Cardiovascular Therapeutic Market: Insight-Driven Commercial Models

8/7/2019 Cardiovascular Therapeutic Market: Insight-Driven Commercial Models

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1 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright 2011 IHS.

How Can Insight-Driven CommercialModels Deliver Value in Cardiovascular

Therapeutic Markets?

The Sourcefor Critical Information and InsightTM


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The ast-changing dynamics o the pharma industry

require re-evaluation o analytical models and

streamlining o insight-development processes to

ensure sustainability .................................................. 3

Stakeholder value expectations are the highest in

the cardiovascular therapeutic area, where insight

will play a vital role in uture growth models ............... 4

Growth Model 2.0: Analytical processes that

integrate portolio management, competitive

intelligence, and stakeholder engagement will be

central to uture sustainability. ................................... 5

Function: Market Access .......................................... 6

Function: Competitive Intelligence /

Strategic Planning ..................................................... 7

Function: Research & Development .......................... 8

New commercial models integrating insight-

development processes will be the cornerstones

o success ................................................................ 9

Meet the Author ...................................................... 11

The IHS Global Insight Healthcare

and Pharmaceuticals Practice ................................. 11

How can IHS help you? .......................................... 11

Contents

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The pharmaceutical industry is going through a

period o signicant change driven by the rise o

generic drug markets, payer-centric commercial

models, the growth o pharmerging markets, and

outcomes-based decision making.

In 2009, the industry grew at a rate o 7% to $837billion1, largely because o both horizontal and vertical

consolidation. Key growth actors included the

increasing demand or major therapies in emerging

markets and the rise o specialist-driven markets.

The pharmaceutical industry typically consists o many

independent, highly concentrated sub-markets aligned

to therapeutic categories. Companies compete aggres-

sively in each category, oten using a dual strategy:

Market dominance in one particular disease class Risk-benet-based portolio diversication orthe remaining disease classes

Market leadership in each category is largely

governed by a companys depth o technological

capability and the market penetration o its

existing portolios.

Evolving analytical

models need to

harness consolidated

inormation sources

in order to allow

efcient, intelligent

decision making.

So Whats Changed?

Over the last 50 years, intrinsic innovation was the

main driver o industry growth. During this time,

pharmaceutical companies typically invested

around 15% o their net revenues in Research and

Development (R&D), relying heavily on the success

o single blockbuster products.

Escalating R&D costs, declines in productivity, and

ailures o many late-stage pipeline assets have raised

doubts about the traditional blockbuster-dependent

approach. Many industry experts oresee a payer-

centric growth model driven by coordinated insight-

development processes as the next rontier o success.

Although industry growth is expected to continue, the

nature and structure o growth is evolving rapidly. On one

hand, there are tremendous opportunities in the emerging

markets, and on the other hand, there is a tightening com-

petitive and regulatory landscape in developed markets.

What Does It Mean?

In order or pharmaceutical companies to successully

navigate the opportunities and challenges o this evolv-

ing landscape, it has become ever more important or

them to optimize their insight-development processes.

A robust insight-development process relies on

eective inormation compilation and ensures a

coordinated fow o inormation rom one business

unction to another. It will help pharmaceutical

companies increase commercialization eciency

by engaging proactively with various stakeholders

(payers, regulators, patients, and physicians).

The ast-changing dynamics o the pharma industry require re-evaluation o analyticalmodels and streamlining o insight-development processes to ensure sustainability.

1 Source: IMS


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The cardiovascular therapeutic segment and its

subsequent disease markets are the leading areas o

growth in the pharmaceutical industry. They command

the largest market or prescription drugs and in 2009

generated $110 billion in sales, accounting or about

13.5% 2 o the total market.

Over the last 30 years, pharmaceutical companies

have invested heavily in the cardiovascular arena to

develop and commercialize molecules or various

indications. Competition within the eld has intensied

as a result o:

Rise in the level o investment Stakeholder commitment towards deployment

o resources

High unmet clinical needs Expected greater returns on employed capital Technological advances Greater disease understanding

The increased competition has not only led to signicant

developments in the treatment landscape, but has also

altered the dynamics o the therapeutic category by

placing greater emphasis on the value o cardiac care.

