The Business of Healthcare Innovation

Cover......Page 1
Half-title......Page 3
Title......Page 7
Copyright......Page 8
Dedication......Page 9
Contents......Page 11
Figures......Page 13
Contributors......Page 18
Preface......Page 21
Acknowledgments......Page 23
Innovation and the value chain in healthcare......Page 27
The technological imperative in healthcare......Page 29
The innovation challenge......Page 30
Resource-based view......Page 32
Organizational innovation perspective......Page 33
Failure to fully appreciate the technological imperative......Page 35
Lack of provider focus on upstream supply costs......Page 36
Reinforced stereotypical views of manufacturers......Page 39
Growing prominence of product sectors in the economy......Page 40
Convergence of technologies across sectors......Page 41
Impact of technology sectors on local and national economies......Page 43
Similarities and differences across producer sectors......Page 44
Overview of the volume and of chapter content......Page 45
Notes......Page 48
Part I The life sciences......Page 51
What is a pharmaceutical?......Page 53
Biologicals/bioproducts......Page 54
Market size......Page 55
The largest companies......Page 56
Therapeutic areas......Page 58
Generic drug companies......Page 59
Risk, time, and return......Page 60
A challenging business model......Page 61
Biotech company evolution......Page 62
Pharmaceutical companies......Page 63
Healthcare innovation environment......Page 66
Role of the USA......Page 67
Germany......Page 68
The value proposition......Page 69
First in class drugs......Page 70
Drivers for advancements in healthcare......Page 71
The potential demand for pharmaceuticals......Page 73
Population......Page 74
Determinants of pharmaceutical pricing......Page 75
Market demand equals price-times-population......Page 76
Research and development: the key steps in the value chain......Page 77
Target identification......Page 79
Target validation......Page 81
Lead generation......Page 82
Candidate selection......Page 84
Preclinical and medical development......Page 85
Phase I testing: first studies of safety in humans......Page 86
Phase II testing: first studies of efficacy......Page 87
Phase III: definitive multicenter trials......Page 90
Registration......Page 91
Phase IV studies......Page 92
Problem statement......Page 93
Biological understanding and productivity......Page 95
Organizational structure......Page 98
Introduction......Page 99
Form/fill/finishing (F/F/F)......Page 100
Supplying the medicine......Page 101
Forecast accuracy......Page 102
Process robustness......Page 103
Current good manufacturing practices and compliance......Page 104
Biotechnology products......Page 105
Marketing across the value chain......Page 106
The focus on blockbusters......Page 107
The sales organization......Page 111
Customer relationship management......Page 112
E-detailing......Page 113
Requirement: coordinated implementation, implementation, implementation......Page 114
Can it really be a smooth-flowing pipeline?......Page 115
The role of risk......Page 116
The business development approach......Page 117
Anatomy of a strategic alliance......Page 119
Making the strategic alliance work......Page 121
Mergers and acquisitions (M&A)......Page 122
Barriers to entry in pharmaceuticals......Page 125
Summary and conclusion......Page 126
Notes......Page 127
Introduction......Page 129
History......Page 130
Overview of the biotechnology sector today......Page 134
Impact on healthcare......Page 137
Monoclonal antibodies......Page 142
Genomics......Page 143
Proteomics......Page 144
High-throughput screening......Page 146
Gene therapy......Page 147
Business models – managing scale and scope......Page 148
FIPCO......Page 149
Technology platform model......Page 151
RIPCO......Page 154
NRDO......Page 155
Summary......Page 157
Financing and the capital markets......Page 158
Private placements......Page 159
PIPEs......Page 160
Convertible debt securities......Page 161
Summary......Page 162
The biotechnology–pharmaceutical company alliance......Page 163
Managing a biotechnology firm......Page 176
The global structure of the biotechnology sector......Page 179
Europe......Page 180
United Kingdom......Page 181
Germany......Page 183
Canada......Page 184
Asia......Page 186
Japan......Page 187
Singapore......Page 189
China......Page 190
Australia......Page 191
Global companies......Page 192
Regulation......Page 193
Embryonic stem cell research......Page 197
Human cloning and germline gene therapy......Page 198
Generic biologics......Page 199
Orphan drug law......Page 200
Bioterrorism......Page 201
International conference on harmonization......Page 202
Europe......Page 203
Japan......Page 205
