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‘Design Thinking’: Translating Struggles into Positive Outcomes in Pharma

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Problems of various nature will keep coming on business, as long as long as one remains in the business. It doesn’t spare anyone in the organization – from the very top to right up to the very bottom. All is susceptible to problems. Thus, underlying part of all jobs, is one’s ability to solve problems – decisively, as these keep coming.

At the corporate level, problems could be either self-created. For example, when each functional area operates in a silo, at times restricting overall corporate business growth. This may happen not only due to lack of operational synergy, but also for setting incompatible goals. Problems may even arise out of environmental hindrances, or for smarter competitive strategies. Both would adversely impact the company performance, including the possibility of damage to reputation, and at times, even survival of the business. At the individual level, problems at the work place, may affect one’s personal life, work life, career path, key performance areas or even income, among many others.

Looking at the positive aspect of it, as the saying goes, each problem comes as a hidden opportunity, which needs to be harvested. Importantly, in a work environment, the degree of career success of an individual is often associated with the person’s problem-solving ability – in innovative ways. Conversely, one pays a commensurate price for not being able to do so.

In any case, ‘problem solving’ skill is important for all, as much as it is in any business, irrespective of whether the environment around is digital or one involving with lesser of computer technology. This skill is highly necessary for business success. Therefore, the essence of garnering differential competitive edges in any business remains deeply embedded in the quality of problem-solving ability of its people, across various organization functions.

In a broader sense, any innovation – including drug innovation that falls at the high end of the pharmaceutical value chain, is also basically a problem-solving initiative. This encompasses even some of the serendipitous discoveries, such as Viagra for erectile dysfunction. In this article, I shall try to explore the wider applications of a robust process in problem solving – the application of ‘Design Thinking’ in pharma industry.

‘Design Thinking’:

The roots of ‘Design Thinking’ hail back to the mid-1950s with the introduction of the subject, Design Science, at the Massachusetts Institute of Technology (MIT), says US Collective in a paper titled, “What is Design Thinking and how can businesses benefit from it?”

According to MIT Sloan School of Management: “Design thinking is an innovative problem-solving process rooted in a set of skills.”This process has been successfully applied to developing new products and services. It begins with understanding the unmet needs of customers. And from that insight emerges a process for innovation, encompassing concept development, applied creativity, prototyping, and experimentation. With the application of ‘design thinking’ in business, the success rate for any innovation has been seen to improve substantially.

In its analysis, MIT Sloan found that design-driven companies such as Apple, Coca-Cola, IBM, Nike, Procter & Gamble, and Whirlpool have outperformed the S&P 500 over the past 10 years by an accumulated 211 percent in what’s called the Design Value Index—a portfolio of 16 publicly traded companies that integrate design thinking into corporate strategy. According to a 2016 report from the Design Management Institute, this marks the third consecutive year the index has shown an excess of 200% over the S&P 500.

‘Design Thinking’ in pharma:

As we have seen, ‘design thinking’ approach is a human-centric way of problem-solving, understanding the user needs. In the pharma space, it’s problem solving to address its stakeholders’, including patients’ needs and requirements related to health. Thus, for innovative drug marketing, as well, ‘design thinking’ could play a very useful role to make all organizational activities patient-centric – for greater all-round corporate success.

In this context, an article on ‘design thinking’, appeared in the Financial Times on October 12, 2017 reported: “Development of a drug can take around 15 years. But by using the design-thinking process, you could make clinical trials shorter by collecting more real-time data. The manufacturing process and design of packaging could be improved by a better understanding of how drugs are being used. And costs could be reduced, enabling the more expensive drugs to be made more available.”

Four steps of ‘Design Thinking’:

MIT Sloan outlined 4 simple steps in ‘design thinking’ process, which I am summarizing in pharma perspective, as follows:

1.Understand the problem – the source could be both internal or external:

As MIT Sloan professor Steve Eppinger said: “Most people don’t make much of an effort to explore the problem space before exploring the solution space.”

This often happens in pharma too. It’s not very uncommon that looking at just manifestations of problems, a company will look for a solution – quite akin to providing symptomatic relief in the treatment of a disease.

