landscape, it has become ever more important for them to optimize their insight-development processes.
A robust insight-development process relies on effective information compilation and ensures a coordinated flow of information from one business function to another. It will help pharmaceutical companies increase commercialization efficiency by engaging proactively with various stakeholders (payers, regulators, patients, and physicians).
The fast-changing dynamics of the pharma industry require re-evaluation of analytical models and streamlining of insight-development processes to ensure sustainability.
1 Source: IMS
4 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
The cardiovascular therapeutic segment and its subsequent disease markets are the leading areas of growth in the pharmaceutical industry. They command the largest market for prescription drugs and in 2009 generated $110 billion in sales, accounting for about 13.5% 2 of the total market.
Over the last 30 years, pharmaceutical companies have invested heavily in the cardiovascular arena to develop and commercialize molecules for various indications. Competition within the field has intensified as a result of:
� Rise in the level of investment
� Stakeholder commitment towards deployment of resources
� High unmet clinical needs
� Expected greater returns on employed capital
� Technological advances
� Greater disease understanding
The increased competition has not only led to significant developments in the treatment landscape, but has also altered the dynamics of the therapeutic category by placing greater emphasis on the value of cardiac care.
What has driven the rise in stakeholder value expectations?
Demographic Shifts
According to the World Health Organization (WHO), the high prevalence of cardiovascular disorders is attributed to aging populations, coupled with advances in diagnostic technologies. The aging population is driving the heightened emphasis on social care in healthcare systems worldwide.
Payer-centric Solutions
There has been a considerable shift in the balance of power between payers and pharmaceutical companies. Patient solutions have evolved towards payer-centric approaches that rely on outcome- and evidence-based decisions. The quality of care, improved patient outcomes, and cost of affordability are the principal areas of controversy between stakeholders.
Growth of the Generic Drugs Market
A recent study indicated a higher level of generic availability in cardiovascular markets than branded products due to cost-containment strategies in healthcare systems worldwide. This has led to a significant pressure on margins for existing players in the category.
Specialty-focused R&D
There is an ongoing trend in cardiovascular towards more specialized therapies, as this approach offers greater competitive advantage and ensures sustainability. This carries significant upward risk and a higher cost base, but has the potential to deliver far greater value for all stakeholders.
Stakeholder value expectations are the highest in the cardiovasculartherapeutic area, where insight will play a vital role in future growth models.
2 Source: Adpated from Cowan Report 2009
5 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
Cardiovascular therapeutic markets need a strategic re-focus because of stakeholders’ high value expectations. Key future success factors will centre on:
Portfolio Diversity and OptimizationDiversification ensures optimized allocation of finite resources towards projects with greater return on capital at an acceptable level of risk. The level of diversification depends on a company’s core strategy and its relative position in the market. Successful diversification strategies rely on up-to-date market information and agile analytical models.
Dynamic Competitive IntelligenceIntegrated intelligence processes act as principal levers of success in a highly competitive environment by ensuring faster movement of information between markets and decision makers.
Evidence- and Outcome-based Decision ModelsSuccess in the new pharmaceutical landscape will largely depend on how fast companies implement outcome-driven strategies. Quality and consistency of information are core foundations of outcome- based models.
Prioritized Stakeholder EngagementThe evolving market dynamics place greater emphasis on the need for much broader engagement between various stakeholders.
An effective engagement strategy depends on information sharing and processing in order to make value-driven conclusions.
Opportunities AheadThere are tremendous opportunities for growth within the segment, but the development and commercial-ization landscape has shifted to a more value-driven framework. To gain market access, newer therapies and solutions must exceed existing value expectations and increase the total level of cardiac care.
In order to achieve future growth, pharmaceutical companies will need to effectively monitor information across many verticals and integrate those information paradigms into insight-development processes.
In the following case studies, we examine the significance of information and insight-development practises for three functions within the pharmaceutical industry: market access, strategic planning, and R&D.
Growth Model 2.0: Analytical processes that integrate portfolio management, competitive intelligence, and stakeholder engagement will be central to future sustainability.
“ The development and
commercialization
landscape has shifted
to a more value-
driven framework.”
6 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
Market access is one of the most important functions in the pharmaceutical industry and is directly responsible for late-stage commercialization of a company’s drug pipeline.
