The Pharma Business Model: How to Avoid the Innovator ' s Dilemma

Healthcare is the largest sector in the world – around three times larger than banking – yet, in spite of the cutting-edge medical breakthroughs, it lags behind in other forms of innovation.Pharma continues to spend heavily on R&D (around $140bn a year), which results in 30-40 new drug approvals each year, a return on investment that is not as strong as one might expect for the investment. The industry is an example of a ‘business-as-we’ve-always-done-it’ approach. The experiences of other disrupted industries may be relevant to pharma, such as: Continuing ‘business as usual’ and failing to innovate – for example, Blockbuster Video, Kodak and Borders Financial challenges – for example, 11 of the top 13 companies have more debt on their balance sheet than cash (AstraZeneca especially). J&J and Novo Nordisk are the only two with more cash than debt. Tech companies entering the space – for example, Blockbusters replaced by Netflix and Kodak by the iPhone. Google and Amazon are entering the pharma space, with Silicon Valley investing more in healthcare AI and tech than any other sector.The pharma industry is ripe for disruption. In the past, our value was in new, cutting-edge and effective medicines, discovered, developed, manufactured, marketed and sold by pharma. However, pharma companies are no longer alone, and competitors are coming from unexpected sources. For example, Fuji Film was once a rival of Kodak but has now been in the pharma busi...
Source: EyeForPharma - Category: Pharmaceuticals Authors: Source Type: news