Eppinger further articulated, the mistake that problem solvers usually make ‘is to try and empathize, connecting the stated problem only to their own experiences.’ This falsely leads to the belief that problem solvers completely understand the situation. But the actual problem is always much broader, more nuanced, or quite different from what people originally assume, he underscored.

2. Workout possible solutions – involving those who matter 

3. Prototype these, test and further refine

4. Implement the best possible solution

Professor Eppinger further said, people at work can use ‘design thinking’ not only to design a new product or service, but anytime they’ve got a challenge – a problem to solve. Applying ‘design thinking’ techniques to business problems, pharma companies can offer greater value to customers, and stay relevant.

Pharma companies imbibing ‘design thinking’:

There are examples that some pharma companies are seriously nurturing the concept of ‘design thinking.’ One such an instance was captured in an interview, published in pharmaphorum on May 3, 2018. During this interaction, the head of innovationof the global pharma major – UCB,articulated how his company is creating a culture based around ‘design thinking’, right across the organization.

Acknowledging that pharma is generally accused of being distant from patients that it intends to serve, he explained how UCB is aiming to address this issue byfostering a new patient-centric organizational culture through ‘Design thinking.’

Detailed analysis of the needs of the target audience following this process, and the use of insights thus gained, will also encourage researchers to create appropriate new products. The core idea is to create products that are led by the needs of customers – something that is so critical for pharma companies, particularly in increasingly competitive commercial landscape.  He advised people to be persistent and professional, as they measure and see the results, which has potential to create a snowball effect in the organization.

Conclusion:

Several studies indicate that the companies with a long track record of delivering stakeholder value, are more customer focused. Apparently, pharma players are progressively experiencing that for sustainable business excellence, their customers – including patients, should form the nucleus of corporate business strategy. The same concept should, thereafter, cascade down while developing the game plan for each functional area. There doesn’t seem to be any other viable alternative for the same, right now.

With upswing volatility in the business environment, ‘design thinking’ merits to become a relentless process, particularly for creating assertive employee-mindset to accept the challenge of perpetual change, anytime. Accordingly, a well-structured and equally well-integrated, ongoing feedback data generation mechanism, together with sophisticated analytical tools, supported by other requisite resources, should be put in place.

Ample evidences demonstrate that ‘design thinking’ helps business to stay always in sync with the market, customers and also its employees, for performance excellence. It can provide creative inputs for developing game changing business strategies, meeting customers’ new expectations, or even to reformulate those, which are yielding declining or sub-par outputs. Consequently, it becomes incumbent upon top decision makers to integrate this process into the pharma organizational culture.

Thus, I believe, ‘design thinking’ is an effective way of creative problem solving in a number of situations, having its source both within and outside the organization. It carries a promise of improved all-round corporate achievement – often translatiaing struggles into positive outcomes in the pharma business.

By: Tapan J. Ray   

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Innovation: Is Big Pharma Talking Differently?

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“Nearly 2 billion people have no access to basic medicines, causing a cascade of preventable misery and suffering. Good health is impossible without access to pharmaceutical products.” The World Health Organization’s (WHO) ‘Access to Medicine’ report on ‘Ten years in public health 2007–2017’ made this observation.

It also reemphasized: “A significant proportion of the world’s population, especially in developing countries, has yet to derive much benefit from innovations that are commonplace elsewhere.” Despite this, continued lobbying of many pharma companies for TRIPS-plus measures and legislation, the breaching of laws or codes relating to corruption and unethical marketing, and several blatant instances of company misconduct continues, even today.

In the midst of this situation, has Big Pharma started thinking differently about the purpose of innovation? I shall try to explore the ground reality in this article.

The argument of Big Pharma:

In response to the above observation or anything akin to that, Big Pharma has counter arguments, which are rather contentious, as many believe. They generally say, it is the responsibility of the different governments to alleviate health misery of the citizens, and not theirs. In tandem, they keep repeating the same old argument, underscoring lower prices of innovative drugs would lead to lower profit generation, significantly slowing down the process of innovation.

Drug innovation follows an arduous path and an expensive process: 

Big Pharma wants people to comprehend about what it entails in the journey of discovering a New Molecular Entity (NME) and converting it to a safe and effective medicine.