Conclusions: the real drivers of the biotechnology sector......Page 206
Notes......Page 209
Overview......Page 216
Technology platform companies: a turning point in biotechnology business models......Page 217
Genomics, proteomics, and drug discovery......Page 219
Strategic alliances and technology platform companies......Page 223
Therapeutic area alliances......Page 228
Technology development alliances......Page 229
Measuring alliance performance......Page 231
Business and revenue models: an overview......Page 234
Macro and micro factors affecting business and revenue models......Page 237
Business and revenue models: rethinking vertical integration......Page 238
Technological reintegration and the healthcare value chain......Page 246
Notes......Page 247
Introduction......Page 249
M&A rationales in industrial organization theory and research......Page 250
M&A trends among pharmaceutical and biotechnology firms......Page 252
M&A rationales among pharmaceutical firms......Page 255
Combat increased profit pressures......Page 256
Cutting infrastructure costs......Page 257
Satisfy the market mandate to maintain earnings growth in the face of pipeline problems......Page 258
Maintain competitive scale and scope......Page 260
Defense against acquisition......Page 261
Gain access to foreign pharmaceutical markets......Page 262
Extend capabilities to new therapeutic areas......Page 263
Achieve economies of scale and scope in R&D, sales, and marketing......Page 264
Create a competitive advantage in R&D productivity......Page 265
Summary of rationales: is there a problem here?......Page 266
The impact of M&A on the performance of pharmaceutical firms......Page 267
Relationship between scale and R&D inputs......Page 268
Relationship of scale with R&D outputs......Page 269
Relationship between scale and stock price, sales, market share, and profitability......Page 270
Relationship of scale and scope with efficiency......Page 272
Summary of the empirical evidence: is there a disconnect with the rationales?......Page 274
Broader evidence on the value of size, concentration, and integration......Page 275
Sources of value in the M&A process: building capabilities to enhance future performance......Page 276
The future of pharmaceutical M&A and the value chain perspective on innovation......Page 280
Notes......Page 287
Part II Devices and information technologies......Page 295
Introduction......Page 297
Comparisons with other industries......Page 298
Historical perspective: missteps, miscues, and misapplications of technologies......Page 299
Market size......Page 303
Global versus US sourcing......Page 305
Unique and defining characteristics of medical devices......Page 310
Separation of consumers, customers, and payers......Page 311
The powerful economics of clinical needs......Page 312
Channels–direct selling......Page 315
Education......Page 316
Feedback–playback......Page 317
Selling efficiencies......Page 318
Limited consumerism......Page 321
Electronics......Page 323
Materials sciences......Page 326
Drug–device convergence......Page 328
Sources of growth: demographics, unmet clinical needs, procedure penetration, price......Page 331
Unmet clinical needs......Page 332
Procedure penetration......Page 333
Pricing......Page 334
Rising importance of channels......Page 335
M&A activity during the last decade......Page 336
Concentration ratios......Page 338
Pace of IPOs......Page 339
Buying growth......Page 342
Leverage distribution channels......Page 343
Increased scale, scope, or geographic reach......Page 344
Conclusion:public market activity and its impact on innovation......Page 345
Notes......Page 346
Introduction to information technology......Page 348
Why has progress in healthcare IT been glacial?......Page 349
Current technology has limited the automation of clinical care......Page 350
Healthcare IT market structure......Page 352
Major healthcare IT applications......Page 355
The electronic medical record: the point of convergence......Page 356
Historical milestones on the path to CPOE......Page 357
Constraints on CPOE adoption......Page 358
Diagnostic applications......Page 359
Digital radiology......Page 360
Remote monitoring/management of patients......Page 361
Payer applications......Page 365
Consumer-directed health plans – an IT intensive new health insurance product......Page 367
Outsourcing information technology installation and management......Page 368
Conclusion......Page 370
Notes......Page 371
The twin towers: invention and adoption......Page 374
Common business models......Page 379
Resources......Page 380
Organizational routines and capabilities......Page 382
Technological convergence across sectors......Page 387
Notes......Page 389
Index......Page 391