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New strategies for market development

Change of strategy needed: Why life science sells processes, not products

  • Monday, 14. February 2022
Change of strategy needed
© Yvonne Röder

When launching a new therapy, pharma companies focus almost exclusively on communicating study data and scientific knowledge. However, it is not only the product itself and the medical rationale that determine market success. Economic and organizational rationales of the various stakeholders in the market are also key. What is the cost-benefit ratio? How could the new therapy be integrated into everyday workflows in hospitals and practices? To understand, influence, and shape the complex processes associated with the application of a product, pharma companies need to reorganize their strategy-related work.

An ampoule, a tablet, an infusion fluid, a catchy name, a colorful label: at first glance, pharmaceuticals seem quite tangible products. Years of work and millions or even billions of dollars are invested in developing a new drug. Once approved, it embodies the highest level of science and research. So why not focus on this product, its properties, and its effects when going to market?

In life science, the same dilemma is encountered again and again: after lengthy basic research and multi-stage studies, a newly developed therapy has received regulatory approval, the specialist medical societies have issued their recommendations, and there has been a great deal of interest and applause at congresses. The sales reps have visited hospitals and medical practices and presented elaborate charts detailing overall survival rates, duration of response, and patient subgroups. And then nothing happens. Even months after a launch, the product’s market share is still low. Then responsible parties at the respective company ask themselves the same question: Since our product delivers better results than the previous standards, why can’t we manage to sell it? There is no right answer because the question is wrong. The truth is that life science does not sell products at all. Life science sells processes.

From product communication to process design

Of course, the various stakeholders in the market, e.g., medical practitioners, hospital managers, health insurers or health authority staff, are interested in the medical rationale, in the product and its promised effects, i.e., what can this therapy do better than the previous standard? However, from their perspective, the complex processes associated with this product and its application are at least as crucial. They ask questions about the economic rationale like “How does the new therapy fit into my business model?” Besides, the organizational rationale is equally important. For example, some physicians may wonder whether they will be able to integrate the new therapy, including side effect management, into their daily work processes. Some questions are even more complex, like whether the new therapy demands new forms of cooperation between different medical practitioners. Behind this hides another simple question: “Wouldn’t it be easier if everything stayed as it is?”

Pharma companies therefore need to abandon their pure fascination with products, however understandable this may be given their technical and intellectual beauty. Instead, they need to understand and influence processes, inspire new ones, and in certain cases, pre-imagine and design them themselves.

How economic and organizational factors prevent market success

Let’s take a very concrete example. A pharmaceutical company had developed a new application form for its oncological therapeutic. The drug no longer had to be administered intravenously but could be injected subcutaneously. As a result, its administration took only five minutes instead of up to one and a half hours – an enormous relief for the patients. But contrary to expectations, the drug found few takers. One obstacle was the economic rationale. Subcutaneous therapies were reimbursed less than intravenous therapies in this jurisdiction. Even more crucial, however, was the organizational rationale. Clinics had administered the intravenous therapy simultaneously to numerous patients in a large room. But for subcutaneous administration into the thigh, patients had to undress, and each patient occupied a separate room. This seemed too inconvenient for many clinics. The company finally organized an exchange of experience between the managers of several hospitals. There, the hospitals discovered, for example, that the faster subcutaneous administration enabled them to avoid overtime for nursing staff. This opened the door for some to make the switch.

In this case, it was still possible to solve the problem after the launch, at least to some extent. For many future challenges, however, it will be important to address the entire product-related process at a much earlier stage of market development. Take this practical example: For the foreseeable future, CAR-T cell therapy will only take place in a few highly specialized medical centers. But how do patients get to these centers in the first place? How can medical practitioners who apply less advanced therapies be incentivized to refer their patients to the true specialists? How can these specialists be supported in gaining patients? What arguments can be used to convince regulators and health insurers to approve and reimburse the advanced and costly therapy for larger collectives?

Pharmaceutical companies need to rethink traditional division of labor

Admittedly, these are a lot of quite difficult questions – and one could pose many more. To make matters worse, pharmaceutical companies are not particularly well positioned to provide the answers. The traditional division of labor between market access, medical and sales and their siloed expertise is well suited to traditional product communication. But when it comes to understanding and influencing complex processes running across the entire pharmaceutical market, you need the full picture. For this, you first have to assemble knowledge of the various functions, like the pieces of a puzzle. Pharmaceutical companies need to create an arena in which an organization’s entire market knowledge is brought together and integrated, and in which the various local market rationalities can be mapped. A place where productive tensions develop, and a coherent strategy can be developed.

The need for such an integrated approach will only grow. The tremendous sophistication of modern medicine means that many new therapies tend to only deliver gradual improvements. At the same time, competition in the healthcare system is increasing, the therapy landscape is becoming ever more complex, and cost pressures are continuing to rise. All of this will make product launches more and more challenging.

But the more strenuous the work, the more important and rewarding it is. For a long time, the battle for medical progress seemed to be mainly taking place in R&D laboratories with product experts and virtuosos involved. Now, however, as market development becomes increasingly important, it takes decision-makers who use their creativity, cooperativeness, and commitment to ensure new therapies actually reach the intended patients. The future belongs to process professionals.

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