“The pharmaceutical business is changing.” This mantra echoes through every industry board and lunchroom. Negative public opinion of pharma rose dramatically in the past decade, bringing a host of cumbersome legislative and societal impacts. New technological advances redefine the healthcare delivery system, with increasing virtual doctors’ offices sharing information through digital media.
The Affordable Care Act (ACA) promises to reshape access to critical markets. Many parties—inside and outside pharma—call for a shift from transactional to outcomes-based healthcare payment. Pharma’s current course is rough and uncertain, but identifying fundamental themes in societal trends can improve both public perception of the pharmaceutical industry and provide unique business opportunities.
Business As Usual Is Behind Us
Even with universal acknowledgement of inevitable changes, uncertainty exists in identifying the best business strategies for this shifting environment. One thing is certain: Business as usual is not a sensible option. Innovative businesses devise and implement strategy to take advantage of shifts in ideology and market forces. Since the major changes in the industry address societal issues, seeking value creation outside traditional pharma business strategy is important to developing novel and profitable enterprises.
Through the lens of traditional pharma business strategy, shifting societal trends are too often viewed as hurdles. Newer paradigms re-envision these as opportunities to address key gaps in business performance and public perception. The shared value business concept, first introduced by Dr. Michael Porter in the Harvard Business Review,1 offers key insights into capitalizing on the relationship between societal progress and economic growth. This article explores the current implementation of shared value approaches in the industry and the benefits of shifting the commercial pharma paradigm toward these models.
What is Shared Value?
A shared value model aims to integrate traditional approaches for advancing a business’ competitive advantage with the more novel concept of developing societal improvements. Similar to the concepts of corporate citizenship and corporate social responsibility, shared value is distinct as it seeks to create value—not merely to project a sense of responsibility. Shared value is not philanthropy or even corporate citizenship, but self-interested behavior that promotes self-value through the creation of mutually beneficial institutions, infrastructure and partnerships. The theoretical aspects of shared value elaborated by Porter are best described by three basic and self-reinforcing tenets:
1. Products and Markets: Devising new products and structuring markets in manners that meet consumer needs and contribute to society.
2. Value Chain Manufacturing: Incorporating social innovation into the definition of productivity and corporate value.
3. Clustering: Protecting business interests by supporting industries, companies and institutions that benefit your own.
Employing Shared Value In Contemporary Pharma
Few industries are more closely tied to societal needs than pharma, and as such, few industries gain as much from incorporating shared principles into business practices. Since the industry is often plagued with an unfavorable public image, many in the media and government sometimes fail to acknowledge pharma ultimately exists for the benefit of patients.
Perceived societal needs are the fundamental drivers of pharma markets. Every aspect of the innovative pharma industry—from research and development to marketing and sales—ultimately hinges on patient well-being. As the industry looks toward the future shifting paradigms in development and marketing strategy, incorporating these societal needs into business plans will increase the societal benefits, improve public perception and, more compellingly, increase the bottom line. Several large players in the pharmaceutical industry have already identified the benefits of shared value approaches for their own strategies. Three include:
- Eli Lilly: The Lilly Global Health Innovation. Created to develop and promote innovative pharmaceuticals for disadvantaged and traditionally underserved markets.
- Novo Nordisk: Blueprint for Change Program. A program that identifies and addresses barriers to quality healthcare for patients with type 2 diabetes.
- Novartis: Community Health Initiatives in Arogya Parivar. Involves hiring community healthcare educators in rural India to build distribution systems of Novartis products to underserved regions.
Novo Nordisk is one of a handful of companies that actively pursues a shared value approach in their business model. Not only does the company explicitly address this concept in their corporate promotions, but they also engage the applied principles using programs such as their Blueprint for Change Program. This initiative works to identify and address barriers to quality healthcare for diabetes patients around the globe.
