Ey medica-media-forum-2011-pharma 3

ePatient/Health 2.0:

Key factor for new sustainable business models in Life Science Industry

Health 3.0

Page 2 © Ernst & Young – All Rights Reserved

Ernst & YoungPublications

Beyond borders 2010E&Y’s 24th annual biotechnology report reveals how firms are responding with business strategies, new funding sources and creative deals.

Pulse of the industry 2010Medical technology report 2010. Firms will need to revisit key elements of their business models.

Progressions 2011: Building Pharma 3.0 New organizational capabilities and radically enhanced business processes to succeed in Pharma 3.0.

Prescriptions seriesLife Sciences topics

The Smoke Detector® Life Sciences risk topics

Cash on prescriptionWorking capital

Business Risk Report 2010

Sales and marketing code matrix US and EMEA

New HorizonsUS provider care

Top of mindHealthcare technology

Life sciences insightsEmerging markets

Taking wingsIndian CRO/CMO market


Progressions 2010► “If”, “when” and “why?”► Launched in February 2010► Tremendous media coverage► Based on interviews with 30

executives from the pharma industry and from “non-traditional” players

► Multiple conversations across ecosystem

Progressions 2011► “What”, “how” and “where?” ► Launched in Feb 2011► Focused on implementation► Based on interviews with 37

executives from the pharma industry and from “non-traditional” players

Pharma 3.0


Drivers of change

Business Models

Customer

Valueproposition

Pharma 1.0Blockbuster drugs

Pharma 2.0Diversified drug portfolios

Pharma 3.0Healthy outcomes

► R&D productivity► Patent cliff► Globalization► Demographics► Pricing &

reimbursement

► Health care reform► Health IT► Consumerism► Value mining

PhysicianPayor

Patient

Pharma 3.0 From pharmas’ perspective


meamedica

Source: www.meamedica.de

http://www.meamedica.de


patientslikeme

Source: www.patientslikeme.com

http://www.patientslikeme.com


Pharma 3.0The health outcomes ecosystem

Pharma 1.0 (drugs) Pharma 2.0 (diversified drug portfolios) Pharma 3.0 (outcomes)

PatientsPharma

Health records

Telecom

Governments

InsurersRetailers

Food

Providers InformationcompaniesPhysicians

Socialmedia

Medical technology

Consumerelectronics

IT

Biotech

AcademiaCROs

Med device


Bayer – Nintendo UCB – PatientsLikeMe

Novartis – Proteus BiomedicalRoche – InterComponentWare

Pharma 3.0 is happeningeHealth

Source: www.bayerdidget.co.uk/ Source: www.patientslikeme.com

Source:www.bloomberg.com Source: www.scripintelligence.com

The Financial Times

http://www.bayerdidget.co.uk/

http://www.patientslikeme.com

http://www.bloomberg.com

http://www.scripintelligence.com


Pharma 3.0 in emerging marketsLeapfrogging to 3.0 ?

Pharma 1.0

Emerging Markets

Pharma 2.0► Branded generics► Innovative drugs► Supply platformPharma 3.0► Collaborations

► Changing regulations

► Local industry► Health IT► Consumerism

Pharma 1.0Blockbuster drugs

Pharma 2.0Diversified drug portfolios

Pharma 3.0Healthy outcomes

► R&D productivity► Patent cliff► Globalization► Demographics► Pricing and

reimbursement

► Healthcare reform► Health IT► Consumerism► Value mining

Mature markets


A rapidly changing ecosystem

Developingcore competencies

A progress report


Pharma 3.0 repository220 initiatives enabling health outcomes

Disease management

Adherence and compliance

Openinnovation

► Educational website► Blogs► Patient support programs► On-line communities► m-Health► Medical devices► Data management► Smartphone apps

► Educational websites► Educational programs► Healthcare delivery► Innovative distribution► Patient support programs

► R&D initiatives► New ventures

Education

Financialassistance

Education

Disease management

Decision support

Healthoutcomes

Expanding access

Managing patient outcomes

Meeting unmet medical needs


20102006–09

Source: Ernst & Young. Charts show number of pharma company initiatives by type, as identified by Ernst & Young.