For example, in its booklet Bayer explained: ‘it takes about ten to twelve years to develop a new drug. during this time, highly qualified scientists from a variety of disciplines work on filtering out a suitable active ingredient from an enormous number of compounds. Between 5,000 and 10,000 compounds are rigorously studied in numerous laboratory tests and the best ones further optimized. out of four or five drug candidates that are then tested on humans in clinical studies often only one substance is approved and becomes available to physicians and patients.”

The entire process reportedly takes around 14 years, and according to a 2016 study by the Tufts Center for the Study of Drug Development - developing a new prescription drug, which gains marketing approval, is estimated to cost drug manufacturers USD 2.6 billion. Besides, a new analysis conducted at Forbes finds that getting a single drug to market may involve an expenditure of USD 350 million before the medicine is available for sale. It concludes, large pharmaceutical companies that are working on dozens of drug projects, spend USD 5 billion per new medicine.

Drug innovation is only for those who can afford:

As is being witnessed by many, Big Pharma always tend to argue that high R&D costs drive new drug prices up in pharma. Moving a step further, that drug innovation is for only those patients who can afford, was justified even by the CEO of a major constituent of Big Pharma. An article published in Forbes Magazine on December 05, 2013 wrote: “At the Financial Times Global Pharmaceutical & Biotech Conference this week, Bayer AG CEO, Marijn Dekkers, is reported to have said that Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western patients that can afford it.”

How strong is the justification for high new drug cost?   

Instead of believing the pharma argument on its face value, it will be worthwhile to go for a dip-stick analysis. One such analysis, titled “Pharmaceutical industry profits and research and development”, published by the USC-Brookings Schaeffer Initiative for Health Policy on November 17, 2017, presents some interesting facts.

It says, the pharmaceutical industry is a high-fixed-cost and low-marginal-cost industry. This means, as the authors explain, that the cost of bringing a new drug to market is very high and the process is risky, while the cost of producing an extra unit of a product that is on the market is frequently “pennies a pill”. It also, indicates, though there is a disagreement about the exact cost of bringing a new drug to market, there is general recognition that the process costs run a fewhundreds of millions of dollars per new drug. Thus, innovative drugs are supposed to be somewhat more expensive to many patients. But how much – is the question to ponder, I reckon.

An example of a new drug pricing:

Let me choose here, as an example, the pricing of one of the most contentious, but undoubtedly a breakthrough medicine – Sovaldi (Sofosbuvir) of Gilead. Sofosbuvir was discovered in 2007 – not by Gilead Sciences, but by Michael Sofia, a scientist at Pharmasset. The drug was first tested on human successfully in 2010. However, on January 17, 2012 Gilead announced completion of the acquisition of Pharmasset at approximately USD 11.2 billion.

Subsequently, on December 06, 2013, US-FDA approved Gilead’s Sovaldi (Sofosbuvir) for the treatment of Chronic Hepatitis C. Sovaldi was priced at USD 1,000 a day in the U.S., costingUSD 84,000 for a course of treatment. That Gilead can’t justify the price of its hepatitis C therapy – Sovaldi, was highlighted in an article with a similar title, published in the Forbes Magazine on June 17, 2014.

It is worth mentioning that Sovaldi costs around USD 67,000 for a course of therapy, in Germany. Whereas, it costs round USD 55,000 in Canada and the United Kingdom (UK). Gilead has accepted an altogether different pricing strategy for Sovaldi in some other countries, such as India and Egypt.

When the above concept is used to explain Sovaldi pricing:

The above Forbes paper explained its pricing by saying: “Add in other therapies that supplement Sovaldi, and now you’re talking about USD 100,000 or so to treat a single patient. To use Sovaldi to treat each of the 3 million hepatitis C patients in the United States, it would cost around USD 300 billion, or about the same amount we annually spend for all other drugs combined.”

Let me now put a couple of important numbers together to get a sense of the overall pricing scenario of a new drug. The New York Times (NYT) reported on February 03, 2015: “Gilead Sciences sold USD 10.3 billion of its new hepatitis C drug Sovaldi in 2014, a figure that brought it close to being the best-selling drug in the world in only its first year on the market.”