What has driven the rise in stakeholder

value expectations?

Demographic Shifts

According to the World Health Organization (WHO),

the high prevalence o cardiovascular disorders is

attributed to aging populations, coupled with advancesin diagnostic technologies. The aging population is

driving the heightened emphasis on social care in

healthcare systems worldwide.

Payer-centric Solutions

There has been a considerable shit in the balance

o power between payers and pharmaceutical

companies. Patient solutions have evolved towards

payer-centric approaches that rely on outcome-

and evidence-based decisions. The quality ocare, improved patient outcomes, and cost o

aordability are the principal areas o controversy

between stakeholders.

Growth of the Generic Drugs Market

A recent study indicated a higher level o generic

availability in cardiovascular markets than branded

products due to cost-containment strategies in

healthcare systems worldwide. This has led to a

signicant pressure on margins or existing players

in the category.

Specialty-focused R&D

There is an ongoing trend in cardiovascular towards

more specialized therapies, as this approach

oers greater competitive advantage and ensures

sustainability. This carries signicant upward risk

and a higher cost base, but has the potential to

deliver ar greater value or all stakeholders.

Stakeholder value expectations are the highest in the cardiovasculartherapeutic area, where insight will play a vital role in uture growth models.

2 Source: Adpated from Cowan Report 2009


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Cardiovascular therapeutic markets need a strategic

re-ocus because o stakeholders high value

expectations. Key uture success actors will centre on:

Portfolio Diversity and Optimization

Diversication ensures optimized allocation o nite

resources towards projects with greater return oncapital at an acceptable level o risk. The level o

diversication depends on a companys core strategy

and its relative position in the market. Successul

diversication strategies rely on up-to-date market

inormation and agile analytical models.

Dynamic Competitive Intelligence

Integrated intelligence processes act as principal

levers o success in a highly competitive environment

by ensuring aster movement o inormation between

markets and decision makers.

Evidence- and Outcome-based Decision Models

Success in the new pharmaceutical landscape will

largely depend on how ast companies implement

outcome-driven strategies. Quality and consistency

o inormation are core oundations o outcome-

based models.

Prioritized Stakeholder Engagement

The evolving market dynamics place greater emphasis

on the need or much broader engagement between

various stakeholders.

An eective engagement strategy depends on

inormation sharing and processing in order tomake value-driven conclusions.

Opportunities Ahead

There are tremendous opportunities or growth within

the segment, but the development and commercial-

ization landscape has shited to a more value-driven

ramework. To gain market access, newer therapies

and solutions must exceed existing value expectations

and increase the total level o cardiac care.

In order to achieve uture growth, pharmaceutical

companies will need to eectively monitor inormationacross many verticals and integrate those inormation

paradigms into insight-development processes.

In the ollowing case studies, we examine the

signicance o inormation and insight-development

practises or three unctions within the pharmaceutical

industry: market access, strategic planning, and R&D.

Growth Model 2.0: Analytical processes that integrate portolio management, competitiveintelligence, and stakeholder engagement will be central to uture sustainability.

The development and

commercialization

landscape has shitedto a more value-

driven ramework.


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Market access is one o the most important

unctions in the pharmaceutical industry and is

directly responsible or late-stage commercialization

o a companys drug pipeline.

Market access is typically a three-stage process

commencing with regulatory approval, reimbursementor pricing approval, and ormulary inclusion.

To gain market access or dierent assets, a pharma-

ceutical company must develop an evidence-based

approach ocused on three undamental principles:

Demonstration o clinical and economic value Price evolution according to market conditions Early timetable integrating clinical and economicendpoints

The key challenges faced by market access

professionals:

Understanding the pricing and access landscape

Interpret and orecast payer behavior or newproducts given the current barriers to market entry

Analyze the impact o current trends on theclinical landscape

Optimise potential value propositions to gainaster market access

Deciphering the value drivers

Identiy the value drivers or dierent stakeholdersand potential strategies to overcome reimbursementhurdles

Understand the role o clinical variables rom apayers perspective

Creating value propositions to fully capitalize

existing Pricing and Reimbursement (P&R)

opportunities

Identiy market-access barriers and model payerperception towards dierent scenarios

Conclusion

For companies to mitigate all the key challenges and

develop a strategic road map, inormation processes

play a central role. Timely, consistent, and analytically

rich inormation serves as a undamental building block

or an integrated market-access strategy. An integrated

data source that incorporates dierent verticals oinormation will eectively minimize the time-to-market

challenges by providing greater insight.