There’s an app for thatInvestments in smartphones soar in 2010


Patients - Apps

Source: appstore by apple: www.apple.com

http://www.apple.com


20102006–09

Source: Ernst & Young. Charts show number of pharma company initiatives by type, as identified by Ernst & Young.

Beyond diabetesInvestments diversify across disease segments in 2010


The ecosystem advances Initiatives by Pharma companies

► Smartphones lead the way

► Moving beyond diabetes into broad spectrum of disease states

► More holistic approaches to improving outcomes

0

50

100

150

200

250

2006 2007 2008 2009 2010

78% increase in number of 3.0 initiatives

About 220 Pharma 3.0 initiatives were launched by Pharma companies between 2006 and 2010


The ecosystem advancesInitiatives by non-Pharma companies

Samsung $ 2.8b Electronic health equipment

Nestle $ 0.5b Health and wellness products for diabetes, obesity, etc.

Pepsico $ 2.5b Drinks/snacks inspired by Traditional Chinese Medicine

GE $ 6.0b Health innovation initiative (improve care for more people at lower cost)

TELUS $ 0.8b Social network for Canadian patients to manage health

Non-pharma companies are investing much more: at least US$20 billion


Getting to 3.0

Developingcore competencies

A road map for change


Pharma 3.0Enhanced core competencies to enable health outcomes

Pharma 1.0 and 2.0 Pharma 3.0

Connecting information

Radically collaborative innovation

Multiple business models

R&D

Manufacturing

Regulatory

M&S

Drugs andefficacy insights

Manage patient outcomesExpand accessMeet unmet medical needs

Healthoutcomes


Health records

Telecom

Governments

InsurersRetailers

Food


Socialmedia

PatientsPharma Medical technology

Consumerelectronics

IT

Academia

Biotech Med device

CROs

Connecting informationConnect


Manage patient outcomes

Expand access

Meet unmet medical needs

Delivering outcomes

Health records

Telecom

Governments

InsurersRetailers

Food


Socialmedia

PatientsPharma Medical technology

Consumerelectronics

IT

Academia

Biotech Med device

CROs

Examples of non-traditional business intelligence sources

Healthcare technologies e.g., IBM is developing health care tools and processes for the medical industry as a part of as three-year, $100 million program

Telemedicine (mobile health)

Health records

Patient registry platform

Special pharmacy

Social media

Commercial partnerships

Examples: ►Bayer Diabetes Care-

Nintendo (Gameboydiabetes reader)

► LifeScan (J&J)-Apple (iPhone Glucometer app)

New capabilities� To track, store and analyze

data

� To develop insight-enabled interventions at key points in the cycle of care

Information strategy� As a new approach to IT

� IT will be about informing and driving 3.0 strategy

Big data► R&D functions but also

from external relationships becoming increasingly data rich

► Exponential increase in the quantity of data being created

The internet of things► Connected and context

aware technologies► Generation of real time data

Closed gardens► Data increasingly been

aggregated in closed, proprietary systems

► Need to negotiate access to, collect and analyze different kinds of datain various forms

Aggregators� To aggregated data using

common language and turn data into insights

Building solutions� To develop insightful solutions

from data

Connecting informationConnect


Radical collaborationCollaborate

IT

Payor

Med tech

Payor

Provider

Bio tech

Govt

PE

e-health

IT

Pharma

Social media

Payor

IT

VC

Telecom

Med tech

Pharma 3.0

Patient org

Devi-ces

CRO

Diagnostics

MOC

Aca-dem.

Devi-ces

Bio-tech

Payors

Pharma 1.0 & 2.0

Pharma


IT

Payor

Med tech

Payor

Provider

Bio tech

Govt

PE

e-health

IT

Pharma

Social media

Payor

IT

VC

Telecom

Med tech

Pharma 3.0

Patient org

Manage patient outcomes

Expand access

Meet unmet medical needs

Delivering outcomes

Devices

CRO

Diagnostics

MOC

Pharma Academ.