In the U.S., this program is mainly implemented by the commercial side of the business. According to Novo Nordisk, positive type 2 diabetes treatment outcomes require a focus on both products and services.2 To this end, emphasis of the commercial efforts towards patients and other stakeholders is placed on support programs in disease awareness, patient advocacy, community, access to healthcare and to education. The Novo Nordisk “blueprint” offers other commercial operations a roadmap for incorporating shared value into their corporate identity.
Shared Value = True Patient Centricity
Looking towards the future, what elements of shared value can pharma implement to benefit the industry? Fully incorporating this concept into commercial enterprises offers true patient centricity and a level of societal awareness that can deliver significant gains for individual brands and the industry as a whole. The Novo Nordisk example offers a valuable and simple method to incorporate shared value into commercial operations. Simple means to begin incorporating the first tenet of shared value—products and markets—into commercial operations are available and we explore them here.
Porter and Kramer contend that devising new products and structuring markets to meet consumer needs—and contribute to society—is critical to establishing shared value. The development of complementary support programs is one avenue that many pharma companies have used for years.
Bettering Patient Engagement
A commonly used method of support: Providing financial assistance through patient assistance programs, co-pay reduction, coupons and reimbursement assistance. These programs also provide useful assistance through non-financial means such as education, disease management and patient community support. One simple method for bettering patient engagement through shared value: Develop support programs that improve patients’ healthcare experiences and efficiently communicate these programs through physicians, pharmacists and payers.
To build specified support programs tailored to patient needs, research the target audience and develop a detailed understanding of key demographic nuances. Use all the corporate knowledge and gain insight from qualitative patient-level data, such as ethnographic research. This level of detail requires an understanding of the patient journey beyond the physician’s office. The goal is to uncover how the patient goes through their full healthcare journey on both physical and emotional levels. Appealing to both of these facets enables the creation of programs with the greatest access and impact on the patient.
Although simple in concept, the key to inserting the new brand program into the patient journey is to solve problems, not create them. Use all the information your company has uncovered to map the patient journey. Identify areas of inefficiency (delay, required third-party input, etc.). Then build patient support programs that integrate into the patient journey and seek to improve their healthcare experience.
Engage the Patient Earlier On
For pharma marketers to improve healthcare experiences and outcomes, it is critical to connect with patients before they fill their first prescription. By engaging patients earlier in their post-diagnosis experience, pharma can gain greater influence in educating both patient and healthcare provider on specific details of a suite of therapies. Therapeutic education has traditionally been left up to intermediaries. However, new digital tools offer other ways to connect directly with the patient and decrease prescription abandonment. Empowering patients through education is the first step in brand engagement.
Although support programs alone can better the patient experience through shared value, it is equally important to efficiently communicate these programs through intermediaries. An effective way to accomplish this: Find ways to minimize intermediary communication bottlenecks, thereby improving information flow and access for patients. Work collaboratively with other commercial operations, including those outside of your enterprise, to reduce bottlenecks.
Collaborate to Communicate With Patients
With collaborative online resources such as PPARX.org or RxCuris.com and streamlined information flow, branded pharmaceuticals can more effectively communicate with patients by providing access to useful information. In the hyper-competitive market of branded pharmaceuticals, collaborative partnerships may make some traditionalists uneasy, but investing in common platforms for information sharing is a critical step for effective future healthcare communication. Third-party companies have already started to fill this void, offering aggregated info that gives intermediaries consistent access to normally disparate information in one easy-to-navigate space.
For pharma to adjust to changing societal roles, innovative companies must re-envision the paradigms for success. Fortunately, the foundation already exists. Adopting shared value principles by modifying existing support programs and investing in collaborative information sharing is an easily implementable first step in creating online infrastructure for societal gains. In such tumultuous times for pharma, one thing is certain: The shared value paradigm is a game changer.
1. Porter M. & Kramer M., “Creating Shared Value,” Harvard Business Review, Jan-Feb 2011 (1-17).
2. Novo Nordisk, Creating Shared Value Through Socially Responsible Initiatives in the United States, The BluePrint for Change Program, Jan 2012 (fg 6).