Market access is typically a three-stage process commencing with regulatory approval, reimbursement or pricing approval, and formulary inclusion.
To gain market access for different assets, a pharma-ceutical company must develop an evidence-based approach focused on three fundamental principles:
� Demonstration of clinical and economic value
� Price evolution according to market conditions
� Early timetable integrating clinical and economic endpoints
The key challenges faced by market access professionals:
Understanding the pricing and access landscape
� Interpret and forecast payer behavior for new products given the current barriers to market entry
� Analyze the impact of current trends on the clinical landscape
� Optimise potential value propositions to gain faster market access
Deciphering the value drivers
� Identify the value drivers for different stakeholders and potential strategies to overcome reimbursement hurdles
� Understand the role of clinical variables from a payer’s perspective
Creating value propositions to fully capitalize existing Pricing and Reimbursement (P&R) opportunities
� Identify market-access barriers and model payer perception towards different scenarios
ConclusionFor companies to mitigate all the key challenges and develop a strategic road map, information processes play a central role. Timely, consistent, and analytically rich information serves as a fundamental building block for an integrated market-access strategy. An integrated data source that incorporates different verticals of information will effectively minimize the time-to-market challenges by providing greater insight.
Function: Market Access
Current Market Scenario
Clinical Landscape
Pipeline Dynamics
Regulatory Environment
� Number of competitors � Genetics growth rate � Market size � Positioning of current assets � Prive evolution of each asset
� Country risk assessment � Regulatory guidelines � Engagement scenarios
� Endpoint data � Adverse events assessment � Post-marketing trial information � Evolution of clinical guidelines
� Competitor pipeline assets � Clinical trial results � Pipleine monitoring
and analysis
Figure showing the information dimensions of Market Access and the critical information needs.
7 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
Sustainable performance in today’s complex industry environment relies on how quickly companies process market information and develop strategic processes to gain competitive advantage.
Competitive Intelligence (CI) is one such information-harnessing function. High-quality data is the foundation of an efficient intelligence function and ensures faster development of insight-driven solutions at both the tactical and strategic levels.
Intelligence-rich data enable companies to interpret a given situation, e.g., a recent trend or future forecast, and base strategies for future developments on the current situation and knowledge.
A key challenge for any CI function in the pharmaceuti-cal industry is the optimization of insight-development processes and implementation methodologies.
To develop an optimized CI process, companies need timely data focusing on:
Current Competitor Activity � Price cuts
� Product-labelling updates
� Major licensing and agreement developments
� Patent expiration
Market Landscape Variables � P&R environment in different countries
� Clinical and regulatory policies
� Orphan drug designations
� Post-marketing trial information
Pipeline Monitoring � Endpoints of various trials
� Potential new entrants in same sub-therapeutic category
� Forecasted market positioning
� KOL opinion analysis
ConclusionIn order to achieve the efficient level of optimization for intelligence models, insight-development processes play a central role.
An integrated data source, together with an advanced analytical platform, will help pharmaceutical companies gain competitive advantage and ensure future sustainability.
Function: Competitive Intelligence / Strategic Planning
A successful intelligence framework depends on the three fundamental building blocks of structure and process, awareness and culture, and planning and implementation. This structure is constantly reinforced through effective compilation and utilization of information.
Communication
Analysis
CollectionInterpretation
Awareness and Culture
Planning and
Implementation
Structure and
Process
INFORMATION L ANDSCAPE
8 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
R&D is one of the most important functions in the pharmaceutical industry, as it ensures future growth and sustainability. Nevertheless, over the last couple of years, this function has come under intense pressure because of declining productivity and rising costs of introducing new compounds. This situation is heightened in the cardiovascular market with its high stakeholder value expectations.
Many pharmaceutical companies have started to reorganize their R&D programs by incorporating market variables into the development structure. There has been a growing debate that R&D functions must not be isolated from the pricing or reimbursement environment. A clinical development program must take into account the payer’s perspective on the design, implementation, and interpretation of clinical variables.