Function: Market Access

Current MarketScenario

ClinicalLandscape

PipelineDynamics

RegulatoryEnvironment

Number o competitors Genetics growth rate Market size Positioning o current assets Prive evolution o each asset

Country risk assessment Regulatory guidelines Engagement scenarios

Endpoint data Adverse events assessment Post-marketing trial inormation Evolution o clinical guidelines

Competitor pipelineassets

Clinical trial results Pipleine monitoringand analysis

Figure showing the information

dimensions of Market Access and

the critical information needs.


7/12 7 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright 2011 IHS.

Sustainable perormance in todays complex industry

environment relies on how quickly companies process

market inormation and develop strategic processes to

gain competitive advantage.

Competitive Intelligence (CI) is one such inormation-

harnessing unction. High-quality data is theoundation o an ecient intelligence unction and

ensures aster development o insight-driven

solutions at both the tactical and strategic levels.

Intelligence-rich data enable companies to interpret a

given situation, e.g., a recent trend or uture orecast,

and base strategies or uture developments on the

current situation and knowledge.

A key challenge or any CI unction in the pharmaceuti-

cal industry is the optimization o insight-development

processes and implementation methodologies.To develop an optimized CI process, companies

need timely data ocusing on:

Current Competitor Activity Price cuts Product-labelling updates Major licensing and agreement developments Patent expiration

Market Landscape Variables P&R environment in dierent countries Clinical and regulatory policies Orphan drug designations Post-marketing trial inormation

Pipeline Monitoring Endpoints o various trials Potential new entrants in same sub-therapeuticcategory

Forecasted market positioning KOL opinion analysis

Conclusion

In order to achieve the ecient level o optimization

or intelligence models, insight-development processes

play a central role.An integrated data source, together with an

advanced analytical platorm, will help pharmaceutical

companies gain competitive advantage and ensure

uture sustainability.

Function: Competitive Intelligence / Strategic Planning

A successful intelligence

framework depends on

the three fundamentalbuilding blocks of

structure and process,

awareness and culture,

and planning and

implementation. This

structure is constantly

reinforced through

effective compilation

and utilization of

information.

Communication

Analysis

CollectionInterpretation

Awareness and Culture

Planningand

Implementation

Structureand

Process

INFORMATION LANDSCAPE



R&D is one o the most important unctions in the

pharmaceutical industry, as it ensures uture growth

and sustainability. Nevertheless, over the last couple o

years, this unction has come under intense pressure

because o declining productivity and rising costs

o introducing new compounds. This situation is

heightened in the cardiovascular market with its highstakeholder value expectations.

Many pharmaceutical companies have started to

reorganize their R&D programs by incorporating

market variables into the development structure. There

has been a growing debate that R&D unctions must

not be isolated rom the pricing or reimbursement

environment. A clinical development program must

take into account the payers perspective on the

design, implementation, and interpretation o

clinical variables.

A ully integrated approach needs continuous

monitoring and analysis o competitive, regulatory,

and payer activity, including:

Competitor pipeline variables Indications o various trials Detailed primary and secondary endpoints Results o completed trials Number o enrolments in major trials Saety and ecacy inormation

Regulatory landscape Detailed inormation about registration trials Response o regulatory agencies to clinicalresults data

Payer behavior towards clinical outcomesConclusion

The eectiveness o the R&D unction largely depends

on integrating three main levers o inormation:

regulatory landscape, clinical environment, and

market-access scenarios.

A ully comprehensive data source will help

pharmaceutical companies develop a cost-eective

and market-responsive R&D strategy by providing

greater insight on stakeholder perspectives.

Function: Research & Development

Figure: Stakeholder engagement map

for R&D function

Regulatory

R&D

MarketAccess

ClinicalEnvironment


9/129 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright 2011 IHS.

