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Are you ready for Pharma 3.0?

Many companies are still getting their heads around Pharma 2.0, but according to Ernst & Young that era may already be over as the industry moves into the next step of evolution: Pharma 3.0.

MARTIN RUEGNER/GETTY IMAGES

Pharma companies were once independent entities that controlled the entire supply chain. They built success using a few patent-protected megabrands and enormous sales forces. This was Pharma 1.0, which is now long extinct thanks to barren pipelines and patent expiries on key blockbuster products.

To survive the changing climate, the industry entered Pharma 2.0, an era characterised by companies diversifying their product portfolios, creating more flexible R&D units and partnering with contract manufacturers, universities and biotech firms.

Pharma 3.0

Pharma 3.0 is the latest evolution of the pharma industry and is being driven by a number of factors including healthcare reform, personalised medicine, demographics, health IT and consumerism. According to Ernst & Young's report Progressions: Pharma 3.0, this will be the biggest transformation the industry has seen yet. In particular, the industry is changing into one that will revolve around "healthy outcomes", such as managing patient outcomes, expanding access to healthcare and meeting unmet medical needs. Pharmaceutical companies will no longer be the centre of the industry; patients will be.

But these patients are not the same as the passive patients from previous eras. Pharma 3.0 patients are empowered with new technologies and transparent information, and will take a more active role in managing their own healthcare. "As patients become aware of new health IT applications, we can expect an expansion in usage — which in turn will take health consumerism to an entirely new level," says the Ernst & Young report.

The changing focus will mean that pharma companies have to transform their businesses from developing drugs to delivering healthy outcomes because "companies will not be selling pills as much as managing entire patient experiences," according to the report. However, changing the business model alone will not be enough to survive; companies will also need to learn how to fit into others' business models. Traditionally, the pharma industry has been dominated by pharma companies, but more and more non-traditional businesses, such as electronic/mobile health firms, large retailers and IT firms, will also make moves into the pharma market. Traditional pharma companies will need to learn how to collaborate and compete against these new entities.

Unfortunately, many pharma companies are not yet poised for evolution, with a survey of business development leaders conducted by Ernst & Young highlighting significant gaps in several areas including valuation and modelling, reputation, change management, and data security and privacy.

"Pharma 3.0 puts a whole new spin on many of the traditional transaction-related challenges and competencies," warns the Ernst & Young report.

Despite the upcoming challenges, however, the report also points out the significant rewards: the ability to serve larger populations of patients and deliver real improvements in health.

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