Macro-level innovation: A Q&A with Bain & Company's healthcare guru
For the past three months, BioPharma Dive has been exploring the role of innovation in the biopharma industry. While much of our focus has been on speaking with biopharma execs and knowledge-experts about the most granular aspects of innovation, we wanted to get a macro view of the context in which innovation is occurring—and how the industry continues to be innovative as it navigates through a watershed moment.
Tim van Biesen, a partner at Bain & Company and head of their healthcare practice division, has been exploring how the delivery of healthcare is changing. In order to better understand the vast changes underway, van Biesen fielded a national survey of 632 physicians across specialties and 100 healthcare institutions.
The result of his efforts, “Front Line of Healthcare Report 2015,” tell the story of a rapidly changing healthcare delivery system in the U.S. in which the use of EMRs has increased three-fold in the last two years; purchasing decisions are increasingly made by procurement departments in hospitals; and only 41% of physicians rely on pharma sales reps as a primary source of information.
Despite these changes, van Biesen sees innovation everywhere he looks. Here are some of his macro-level takeaways:
Do the overall changes that you discuss in terms of the transformation of the healthcare delivery system reflect a more innovative approach in terms of the way providers interact with payers?
Tim van Biesen: Yes, we see that providers are increasing in sophistication in their payer engagement models, but these are early days. They have been exploring alternative payment models that include risk sharing, some near-term outcomes-based payments, and other incentives to align their interests. But few of these models have been broadly used, so we are still some time away from a wholesale transformation of the model. Note that the innovation in provider-payer engagement is occurring predominantly in geographies where competitive intensity is high, such as Massachusetts, and physician networks are strong. In other areas, such as Mississippi, the traditional fee-for-service model is still preferable for most providers.
What do these trends mean for pharma companies? Any specific examples?
van Biesen: Bain sees that the most significant implication for pharma companies is that their pursuit for scale should be focused on categories where they can establish leadership positions. This category depth will better position them for more strategic partnerships with payers and providers where they can offer value beyond the product, including care management as an example. A great example of this is Novo Nordisk in diabetes where their presence is so strong that any new product they introduce gets the immediate attention of the global endocrinology community. The same is true for Roche/Genentech in oncology.
In your report, you noted that there is a change in terms of the percentage of physicians who rely on pharmaceutical sales reps for information (with regional variation). Although there is a decline in the role of sales reps as the primary source of information, what role will they continue to have? What role does innovation play in this case?
van Biesen: It is important to note that sales reps are, on average, less relevant than they once were. But the real change is that that they have become MORE relevant in some categories, where a highly consultative support model is needed—this is most visibly true in oncology. One way to think about it is the sales rep is most relevant in areas where standards of care and treatment guidelines are not firmly established and broadly applicable.
What’s your overall takeaway about what all of this means for innovation on a macro level?
van Biesen: Bain believes that true innovation trumps all of these trends. The market has not given up the willingness to pay for meaningful clinical advances and these require a significant sales support model to drive penetration.