The pharmaceutical industry is in a state o fux,

and many orces are re-shaping its core structure.

Historically, pharmaceutical companies have

succeeded by discovering, developing, manuacturing,

and then marketing their products, oten allocating

resources in the prioritized manner.

The sequential approach (tunnel innovation) o

resource allocation has uelled the growth o the

blockbuster-dependent commercial model. One

o the principal drawbacks o this approach is the

peripheral position o inormation and how it is

used in decision-making models. Inormation was

disseminated rom one discipline to the next, but

not within disciplines, oten creating inormation

silos and masking.

A Rapid Evolution

With the rise o the inormation age, the undamental

elements o success are evolving rapidly. Pharmaceutical

companies are challenged on several ronts, and their

major areas o concern are centred on:

R&D technologies Regulatory emphasis and market access Stakeholder engagement E-business and supply chain management Marketing and consumer demands

The role o inormation has changed dramatically in

such a competitive environment. The need to compile

inormation sources is exacerbated with the rise o the

payer-centric model and the requirement or economic

endpoints in decision making.

For uture growth and success, new commercial

models must integrate insight-development processes

in order to actively engage the various cross-unctional

disciplines within a company.

Pharmaceutical companies should work towards

resolving all the roadblocks in inormation sharing

and compilation.

An integrated inormation source will help ease

many concerns or dierent stakeholders in the

pharmaceutical industry. It should give timely,

accurate, and mission-critical inormation oncompetitors, regulators, payers, and consumers,

thereby providing pharma companies with eective

stakeholder engagement points and helping them

achieve a sustainable growth strategy.

New commercial models integrating insight-development processeswill be the cornerstones o success


10/1210 | How Can Insight-Driven Commercial Models Deliver Value in Cardiovascular Therapeutic Markets? Copyright 2011 IHS.

PharmaceuticalCompanies

RegulatoryAgencies

Physicians/

ClinicalCommunity

Patient

PayerGroups

Inormation

The blockbuster-dependent model relies on

cyclical fow o inormation but lacks ocus to

disseminate inormation across disciplines, oten

creating inormation silos.

The payer-centric model works on undamental principles

o inormation dissemination across disciplines and between

stakeholders. It links decision-making process through

uniorm distribution o inormation.

Pharmaceutical

Companies

Physicians/

Clinical Community

Patient

Regulatory

Agencies

Payer

Groups

Figure highlights the evolving

commercial models in the

pharmaceutical industry and the

changing role of information inthe decision-making process.

The blockbuster-dependent

approach relies on information

sharing as a collateral function,

depending on communication of

results, whereas the new payer-

centric approach requires an

integrated and cross-functional

utilization of information.



Meet the Author

Praful Mehta

Senior Healthcare Analyst, IHS

[email protected]

Praul Mehta is a SeniorHealthcare Analyst at IHS. He

joined the company in 2010 and

is a practice leader within its

therapeutic area services. Praul has been a long-time

advisor to senior teams within the pharmaceutical

industry on issues o market competitiveness, busi-

ness integration and commercialization strategies.

Prior to working at IHS, Praul was a Vice President

at StrataPro Analytics and Consulting, where he

developed the companys core consulting capability

or developed markets. He also led various project

teams at GlaxoSmithKline Pharmaceuticals and

Johnson & Johnson Pharmaceuticals.

Praul holds an MS degree in International

Management and Corporate Strategy rom North

Eastern University / Dublin City University. He has

a BS with honors in Genetic Engineering and

Biotechnology rom American University / M-IIT.

The IHS Global Insight Healthcare

and Pharmaceuticals Practice

The IHS Global Insight Healthcare and

Pharmaceuticals practice provides a portolio o

intelligence solutions to optimize the perormance

o companies and organizations across the

pharmaceutical, biotech, and generics sectors.

Our key ocus is to provide actionable insights to

support strategic decision making, particularly in the

elds o market access, pricing and reimbursement

(P&R), emerging markets, generics strategies,

therapeutic development pathways, and general

competitive intelligence.

Find out more about our healthcare and

pharmaceuticals practice

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Cardiovascular Therapeutic Market: Insight-Driven Commercial Models

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