Chapter
Pharmaceutical marketplace
Healthcare innovation environment
Biotechnology company evolution
Segments and product markets in the pharmaceutical sector
Innovation from a generics base
Innovation from a service company base
Innovation with virtual pharma models
Pharmaceutical pricing and insurance coverage
Determinants of pharmaceutical pricing
Public insurance coverage
Demand drivers for pharmaceuticals
Research and development: the key steps in the value chain
Intellectual property – patents
Phase I testing: first studies of safety in humans
Phase II testing: first studies of efficacy
Phase III: definitive multicenter trials
Can it really be a smooth-flowing pipeline?
Drug substance and drug product
Drug substance manufacturing
Drug product manufacturing
Excellence in product manufacturing and supply
Current good manufacturing practice and compliance
Major issues with biotechnology products
The business model – risk, time, and return
Challenges confronting the innovation business model
Redeployment from West to East
The challenges in research
Globalization of clinical development
Challenges in clinical development
Marketing across the value chain
Stakeholder complexities in the decision-making process
Traditional promotional techniques for pharmaceutical companies
Contrasting pharmaceutical promotional regulation with that of other industries
Emergence of new stakeholders and influencers
The importance and diversity of payer organizations
The rise of physician organizations
International regulations on promotion
Traditional model layered with new complexities
Patent cliff means more specialized sales forces
Restrictions in regulations yield creative approaches by channel
Advances in technology offer new channels for promotion
3: Pharmaceutical strategy and the evolving role of merger and acquisition
Drivers of pharmaceutical strategy (including M&A)
Decrease in R&D productivity
Deconstruction of the pharmaceutical industry
Diversification in business approach
Diversification in capabilities
Expansion within developing markets
M&A trends among pharmaceutical and biotechnology firms
M&A rationales in industrial organization theory and research
M&A rationales among pharmaceutical firms
Adaptive and defensive rationales
Combat increased profit pressures
Cutting infrastructure costs
Satisfy the market mandate to maintain earnings growth in the face of pipeline problems
Maintain competitive scale and scope
Defense against acquisition
Proactive and offensive rationales
Gain access to foreign pharmaceutical markets
Extend capabilities to new therapeutic areas
Achieve economies of scale and scope in R&D, sales, and marketing
Create a competitive advantage in R&D productivity
Summary of rationales: is there a problem here?
The impact of M&A on the performance of pharmaceutical firms
Review of the evidence from academia and consulting firms
Relationship between scale and R&D inputs
Relationship of scale with R&D outputs
Relationship between scale and stock price, sales, market share, and profitability
Relationship of scale and scope with efficiency
Summary of the empirical evidence: is there a disconnect with the rationales?
Is M&A part of the problem?
Broader evidence on the value of size, concentration, and integration
Sources of value in M&A: building capabilities to enhance future performance
The future of pharmaceutical M&A and the value chain perspective on innovation
4: The biotechnology sector: therapeutics
Overview of the biotechnology sector today
Innovation – the key driver of the biotechnology sector
High-throughput screening
Antisense and RNA interference
Additional biological platforms
Business models – managing scale and scope
Technology platform model
Financing and the capital markets
R&D limited partnership and SWORD
Convertible debt securities
Other alternative financing mechanisms
The biotechnology–pharmaceutical company relationship
Managing a biotechnology firm
The global structure of the biotechnology sector
Special regulatory and policy issues
Healthcare reform in the USA
Embryonic stem cell research
Human cloning and germline gene therapy
Generic and follow-on biologics
Drug regulation outside the US
International Conference on Harmonization
Conclusions: the real drivers of the biotechnology sector
5: Biotechnology business and revenue models: implications for strategic alliances and capitalization
Business and revenue models: an overview
Biotechnology business models in the trade press, academic literature and policy statements
The venture capital business model
Pharmaceutical partnerships with biotech
Macro and micro factors affecting business and revenue models
Business and revenue models: rethinking vertical integration
Technological reintegration and the healthcare value chain
An example of a misguided model: genomics and proteomic technology platform companies
Strategic alliances and technology platform companies
Therapeutic area alliances
Technology development alliances
Technology transfer alliances
Measuring alliance performance
6: The medical device sector
Comparisons with other industries
Historical perspective: missteps, miscues, and misapplications of technologies
Wither growth, whither growth?
Could new products materialize?
An industry in transition – consequences of slowing growth
Corporate and structural change
Unique and defining characteristics of medical devices
Separation of consumers, customers, and payers
The powerful economics of clinical needs
Financing and consolidation trends
Deal size: large deals (> $1 billion) and “tuck-ins”
Public financings – the IPO market
The slowing of the FDA regulatory process
7: The healthcare information technology sector
Introduction to information technology
Why has progress in healthcare IT been glacial?
Ambiguity over the benefits of healthcare IT
Limit on automation of care by the state of technology
Healthcare IT market structure
Business models for healthcare IT
National and regional healthcare information technology architectures
Clinical provider applications
EMRs and computerized physician order entry
Historical milestones on the path to CPOE
Remote monitoring/management of patients
IT as a “navigation” system
Administrative and support applications
History of claims management
Care and disease management
Consumer-directed health plans: IT-intensive new health insurance products
Outsourcing and systems integration
History of outsourcing and systems integration in healthcare
Consumer use of healthcare IT
Consumer demand for healthcare IT
Personal health records and other consumer applications
8: Healthcare innovation across sectors: convergences and divergences
The twin towers: invention and adoption
Strategic resources, capabilities, and key success factors
Organizational routines and capabilities
Technological convergence across sectors
Importance of technological convergence
Technological convergence in healthcare: national systems and product sectors
Types of technological convergence in healthcare products
Market dynamics and barriers to convergence
Convergence of changes occurring downstream from suppliers
The challenges and the changes
Expanding scientific and technological base
Advances in disease identification and treatment
Nascent rise of consumerism
Manpower training needs and delivery system implications
Future disruptions to suppliers’ downstream value chains
Decentralization of care delivery
Consumer- and patient-centered care
Implications for suppliers
Competition between new and old products
The consumer health ecosystem
The Business of Healthcare Innovation
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