Against its just the first-year sale, let me put the cost of acquisition of Sovaldi at USD 11.2 billion, an expenditure of USD 350 million before the medicine is available for sale as calculated in the Forbes articleand the cost to manufacture a pill of Sovaldi at around USD 130. This reinforces the point, beyond any doubt how ‘outrageous’ its pricing is.Even Gilead’s CEO admitted to failures in setting price of Sovaldi at USD 1,000-A-Pill, said another article on the subject. More important is, the costs to Gilead for Sovaldi acquisition and launch were virtually recovered in just a little over a year, but Sovaldi’s original price tag remains unaltered.

Is the Big Pharma talking differently now?

It appears that some constituents of Big Pharma have now started talking differently in this regard, publicly – at least, in letters, if not in both letter and spirit. Be that as it may, one will possibly be too naïve to accept such sporadic signals coming from pharma, as a shift in their fundamental thought pattern on drug innovation as a profit booster. Being highly optimistic in this area, I would rather say that these are early days to conclude that Big Pharma has really accepted the reality that – drug innovation is only meaningful, if it reaches those patients who need them the most.

Changing…not changing…or early days?

Let me explain this point with examples of changing…not changing…orearly days.

Changing?

On July 24, 2018 during an interview to Pharm Exec the head of the sub-Saharan African region for Roche made some key points, such as:

  • Groundbreaking innovation in medical science is only meaningful, if it reaches the patients who need it.
  • Access to healthcare is a multidimensional challenge and key to addressing the barriers, is really understanding them
  • Need to create a new business model that can sustainably – and this is very important – create access for patients.

Not changing?

When one Big Pharma constituent is showing some change in its approach on the purpose of innovation, another constituent is trying to make the entry of cheaper biosimilar drugs even tougher. This creates yet another doubt – both on safety and efficacy of biosimilars, as compared to much higher priced off-patent original biologic drugs.In August 2018, Pfizer reportedly called for US-FDA guidance on ‘false or misleading information’ about biosimilars, citing some of the following examples from other Big Pharma constituents, such as:

  • Genentech’s “Examine Biosimilars” website, which states that “the FDA requires a biosimilar to be highly similar, but not identical to the existing biologic medicine.” Pfizer argues that Genentech’s omission of the fact that an approved biosimilar must have no clinically meaningful differences from its reference product is a failure to properly communicate the definition of a biosimilar.
  • Janssen Biotech’s patient brochure for brand-name Remicade, which states that a biosimilar works “in a similar way” to a biosimilar without clarifying that the biosimilar must have the same mechanism of action as the originator. Pfizer also takes issue with the brochure’s suggestion that no infliximab biosimilar has been proven to be safe or effective in a switching study.
  • Amgen’s April 13, 2018, tweet that states that patients may react differently to biosimilars than to reference products. Pfizer also points out an Amgen YouTube video that implies that switching to a biosimilar is unsafe for patients who are well controlled on a current therapy.

Interestingly, on July 20, 2018 Pfizer announced that the US-FDA has approved Nivestym (filgrastim-aafi), a biosimilar to Neupogen (filgrastim) of Amgen, for all eligible indications of the reference product. This is the fourth US-FDA approved Pfizer biosimilar drug, the marketing and sales promotion of which expectedly, I reckon, will be no different from other biosimilars.

Early days?

Yes, it appears so. These are early days to draw any definitive conclusion on the subject.

Conclusion:

W.H.O observed in its above report that the ‘overall situation is somewhat improving’. It was also corroborated in the ‘2016 Access to Medicines Index’, which gave high marks to those companies that negotiated licenses for antiretrovirals and hepatitis C medicines through the Medicines Patent Pool (MPP). MPP was set up in 2010 as a public health organization supported by the United Nations to improve access to HIV, hepatitis and tuberculosis treatments in low- and middle- income countries.

It could well be, on the purpose of drug innovation some new realization has dawned, at least, on some few global pharma majors. However, it is still difficult to fathom its depth, at this point of time. There is no conclusive signal to believe that the Big Pharma is now thinking differently on the subject, not just yet.

