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Building innovative “beyond pill” revenue models for the pharmaceutical industry

Project Status: Completed in 2019

Article by: Dhairya Pujara  •   Feb 2021

Challenge Statement

How might we reduce the rate of mortalities due to Malaria and also create an awareness around prevention techniques?

Background

Ycenter’s origin story traces back to healthcare and biomedical projects in Africa from 2012-2016. So in 2019, when we got a call from a major global pharmaceutical company on using our Design Thinking framework to help with their strategy and innovation portfolio, we knew our experience of working on healthcare projects is going to come handy with this project.

The Project Story

Our partner client is an established leader in branded generic drugs in multiple markets around the world. They are positioned as a market leader in pharmaceuticals, nutrition, devices and diagnostics and cover almost 80% of therapy areas. They wanted to build a platform of rapid innovation that allows them to grow their revenue beyond typical pill selling models. We were given a limited time, budget and most importantly measurable revenue goals. It was almost like building an in-house venture incubator for new ideas that add value to their existing portfolio.

The Process

The first step was to build a project roadmap for different therapy based teams. Instead of working on function based teams, we decided to work cross-functional within a therapy area. For example, instead of working just with the finance team or legal team, we worked with the cardiology team (one of the therapy areas) and within that team we brought in the doctor, marketing head, manager, business division head all in one room to look at the current revenue models, products and most importantly the unmet market needs and gaps.

Our healthcare design thinking & innovation development approach was focused on creating new market-oriented product or service concepts, preparing strategy development and concept engineering for future developments, introducing an idea on a new product segment. "Healthcare Design Thinking" is a specific method of designing a solution in order to improve people's health and well-being"

One of the most important things to note was we weren’t hired to solve a specific problem. Instead, we were hired to grow the revenues for different therapy areas using innovations that go beyond typical pill selling models. Using the design thinking approach, our first step was to have teams find existing problems. We had to pivot their thinking from just growth to growth via “patient centric problem solving”. It started with asking simple questions like - Why aren’t our revenues growing? And then leading them through the Discovery to Empathize phase, we were able to bring the multistakeholder approach for each therapy area. We mapped the needs/wants and existing problems the patients face that are not solved by our client’s pharma or device products. Most of them were about lack of compliance or adherence to prescribed treatment, lack of knowledge for the patient and their families about their condition leading to anxiety issues and most importantly - looking at the lifestyle based disorders which could be prevented with healthy dietary and nutritional choices. Prevention is a better than cure, we all know this. But the real challenge is how do you build a business model around this motto.

design thinking in action

Discovery phase

We started tracking their lifestyle, behavior and profession to build a user persona of people who are most affected. There is a link for eating highly processed foods leading to hypoglycemia leading to uric acid leading to gout leading to much severe form of arthritis which might lead to knee replacement surgery. The medical team/doctors in the room played the role of facilitator to help everyone understand What is arthritis and the biology of it. You know you are having a good design sprint with the right team composition when a business head is not only asking medical questions but suggesting possible solutions for prevention, even if they might not be right. Design thinking is about having a multi-disciplinary and cross functional collaborative approach to problem solving. We were able to storyboard the patient’s life stages and compare it with data of average people getting gout and who it affected the most in terms of rural/urban, male/female and other ethnographic data.
Ideation phase
The next step was to generate as many ideas as possible at every step of the storyboard created in the previous step. The ideas ranged from Lifestyle management via Diet and Nutritional consulting services to a self-managed app to track intake of processed found especially the ones that led to excessive uric acid formation in body to ideas as complex as portable handheld device for general physicians to diagnose early onset of gout to mechatronic knee. As you can see, the ideas were generated from prevention of disease to management of disease onset to potential cures improving knee replacement surgery outcomes.
Prototyping phase
From the ideation phase, we formed 3 teams that would now build upon ideas by building a virtual model in consultation with actual doctors or patients. This went on for 2 weeks and 2 of the teams came back and said, every single doctor we spoke in our network, hated our idea. We are very discouraged and do not wish to continue working on this. The third team had a contrasting experience and truly found many takers for their idea and even a possible collaboration partner. This process was interesting, because for prototyping, the teams actually had to speak with real customers/stakeholders/users and it saved them time and potentially huge losses in going ahead with an idea that would be discarded by the markets. In a free market, the worth of your awesome boardroom ideas is judged eventually by your customers.
Pivot phase
While exploring ideas and researching higher uric acid levels and lifestyle based food choices that people make, the design team learnt that for some patients the higher uric acid level could lead to diabetes and not necessarily gout. So they went and sought the counsel of diabetes and team and medical doctors to see if they have a prevention tool or better management tool they use to control people from getting diabetes. This is a perfect example of How Knowledge branching and Multidisciplinary collaboration can help you not only learn new things but possibly even explore ideas from a different sector. For example, what is the relation between an amusement park ride and an childrens’ medical imaging center, what is the connection between an automobile design and a gaming console and so on. We called this Cross Sectoral Innovation.

Innovative business models

Turning the problem statement upside down into an Empathic Opportunity statement while keeping a focus on business growth.
How might we increase our profits while selling lesser drugs and keeping patients healthier?

We repeated the above phases/process and had multiple problems statements from different therapy areas to have them create solid problem statements using our CASE methodology tool. Using Design Thinking and combination of Cross-sectoral innovation methodology, we were able to generate many new ideas. The key point was how to integrate these ideas and build a business model around it. Here are 3 possible pathways that we are able to define for the client

1. Buy or Partner with a startup company - Scout for startup companies and buy/license their Intellectual Property or partner with them and integrate them in your company under a mutually benefit contract. Startups need money and traction to bring their product to masses and you need highly creative, non-traditional people to implement new ideas. It could be a win-win for big companies and smaller startups. There are many programs emerging around this theme in the USA and Indian markets.
2. Translational research - Scout for lab tested ideas that are yet to hit markets with a potential to commercialize this research. One of the best places to do this is to start from University’s research centers and their patent/licensing office. You benefit from the R&D that’s already done and university benefits from the compensation and brand equity they can lend to a commercial project. It can help you go to market faster.
3. Intrapreneurship investment - Invest in your employees, train them and hope they will be able to crack new ideas in next few months, if not years. This is the most long term strategic way of doing things. While this can be expensive in terms of time and money, it could yield higher returns and also build a culture of innovation that can eventually lead to many new ideas coming out in a few years.

Reference Reading
You will find more sophisticated models offered by reports from PwC, that talk about • The federated model • The virtual variant of the federated model • The venture variant of the federated model • The fully diversified model Read the full paper here.

The traditional business models for Pharmaceutical companies have been relying on the Blockbuster drug. But, by 2020, the strategy of singlehandedly placing big bets on a few molecules, marketing them heavily and turning them into blockbusters will not suffice.
As J.P. Garnier, former chief executive of GlaxoSmithKline, recently pointed out, it is a “business model where you are guaranteed to lose your entire book of business every 10 to 12 years”.

the way forward

As most sectors get more disruptive, Pharma and healthcare remains one of the fewer industries to be heavily disrupted by smaller startups. Because of the excessive regulatory framework, IP laws, the capital intensive R&D and the impact on actual human lives. A bad customer experience in this industry can prove to be fatal to your customer. And no company in any sector can afford that. We truly believe a more humanistic approach, a patient centric approach using design thinking can truly help generate many breakthrough ideas and business models for pharmaceutical companies.

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