A fully integrated approach needs continuous monitoring and analysis of competitive, regulatory, and payer activity, including:
Competitor pipeline variables � Indications of various trials
� Detailed primary and secondary endpoints
� Results of completed trials
� Number of enrolments in major trials
� Safety and efficacy information
Regulatory landscape � Detailed information about registration trials
� Response of regulatory agencies to clinical results data
� Payer behavior towards clinical outcomes
ConclusionThe effectiveness of the R&D function largely depends on integrating three main levers of information: regulatory landscape, clinical environment, and market-access scenarios.
A fully comprehensive data source will help pharmaceutical companies develop a cost-effective and market-responsive R&D strategy by providing greater insight on stakeholder perspectives.
Function: Research & Development
Figure: Stakeholder engagement map for R&D function
Regulatory
R&D
Market Access
Clinical Environment
9 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
The pharmaceutical industry is in a state of flux, and many forces are re-shaping its core structure. Historically, pharmaceutical companies have succeeded by discovering, developing, manufacturing, and then marketing their products, often allocating resources in the prioritized manner.
The sequential approach (tunnel innovation) of resource allocation has fuelled the growth of the blockbuster-dependent commercial model. One of the principal drawbacks of this approach is the peripheral position of information and how it is used in decision-making models. Information was disseminated from one discipline to the next, but not within disciplines, often creating information silos and masking.
A Rapid EvolutionWith the rise of the information age, the fundamental elements of success are evolving rapidly. Pharmaceutical companies are challenged on several fronts, and their major areas of concern are centred on:
� R&D technologies
� Regulatory emphasis and market access
� Stakeholder engagement
� E-business and supply chain management
� Marketing and consumer demands
The role of information has changed dramatically in such a competitive environment. The need to compile information sources is exacerbated with the rise of the payer-centric model and the requirement for economic endpoints in decision making.
For future growth and success, new commercial models must integrate insight-development processes in order to actively engage the various cross-functional disciplines within a company.
Pharmaceutical companies should work towards resolving all the roadblocks in information sharing and compilation.
An integrated information source will help ease many concerns for different stakeholders in the pharmaceutical industry. It should give timely, accurate, and mission-critical information on competitors, regulators, payers, and consumers, thereby providing pharma companies with effective stakeholder engagement points and helping them achieve a sustainable growth strategy.
New commercial models integrating insight-development processes will be the cornerstones of success
10 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
Pharmaceutical Companies
Regulatory Agencies
Physicians/ Clinical
Community
Patient
Payer Groups
Information
The blockbuster-dependent model relies on cyclical flow of information but lacks focus to disseminate information across disciplines, often creating information silos.
The payer-centric model works on fundamental principles of information dissemination across disciplines and between stakeholders. It links decision-making process through uniform distribution of information.
Pharmaceutical Companies
Physicians/ Clinical Community
Patient
Regulatory Agencies
Payer Groups
Figure highlights the evolving commercial models in the pharmaceutical industry and the changing role of information in the decision-making process. The blockbuster-dependent approach relies on information sharing as a collateral function, depending on communication of results, whereas the new payer-centric approach requires an integrated and cross-functional utilization of information.
11 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
Meet the Author
Praful Mehta
Senior Healthcare Analyst, [email protected]
Praful Mehta is a Senior Healthcare Analyst at IHS. He joined the company in 2010 and is a practice leader within its
therapeutic area services. Praful has been a long-time advisor to senior teams within the pharmaceutical industry on issues of market competitiveness, busi-ness integration and commercialization strategies.
Prior to working at IHS, Praful was a Vice President at StrataPro Analytics and Consulting, where he developed the company’s core consulting capability for developed markets. He also led various project teams at GlaxoSmithKline Pharmaceuticals and Johnson & Johnson Pharmaceuticals.
Praful holds an MS degree in International Management and Corporate Strategy from North Eastern University / Dublin City University. He has a BS with honors in Genetic Engineering and Biotechnology from American University / M-IIT.
The IHS Global Insight Healthcare and Pharmaceuticals Practice The IHS Global Insight Healthcare and Pharmaceuticals practice provides a portfolio of intelligence solutions to optimize the performance of companies and organizations across the pharmaceutical, biotech, and generics sectors.
Our key focus is to provide actionable insights to support strategic decision making, particularly in the fields of market access, pricing and reimbursement (P&R), emerging markets, generics strategies, therapeutic development pathways, and general competitive intelligence.
» Find out more about our healthcare and pharmaceuticals practice
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12 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright © 2011 IHS.
