Strategic Innovation in the Pharmaceutical Industry!Guest Lecture for McGill University:!

Managing Innovation and Competitive Strategy!!

John G. Singer, Senior Vice President!!

March 19, 2014!

•  Share a new strategic framework!–  Structural change in how the world “works”!–  Fresh perspective to innovate, be different!

•  Talk about strategic innovation in the pharmaceutical industry!–  A new way of competing!

•  Ask me anything!–  Business, career, job-hunting!

•  Brands used for illustrative purposes only!–  Better than “brand A”!

2  

Today’s Agenda!

me!!!

!

About 25 Years Experience in Marketing and Innovation Services Focused on the Pharmaceutical/Health Sector!!!!•  Lead U.S. Healthcare Practice at OMC Marketing Company!•  Manage Account Teams of 20 People: Client Services, Decision

Sciences, Creative Technology, Design !!

Senior Vice President!Head of U.S. Healthcare Practice at RAPP!

50 offices in 30 countries!Founded in 1964!Headquarters in New York City!Strong presence in LA, SF, and Dallas!Over 2,000 employees worldwide!Pioneered the concept of “CRM”!!

More than 20 disciplines in-house!Data Sciences: Statisticians, Data Mining and Modeling, Business Analytics!CRM Technology: Database Architects, Front- and Back-End Developers!Creative Technology Studio: Technologists, Writers, Designers, Craftspeople!Experience Design: Systems Thinkers, Interaction Designers, Researchers!Interactive Communications: Multi-Channel, Brand, Strategy!Project Management: 5 Project Managers with Six Sigma Black Belt!

RAPP is a Unique Marketing Company:the combustible power of data + creativity + technology!

Pfizer Races to Reinvent ItselfThe New York Times – May 1, 2012!

Drug executives are asking themselves: “What is it that we now face, given that in the past decade -- when everything was going right – we didn’t build with this future in mind?” said Jeremy Levin, who oversaw a similar re-organization of Bristol-Myers Squibb and is about to takeover as chief executive at Teva Pharmaceuticals.  !

the breakdown of industrial age

ideas!

fragm

enta

tion

incr

easi

ng!

boundaries dissolving!

OldEra!

New Era!

Future of Complexity!and Competition!?!

new kind of customer!

CVS  chief  shakes  up  business  model  of  US  pharmacies    CVS  expects  to  lose  about  $2bn  in  annual  revenues  from  the  decision,  just  a  fraction  of  its  total  2012  sales  of  $123bn.    Although  the  Binancial  stakes  are  not  large,  Mr  Merlo’s  move  sets  his  company  apart  from  its  peers  by  choosing  to  forgo  short-­‐term  proBits  for  a  long-­‐term  vision  of  the  company  as  a  healthcare  provider.  

February 7, 2014 4:48 pm!

an emerging market for new population health models!!!

Value! Health Outcomes That Matter to Patients!

Costs of Delivering Outcomes!=!

Role of Brand Marketing!

Adapted From: The Strategy That Will Fix Health Care!by Michael E. Porter and Thomas H. Lee, Harvard Business Review, October 2013!

feature-benefit.!“I don’t care about righty-lefty. I do.”!

the nature of marketing has changed!Three out of every four senior marketers told Forrester that their priority was to differentiate on the basis of customer experience.!

not product, but!experiences and services!to make it more worthwhile!

The world’s leading pharmaceutical markets will soon be dominated by products !that are largely undifferentiated from their competitors!

53%  

52%  

60%  48%  

66%  

69%  

48%  

75%  GERMANY!

JAPAN!

US

UK

FRANCE!

CANADA!

SPAIN!

ITALY!

2007 - 2010 % Growth Commodity!

2010

- 20

15 %

Gro

wth

Com

mod

ity!

Commodity !Pressures - Last 5 Years!

Constant 10-Year Pressure!

Source: IMS Health!

Unmet Need: Competing Differently!

strategic innovation: jump to the next “S” curve for new growth!Embed as Part of Health Experience!

Opportunity Space!

Promote-and-Push a Feature/Benefit Message!

market adjacencies! +  

unconventional partnerships! +  

“dynamic connectivity”!

!Shared !

Marketspace!

Market A ! Market B!

Market C !

horizontal connections! +  

Platform Strategy: !Not Glucose Monitoring, but “An Essential Health Brand”!

Competing Differently!at Retail Pharmacy!

“…that smartphone is going to be a conduit of data and information about your health, about your medical essence, like you’ve never had before…”!

“…I have a smartphone, !am I a doctor?”!

The Colbert Report! March 26, 2013!

320,696,719!personal systems of health in the United States!

(excluding the babies without the motor skills to use a smartphone)!

As of 4:33 pm, October 2, 2013!

∞!1!= Platforms to Self-Assemble Health!

(a.k.a “Managing Perpetual Innovation”)!