By: Tapan J. Ray   

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Key business strategies of global pharmaceutical industry are undergoing a radical change, while in India we are still thinking within the box. Who cares about the global clue?

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One of the leading consulting companies, PricewaterhouseCoopers (PwC) in its report of June 2007 titled “Pharma 2020: The vision –Which path will you take?” postulated that the business model followed by the global pharmaceutical companies is, “economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets”.
R&D is failing to deliver:Datamonitor highlighted that drugs worth U.S$ 140 billion will go off patent by 2016. Thus the value turnover that will be lost because of number of drugs going off-patent will be almost impossible to replace by this time. Many analysts have been expressing concerns about gradual but steady decline in pharmaceutical R&D productivity since quite some time. During this period, most of the research based companies could afford only a small increase in their R&D budget, while marketing and other overhead expenditures registered a significant increase.

Single global process of Drug Regulatory approval…is possible…but is it probable?

PwC in the same report touched upon another interesting possibility within the R&D space of the global pharmaceutical industry. It indicated that the research based pharmaceutical companies will gradually switch over from, “Classic model of drug development that ends in regulatory approval to ‘live licenses’ that allow for narrow product launches followed by gradually expanding approvals as drugs are continuously tested.”

Most interestingly, the report also forecasted that by 2020, the drug regulators across the world will work together under a collaborative framework to arrive at uniform and single global process of drug regulatory approval. If it materializes, the process will indeed be path breaking in every sense.

Global pharmaceutical market will register significant growth:

Following this trend, the report highlighted, that the global pharmaceutical sales will touch U.S$ 1.3 trillion by 2020, almost double of what it is today. High growth of emerging markets and the aging global population are expected to be the key growth drivers.

During this period E7 countries like, Brazil, Russia, India, China, Mexico, Turkey and Indonesia are expected to contribute around 20% of Global Pharmaceutical turnover. Keeping pace with the economic progress, the disease pattern of these countries are also changing, from infectious diseases to non-infectious chronic illnesses, like diabetes, hypertension, just as we now observe in the developed world.

Together with this change, many predict that ‘greenhouse effect’ arising out of global warming process will have significant impact on health of the global population, resulting in large scale re-emergence of diseases like malaria and cholera together with various types of respiratory disorders.

Radical change is envisaged in pharmaceuticals marketing:

In April 2009, PwC came out with another interesting report titled, “Pharma 2020: Challenging business models, which path will you take?” on the future of the global pharmaceutical industry.

As the time progresses global pharmaceutical companies will need to understand the shift in ‘perceived value’ that is taking place within patients, medical profession and the community as a whole towards healthcare delivery. Just an innovative medicine will no longer be able to satisfy their ‘value expectations’. Pharmaceutical companies will have to offer a ‘bundle of benefits’, combining the innovative products with related health services, for which the market will not hesitate to pay a reasonable premium.

Thus in future, global pharmaceutical companies will need to collaborate with disease management specialists for a “holistic offering” to address an ailment rather than just treatment of the disease with medicines. Such “value added and innovative” marketing strategies will differentiate business success from failure, in 2020.

In the recent report PwC advocates that to be successful, in future, global pharmaceutical companies will need to change their ball game almost radically. The future strategy will focus on collaborative arrangements between various allied healthcare establishments and the pharmaceutical companies to offer a “holistic solution” to the patients in all disease areas.

That means, global manufacturer of an anti-diabetic drug will need to offer along with the innovative drug, counseling on diet regimen, suggesting exercise programs and their follow-up, reminders for regular and timely intake of medicines and many more. Who knows?

“Better late than never”:

In any case, to excel in business at a time when the global pharmaceutical business model is undergoing a fundamental shift; there is a need to keep on investing more towards R&D, which will continue to remain the ultimate growth engine of pharmaceutical business, the world over. At the same time, there will be a dire need to prune expenditure in innovative ways and that opens the door for global outsourcing of various business processes from most cost efficient countries having world class facilities.

Domestic pharmaceutical players, if start mustering all resources to avail these global opportunities, India can soon become a global hub for pharmaceuticals outsourcing, outracing China which is currently placed ahead of India, in this field. As the good old saying goes, I shall always wish, “better late than never”.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.