How Pharmaceutical Companies Can Win in the Digital World (Part I): Introduction and Product Overview

The digital revolution will fundamentally transform the healthcare industry, and many believe that a turning point is imminent. In 2014, investment in the digital health sector grew from $2.9 billion in 2013 to $6.5 billion.

The critical issue facing pharmaceutical companies today is how to maintain their industry leadership amid these changes. We sought to understand the trends and impacts of digital health by engaging in in-depth discussions with thought leaders from 20 different fields, including analytics, biotechnology, data, pharmaceuticals, suppliers, technology, and venture capital. The current consensus is that, as healthcare continues to undergo digital transformation, pharmaceutical companies must adapt their traditional practices to remain competitive.

Successful enterprises will reposition their businesses, rethink their operating models, reshape their corporate cultures, enhance relevant capabilities, and adopt a new, long-term mindset to foster innovation and drive bold strategic actions. These conclusions stem from three key themes emerging from our discussions:

1. The dramatic shifts in traditional roles and the dynamic nature of healthcare stakeholders have a fundamental impact on pharmaceutical companies.

2. It is time to envision them as companies that provide solutions, rather than merely as asset management firms.

3. The technological conditions are already in place; however, if pharmaceutical companies intend to leverage and harness them more effectively, they must make corresponding adjustments to their development strategies.

These conversational themes carry strong implications: for the new digital environment to succeed, three major transformations are required—adopting a proactive mindset and a spirit of adventure; fostering a collaborative culture to jointly tackle challenging obstacles; and reshaping the company by building capabilities that transcend traditional healthcare and continuously updating its business model.

Patients Will Take Control of Decision-Making in Disease Treatment

The digital revolution has spawned a consumer revolution driven by escalating information demands. With the emergence of new technological tools, consumers are becoming increasingly proactive and self-directed, placing greater emphasis on their own well-being. This shift will transform their interactions with healthcare providers, payers, and pharmaceutical companies.

People are beginning to take charge of their own disease management, with patients no longer being passive recipients of care. “As more patients provide doctors with relevant information about their conditions, the evolution of healthcare will rely more on consumer-driven initiatives than on physicians alone. Patients can collect relevant data at home and discuss with their doctors how treatments should be administered, upgraded, and aligned with future medical guidelines,” said Dr. Bertalan Mesko, author of The Future of Healthcare and My Health. “A cloud-based life sciences business solutions company can take this concept even further,” said Dan Goldsmith, Chief Strategy Officer at Veeva Systems. “In the next three to five years, patients will actively collaborate with their physicians to design their treatment plans, rather than merely being informed or remaining curious.”

As patients gain greater control over their own health, including the medications they take, pharmaceutical companies must recognize this new decision-making power and adopt more effective strategies to engage them. This is no easy task. “Pharmaceutical companies are trying to engage patients, but it is difficult because they often lack a thorough understanding of their patients and struggle to establish in-depth communication and interaction with them,” said Ma Li, Vice President of Health Information Technology Strategy and Investment at Alibaba.

Some pharmaceutical companies have recognized the importance of building connections with patients and are undertaking related initiatives. A Director of Customer Experience at a leading pharmaceutical company stated, “We employ different approaches tailored to our target audiences, engaging them through channels they prefer in order to make an impact. We observe patient behavior in online communities, participate in discussions within research communities, conduct home visits, monitor interactions between patients and physicians, and use quantitative methods to analyze trends and adjust content accordingly, thereby fostering greater public engagement.”

How Do Pharmaceutical Companies Provide Digital Solutions?

If pharmaceutical companies hope to participate in genuinely encouraging and facilitating the development of healthy behaviors, they need to create different solutions. Although many solutions, particularly apps, have been heavily developed in recent years, not all have been accepted by patients. Dr. Todd Johnson (CEO of Noble.MD) stated, “Patient-facing apps have been designed to address pharmaceutical companies’ business growth issues. In contrast, there is an urgent market need for apps that focus on the needs of patients or providers, addressing the real demand for measurable impacts on health quality and costs. If these apps simultaneously meet commercial needs as a secondary outcome, they stand a chance of being accepted by patients.”

The clinical environment will undergo fundamental changes. As consumers become more focused and care settings grow increasingly complex, physicians will need new skills and tools. “There will be a dramatic shift in how doctors spend their time,” said Vinod Khosla, founder and former CEO of Sun Microsystems and founder of Khosla Ventures. “They will devote a smaller proportion of their time to diagnosing and interpreting diseases, while investing greater effort in addressing the social determinants of health to help patients and families make informed treatment decisions.”

Physicians will also integrate increasingly vast amounts of traditional and non-traditional health data, such as hundreds or thousands of fragmented electronic health records, as well as data from mobile devices and other personalized high-tech gadgets. This advancement is critical because “consumer-grade mobile devices, which are still widely prevalent today, are rapidly evolving into research-grade and ultimately clinical-grade tools,” points out Dr. Eric Schadt, Director of the Icahn Institute at Mount Sinai.

In the near future, doctors may receive a fixed, timed data stream from certain patients. With the development of embedded ingestible sensors, the antihypertensive medication Diovan (valsartan) has already been utilized in clinical trials, demonstrating improvements in patient adherence. The sensor records the time interval between medication ingestion and the transmission of this information from within the patient’s body to a wearable device. (This device can also capture other physiological data.) These data can be shared with smartphones, laptops, and the cloud, allowing both patients and providers to access them at any time. Such advancements have led Dr. Krishna Yeshwant, a general partner at Google Ventures, to conclude that “as medical tools continue to proliferate, physicians working in increasingly complex environments require a suite of solutions adapted to this new landscape.”

