BusinessWeek: Pharma's recovery "starts by admitting" biz model problem

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Big Pharma has received more unsolicited advice on how to reinvent itself--this time in the form of a BusinessWeek column by two consulting executives who suggest, among other things, that Pfizer consider partnering with Wal-Mart.

Still, pharma needs help. As the authors from the consultancy Maddock Douglas point out, citing IMS Health data, drug companies are expected to lose $137 billion between 2010 and 2013 because of patent expirations and business lost to copycat drugs. Every year, developers sink tens of billions of dollars into R&D to rescue their pipelines, with lackluster productivity to show for it. The column points out, as some have said before, that new business models are needed to rescue pharma.

While we've seen Big Pharma companies like GlaxoSmithKline and Sanofi stir their R&D pots by looking outside their organizations for help in discovering and developing new products, the BusinessWeek column writers seem to call for drug outfits to look even further outside of the proverbial box. In a purely hypothetical example, they prescribed that Pfizer partner with retail giant Wal-Mart on a "Readi-Clinic at Wal-Mart, Powered by Pfizer," in which case the drug giant would provide treatments such as the cholesterol pill Lipitor as well as a service model.

Perhaps such a scenario isn't so far-fetched. Drug companies have been spent so much time and money on developing the best possible drugs, they might have neglected their business models. The column argues that companies like Starbucks and Apple and Southwest Airlines haven't necessarily succeeded in their respective industries because they have the best inventions. Those companies do now how to engage their customers, however, and executing on that score might offer a better way forward for Big Pharma too.

- see the column in BusinessWeek

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