Of the 399 senior executives in the life sciences industry surveyed by the Economist Intelligence Unit (EIU) recently, 64% of respondents said that demonstrating value is a key challenge facing their business. The major issue, most agree, is that stakeholders have different perceptions of what value is.
The Quintiles-sponsored report, Reinventing Biopharma, found that most pharma companies have made at least one change to their business model, commercial and/or R&D strategy to meet this ‘value challenge’; many are accepting that the demand to provide value has had an important or significant impact on their business model and are “coordinating the response to the challenge across the company”.
Dr Adrian Thomas, VP for Market Access at Janssen, for example, said that the company’s R&D organization has developed a “fairly solid understanding of payer value”. He explained: “Clinical evidence and regulatory hurdles are still crucial, but equally important are commercial considerations that products will meet other thresholds of acceptability…We have the value question as a critical piece of decision making. That is a huge departure from three to five years ago.”
But there remains little convergence in dealing with the value question; no single strategy is emerging as a majority favourite. As Dr Ed Pezalla of Aetna comments, while many players are aware of the issue, “substantial change still has to take place”.
Until then, demonstrating value will very much remain a challenge for the industry.
Reinventing Biopharma: the value challenge, is available here.