Devices

Biotech

Payors

Pharma 1.0 & 2.0

Rigorous process for R&D� Pharma will develop large

portfolios of business model experiments

New approaches to IP� Pharma will need to learn to

contribute assets and IP into new models that they do not entirely control

Community engagement� A key driver of success will be

the ability to engage with customers and developers in fundamentally different ways.

� Open partnering and open innovative process, crowdsourcing

New business models► …require a different

approach to innovation► No single entity will have

the full complement of skills, expertise and insights to develop innovative outcomes-based business models

A broken system► Innovation will need to be

disruptive► A focus on outcomes is

providing a catalyst for disruptive innovation

► Assets are in place, need to combine them

Radical collaborationCollaborate


Key Partners

CXOstoNon traditionalseHealthITTelecomTechnologyRetailersAcademia

Key Activities

R&D, M&StoConnecting informationCollaborationMultiple business models

Key ResourcesVertically integrated value chain, IPtoExtrapriseClinical and customer insights

Value proposition

DrugstoHealth outcomes

PreventionDiagnosisTreatmentAdherenceSelf-managementIntegrated care

CustomerRelationshipsDetaillingtoCommunities(patient, families, physicians)

ChannelsDetaillingtoEngagement(payor, patient, HCPs, Direct to patientRetailers)

CustomerSegments

PhysiciantoPayorHealth insuranceManaged careGovernmentNGO+Patients+Physicians

Cost Structure

Classical COGStoShared, leveraged

Revenue Streams

drug price x volumetoHealth outcomes basedCapitation, Fee for service, Risk sharing

Multiple business modelsOperate


Key Partners

CXOstoNon traditionalseHealthITTelecomTechnologyRetailersAcademia

Key Activities

R&D, M&StoConnecting informationCollaborationMultiple business models

Key ResourcesVertically integrated value chain, IPtoExtrapriseClinical and customer insights

Value proposition

DrugstoHealth outcomes

PreventionDiagnosisTreatmentAdherenceSelf-managementIntegrated care

CustomerRelationshipsDetaillingtoCommunities(patient, families, physicians)

ChannelsDetaillingtoEngagement(payor, patient, HCPs, Direct to patientRetailers)

CustomerSegments

PhysiciantoPayorHealth insuranceManaged careGovernmentNGO+Patients+Physicians

Cost Structure

Classical COGStoShared, leveraged

Revenue Streams

drug price x volumetoHealth outcomes basedCapitation, Fee for service, Risk sharing

A rigorous and systematic approach� Use commercial trials to

develop and experiment around new offerings

Manage a portfolio of partners� Investing in long-term potential

of some relationships, partner around specific challenges, bring together complementary skills and needs

Manage performance� …of developing and scaled

initiatives

� Function as a value added private equity firm

A multiplicity business models

► Diverse new value propositions

► Heterogeneous customer base

► Diverse and new channels

► Emerging enabling technologies

► A need to experiment

A shift to solutions► Allowing to unbundle

knowledge from product

► With models incorporating services and customer insights

Multiple business modelsOperate


Building and managing a portfolio of innovation models

Innovative collaborations with non-traditional partners to co-create value for each other and the ecosystem

Radicalcollaboration

Business processes

that should be created or enhanced

Three core com

petencies for success in Pharm

a 3.0

Extracting value out of large volumes of data from diverse, unfamiliar sources

Connecting information

Multiple business models

Community engagement: engaging to add personalized value and build trust

Information strategy: empowering IT to guide 3.0 strategy

Performance management: measuring and communicating 3.0 value drivers

Capital strategy: adapting the capital agenda for Pharma 3.0 initiatives

Governance, risk and controls: embracing (and managing) risk in 3.0 initiatives

Business model development: systematically experimenting with new models

Building Pharma 3.0Six business processes

Pharma 3.0


Thank you!


Contact Details

Matthias WartenbergDirector Advisory Services

Ernst & Young GmbHMergenthalerallee 3 – 565760 Eschborn, Germanyphone +49 6196 996 16693 mobile +49 160 939 16693Email [email protected]

mailto:[email protected]

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