（Novartis has integrated Proteus Biomedical’s patented Ingestible Event Marker (IEM) microchip technology into tablets. Upon ingestion, gastric acid in the stomach activates the chip, which then transmits data on heart rate, body temperature, and physical activity to a Bluetooth-enabled skin patch. The patch subsequently relays this data to the Electronic Medical Record (EMR) system, enabling physicians to remotely monitor patients’ physiological parameters.

As healthcare startups and tech giants enter the traditional pharmaceutical sector, pharmaceutical companies will need to adjust their value propositions. Dr. Krishna Yeshwant of Google highlighted potential future challenges: “For pharmaceutical companies, the question is whether they can integrate their existing assets with digital technologies to transform from drug manufacturers into solutions providers.” A U.S. Deputy Director of Medical Affairs at a global pharmaceutical company concurred, adding, “For the pharmaceutical industry, the most exciting value of digital technology lies in leveraging it to complement or support pharmacotherapy, thereby more effectively addressing suboptimal outcomes.”

In the aforementioned example, the combination of the antihypertensive drug Diovan and the Proteus chip is complemented by another case involving collaborations between Google, DexCom, Novartis, and Sanofi to combat diabetes. In this project, glucose and insulin data are uploaded to the cloud via contact lenses worn by patients, while a sensor, no larger than a bandage, transmits data to the cloud. This technology can significantly enhance the quality of diabetes care and prove highly effective in preventing and controlling complications. By detecting any abnormalities in blood glucose and insulin levels in real time, it provides guidance for appropriate medical care and treatment.

Beyond close collaboration with technicians, pharmaceutical companies can create substantial value by integrating diverse therapeutic approaches and offering solutions from multiple manufacturers. In oncology, there is a growing trend toward combining novel immunotherapies and targeted treatments with PD-1 inhibitors resulting from the collaboration between Merck & Co. and Bristol Myers Squibb.

To effectively develop the most promising combinations, these pharmaceutical companies need to acquire and share early-stage data and enhance their digital infrastructure to manage complex experiments and test reports. If inter-company collaborations aim to combat AIDS and cancer, pharmaceutical firms must recognize that not only patients but also they themselves will benefit from such cooperation and combination regimens. For instance, they can reduce the risks associated with clinical trials, adopt lower-cost combination therapies, and fully leverage the strengths of each partner.

Chris Geissler and Sanjay Mathur of Silicon Valley Science Data elucidate the critical importance of transforming pharmaceutical companies, noting that there is a vast chasm between success and failure. They add that large pharmaceutical companies may be destined for failure unless they transform themselves. What constitutes such transformation remains an open question, dependent on several factors. For instance, Mathur believes that pharmaceutical companies will need to establish “personal relationships built on mutual trust with consumers.” Such a shift may prove difficult for large pharmaceutical companies, as they are “mired in traditional organizational structures and mindsets.” “These companies cannot compete flexibly and effectively with small and medium-sized enterprises.” “If they wish to avoid losing everything, they must either change rapidly to survive or face acquisition,” said Mathur.

Finally, the time has come to provide comprehensive solutions or systems for certain diseases. For example, diabetes affects approximately 387 million people worldwide, and in the United States alone, one-ninth of annual healthcare expenditures ($612 billion) is spent on this condition. Clearly, this is an area ripe for end-to-end solutions.

Pharmaceutical Companies Need to Share More Clinical Trial Data

Currently, patient loyalty to brands is steadily declining, while cost consciousness is on the rise. People are now less loyal to brands and companies alike, including insurance providers and pharmaceutical manufacturers. “The average tenure of an individual health insurance plan is now approximately two to three years,” said Mather, CEO of Silicon Valley Data Science. He pointed out that this trend can be attributed to employees frequently changing jobs and employers adopting new plans to cut costs. “In the future, no one will care about which brand of medication they take. As data from devices, behaviors, and health agents become more accessible, the way patients select medications will change significantly.” The growing cost consciousness among patients has further intensified this trend: they choose medications with varying efficacies based on different coverage plans, striving to achieve the optimal balance between therapeutic effect and price.

Pharmaceutical companies will lose exclusive control over narratives that are valuable to them. As the boundaries between payers, healthcare providers, and pharmaceutical companies blur, carefully controlled clinical trial data will no longer be the sole source of outcomes data. The dynamics among stakeholders are evolving: payers have expanded into territories traditionally dominated by healthcare providers and pharmaceutical companies (for example, in some cases, payers have completely excluded certain drugs from their formularies).

“As health data becomes more digestible and increasingly accessible, payers and providers will have greater access to information linking drugs to their therapeutic outcomes, enabling value-based pricing,” said Amy Abernethy, MD, PhD, Chief Medical Officer and Senior Vice President of Oncology at Flatiron Health. “The healthcare industry will begin to converge, and the boundaries among stakeholders will rapidly blur,” added Dr. Wolfgang Lippert from Salesforce.com’s Healthcare and Life Sciences business unit. “Payers will increasingly resemble providers delivering medical interventions and home care, while pharmaceutical companies will prioritize data analytics to stress-test the value of their medicines,” he predicted.

For pharmaceutical companies, this is insufficient to compel them to accept the reality of no longer having full control over their product data. To gather more data from diverse channels, pharmaceutical companies also need to contribute more of their own experimental data and engage in collaborations in an appropriate manner. Neeraj Mohan, Managing Director at Blackstone, stated, “Pharmaceutical companies may believe they need to keep their data secure, but the opacity of clinical trials actually poses a dangerous drawback for patients and regulators.”

Compiled by Chen Kun

Editor: Yan Bu