Could you introduce yourself?
Tobias Rooney, Life Sciences Unit at Cap Gemini Ernst & Young. I have been doing management consultancy for the past seven years and I've specialised in the R&D sector for the past five. I have been involved in European and international projects for the major pharmaceutical companies. These projects have included strategic and operational missions for clients from middle management right up to the board.
What types of e-projects are happening in the Life sciences area?
At CGEY we have a segmentation of the market in three layers of e-business activities:
Within the company:
this refers to e-development between employees of the company, for example it can correspond to the company intranet. All companies have an Intranet that is more or less sophisticated. It can include news, jobs, newsfeeds etc.…The trend is towards individually specific portals. You can have a customised web site where you can follow topics of your interest and areas of management responsibility, for example a project leader could access information on project costs vs plan, competitor information, marketing data etc.
Within the immediate industry:
activities where you interact with companies directly working with you. This could include relationships with suppliers and stock management, or access to trials performance of your CRO
Redefine the value chain:
activies which change the existing value chain to give a lead advantage - this could be such things as recruitment and management of trials on line, on-line sales etc.
How does the pharmaceutical value chain fit within these layers?
You can divide the three circles into four areas: e-R&D, e-S&M, e-Supply chain and e-Administration
today fits mostly within the first circle and concerns activities like intranet development and online recruitment (HR).
supply chain is generally the "poor cousin" amongst all the opportunities the Internet can bring. In the case of drugs, the cost of supply is nothing compared to the cost of R&D and the cost of sales. Still, there is value in doing it. It creates cost savings, it is manageable and has an immediate impact. The business case is usually very strong and the clients don't have to make a leap of faith, the opposite of e-S&M where you have to sell an idea.
Sales & Marketing:
The objective is to create an interactive interface between the drug company, the doctor and, ultimately, the patient. Changes in the patient-doctor relationship create and drive opportunities in the sales arena. The internet is creating an increasingly knowledgeable patient, face to face with a doctor who is a generalist. Having helped create the knowledgeable patient, the internet can ease the doctor's dilemma through easy access to specialist information. There is a huge opportunity for the pharmaceutical companies to use the Internet to leverage their sales force efficiency through provision of data remotely, as well as on line tracking of sales performance, disease prevalence etc.
Research & Development:
In research the main areas of interest are in issues of knowledge management, and access to scientific databases online. In development the greatest area of interest is in the clinical trials management process - recruitment, data access and trial performance, all expected to significantly improve the speed and impact on the cost of trials. Patients are increasingly comfortable with looking for and subscribing to trials on-line.
What is the level of development of these "e"-activities?
The Pharma industry is viewed as not mature in e-business terms and as being very conservative and reluctant to implement e-business activities. Recently however the phenomenon has accelerated. E-procurement for example, is an activity of low risk and high reward and has been often considered as the entry point for pharma companies in e-business.
The real value however, as I see it, is in Sales & Marketing and Research & Development activities. R&D organisations are already active in various ways. There are numerous examples of on line trial recruitment, and a whole raft of specialized companies offering on line trials tracking and management tools. There are also a series of agreements between big pharma and specialist companies offering access to specialised genomic databases.
S&M has been the less developed area, in that the tendency has been to offer "brochure sites" offering information on products or conditions, but not interactive sites. This is clearly a complicated legal area due to different legislation around product promotion and prescribing. The next step is to move from a sales support role to a specific channel in itself, and the potential is huge:
- Healthcare is the most accessed topic for Internet connections.
- On a recent survey, 80% of doctors would prescribe the drug the patient requested.
- The UK has the highest rate of doctors online.
What are the main challenges to overcome in order to successfully implement an e-business activity?
Internally to the company, the most obvious question is that of data access - the internet and by extension the intranet is a great leveller, providing ease of access to everyone. This pushes the organisation to make decisions about data access, which in turn will uncover a nest of political considerations about data use, responsibilities and who gets to make what decision.
In the R&D area, you are constantly confronted with how to ensure the patient confidentiality and data integrity, and as the issue of data security is one of concern generally on the internet, this is clearly a restraining factor.
For e-S&M activities the benefits are great…so is the risk. The big pharma have to be careful with their legal and ethical image. It is difficult to promote ethical drugs on the web. Direct to consumer is significant in the States but is still forbidden in Europe. It is difficult to promote a drug: the entry point is rarely a pharma company but more often an independent web site like Web MD, the name of a drug and the link to the pharma company comes last. The big pharmas stand outside for the moment and need to figure out how to get into this huge marketplace in a strategic way. The challenge is how to crack this nut.
More generally the issue is often one of organizational culture. The internet, and success on the internet comes about historically through companies radically changing their operating model. It is not about having another channel to collect data or market the product, it fundamentally changes relationships within and along the value chain. Until pharma addresses this problem, e-business will remain a marginal source of competitive advantage.
So, then what will the future look like? Will there be a new set of alliances? Emergence of marketplaces?
"The future will depend on how pharma companies see their role. Pharma have taken stakes in various companies, developed sophisticated web sites for patient information, and explored data access alliances. Certainly we will see the development of all manner of intermediary company offering specialised services and opportunities. Pharma is used to the outsourcing of certain needs, but the question will be one of identifying where the real value is created.
I think we will see a plethora of specialist companies offering specific services along the value chain, a greater outsourcing of company activities, and an increasing push towards business performance within pharma. Ease of access to data, pressure from health authorities, and a myriad of other trends have meant that pharma needs to manage more efficiently its business decisions. Changes in organisational structure have been announced at GSK along these lines. Will big pharma meet these challenges head on? Hard to say, I think some will see the need to adapt and evolve, and others will get stuck in an outdated business model which will leave them little option but to merge or be bought up.
For marketplaces specifically, I do think there are some opportunities for marketplaces but I am not sure what are the criteria for success and development. A number of market places can evolve.
For example in R&D, some companies are bringing together CRO and "big pharma": "big pharma" puts a request and the CRO puts a bid. There are some opportunities for intermediaries to manage some new e-opportunities. Classical e-procurement type market places are less obvious due to the regulatory constraints on manufacturing processes during development and the selection of suppliers
"The Internet offers a lot of opportunities to understand and communicate directly with the patient but what does the patient "get"? Information becomes a gold mine for pharmaceutical companies but how much patients benefit from it is not obvious. People need to develop a strong and clear value proposition.
For the moment the Internet world is still characterised by massive uncertainties and people investing for massive opportunities…."