Is Pharma tinkering while health tech is innovating?

Is Pharma tinkering while health tech is innovating?

Pharma used to be consistently the powerhouse of global R&D spending– and whatever else the public felt about them (physician kickbacks, annoying adverts, increasing costs, weird trials) the innovation argument was

the shield protecting the industry from an increasingly hostile environment.

Two things have clearly changed.

R&D Spending wanes

Pharma continues to slide relative to pure technology companies.

Strategy&’s 2016 R&D report make sobering reading for the life sciences….

The first is that while pharma is still spending a huge amount on R&D (still the biggest industrial sector, for now), this figure has not kept pace with the new tech giants. Amazon now holds the crown for biggest research spender (and is even about to open a second headquarters). It was just in 2011 when according to the Strategy& (then Booz&Co.), big pharma took up 3 of the top 5 spots in terms of spend on research (with Merck at no.6, too).

There are legitimate discussions to be had about more efficient things being done with research dollars, and the outsourcing of research functions to younger and more specialised companies. Certainly, R&D spend is not the only indicator of success in innovation, but even then – this may well be a canary for pharma losing its edge.

Technology leaving pharma behind

The second is that innovation and research are not necessarily keeping up with the wider ecosystem. Take Novartis. They are without a question

Jimenez will move to health technology after his pharma years.

Joe Jimenez, a Stanford graduate, will return to California after his decade at Novartis.

of a doubt at the forefront of large scale corporate experimentation – the value based pricing of Entresto, for instance, is likely to become a case study of adapting to external demands. And their recently FDA approved Car-T therapy (Kymriah) looks to be a revolutionary treatment for youth leukaemia, and while is expensive (>$400,000 a course), is only payable if it has a set impact in the first month.

 

Despite this – Joe Jimenez, the CEO of Novartis, is stepping down – to go back to Silicon Valley. He states that in health technology he sees the biggest future efficiencies for the healthcare system. That the CEO of one of the most innovative pharma companies in the world – with relationships with rain- makers such as Google on tap – feels that it is time to get out, then… Pharma may need to re-evaluate.

Health tech is the future, and as is becoming clear, the behemoths of the life sciences industry are going to have to begin harnessing the creative power of technology, or be left significantly behind. The big question is …. How?

Peter Hinssen covers this topic extensively in his new book the Day After Tomorrow, and the Across Healthcare Disruption Tour builds on this by looking at the Hows, Whys and Wheres of healthcare start-ups and innovation thinking. We visit labs, universities, incubators, and industry titans. It’s an eye opening experience.

 

To find out more, click here .

 

Edward
edward.atkinsonclark@a-cross.com


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