Brain Teaser: Paul Simms on 2021 in Pharma

So far, this new year has not yet brought us the lower turbulence that we have been well-wishing each other over the Holidays. VUCA (Volatility, Uncertainty, Complexity and Ambiguity) are now around us, and it is unlikely that it will go away.

Management and growth, of your job, your company and yourself, does require some degree of planning. But how is this possible when VUCA rules? The answer is actually quite simple, if very hard to do: multiple scenario planning. Linear is out; parallel is in. You will not know which of your anticipated scenario will play out until it does, but if you never thought of that scenario, you will definitely be worse off.

Thus, we need to challenge our thinking, our teams and our business about what may happen. This requires listening and learning to others, especially to people like Paul Simms, who loves to stir up the thinking with bold predictions.

I hope that you will enjoy my below notes from his last set of Bold Predictions, which he will soon also publish. Meanwhile, start thinking and start discussing. Share to grow.

Background: 

In April 2020, Paul Simms, then still Chairman of EyeForPharma, made 5 bold predictions about the future of pharma, which he later published on Linkedin. These predictions, like their previous edition in March 2019, sparked a lot of interest and discussions, which was exactly the purpose.

Since leaving EyeForPharma, Paul has been asked by multiple pharma leaders to update his predictions, because they felt these predictions had helped them in their own thinking. On 05 January 2021, Paul invited a select and capped number of pharma leaders to an online webinar/interview to reveal his new predictions. The webinar was attended by the maximum allowed number of 500 participants, with many not able to join.

Interviewer and moderator was Jessica Federer. Jessica gained widespread visibility and recognition as Chief Digital Officer (recognized as one of the top 100 global CDO’s) at Bayer, where she previously held other significant roles. She left Bayer in 2017 and has since served on the board of several public and private companies. She was the founder and CEO of Innovayte, a boutique innovation firm, and is now the US President of Huma (formerly Medopad), a global health technology company transforming care and research.

Top Predictions by Paul Simms for 2021

Paul started by stating clearly that he does not expect all of these predictions to come true in 2021, but urged to think and prepare for all. He will have been right if more than half of these predictions do happen (as was the case for the 2019 predictions) and he will have added value if these predictions have helped anyone to better prepare and plan. Paul repeated this point several times during the webinar.

• Pharma will buy its way into consumer relations. Pharma is coming to terms with the key observation that R&D is no longer the sole or best investment that provides the expected return to its shareholders. R&D has now a very low and uncertain ROI, so other ways to create shareholder value are looked at actively by CFOs and CEOs alike. Combine this with the increased realization by pharma that (for many reasons) in fact it has no relations with its end users (unlike many other industries where this is not only the case but also a predictor of success), and it is inevitable that pharma will invest into building its customer relations. At this time, pharma does not have the qualities, services or products to seduce others (having the customer relations) to partner with them, which leaves buying as the only option to proceed in this direction. Paul expects that at least one major company will confirm such a purchase this year.
• Unconscious healthcare is coming. Today, purchasing a product has become much easier, yet it still requires effort. Indeed, one still has to search (often multiple websites of different format and quality) and they chose between all those options (itself an effort) before buying. The one thing that is better than clicking to select what you want is not clicking. In other words, what if the choices are presented to you without you having to look, based on an intimate and growing knowledge (i.e. algorithms driven by AI) so that what is presented is indeed really and only for you. Several recent examples of this approach have proven hugely successful, especially Tik-Tok or Netflix. There is absolutely no reason why theis evolution would not invade the whole space of wellness and health (perhaps less so in the really curative sector - at least at first. People (consumers) can be offered all kinds of products and services based on an ever-growing understanding of their individual choices (including refusal, non-adherence etcetera) such that the choices proposed become ever more relevant.
• Vaccine Nationalism will expose pharma’s ugly side. Since the pandemic triggered huge efforts to find a vaccine, now a year ago, we and the public have seen a behaviour by pharma that has been different from the past. Indeed, pharma was more collaborative, more open and clearly prioritised finding a vaccine over other activities, and even over ROI. In fact, pharma had at the start of the pandemic promised that for this pandemic it would behave differently. And they did, visibly and recognised by the public. At least for and during the vaccine development. As a result, pharma’s reputation improved dramatically over the last year. But now we enter the phase of commercialisation, and already the pricing and distribution developments seen go back to old habits of low transparency, of competition, and of choices that are driven by politics and finance. Sadly, the backlash on reputation can be extremely severely severe, especially since pharma had promised to do differently and for a while did. The negative impact of such backlash cannot be underestimated.
• Pharma leaps to a 2.0 web business model. In spite of all the hype, pharma really has a major backlog compared to other industries then it comes to digitisation. Web 1.0 is when a company or industry digitises what already existed in terms of processes. And this is what pharma has done so far, even if accelerated because of COVID. Clinical trials are a great example of this, as is e-detailing. Neither have fundamentally changed; they have just become -partly- digitised. Web 2.0 is fundamentally different, as can be seen in other industries; it means rethinking and re-inventing the actual business model and thus processes. In 2.0 the platform is key; the platform connects the buyer (of the product/service) to the seller. And if well done, then the platform does not need any brick & mortar. Such a new web 2.0 model could fundamentally change some aspects of pharma. Take clinical development as an example. Today, the owner of an asset basically faces a difficult dilemma: go solo (at great cost and risk) or license out (and lose most value). A web 2.0 platform could offer the framework for successful development at low cost and risk, while preserving the ownership of the asset. The platform does not charge for being used, only for success. Thus, the platform carries the development ‘at risk’. This is like the Apple Store that provides a framework for App developers and only charges when the App becomes a success (at which time it is OK to charge a lot). 
• Digital health kills telemedicine. Telemedicine is the virtual interaction between patient and HCP. It got a huge boost by the pandemic. Specialised telemedicine providers appeared and they have already had their boost, but their value is flat now. Indeed, telemedicine, like the fax machine and the internet are not self-standing independent sustainable businesses. Telemedicine can and will not be a stand-alone or replacement; it will become a (small) part of the whole clinical and digital support and care system around the patient. Both HCP and patients have learned that in-person contact remains essential and cannot be replaced. Some telemedicine may help to increase the value of the in-person contacts, and in fact the patient interface will become digitized, but digital health is much more than telemedicine, which will become a small part of that. The same applies by the way to the sales function.
• Amazon wins Healthcare, as a sidekick. Profit is not the driving force of Amazon, cash flow and volume are. Volume increases by channeling ever more products and services to the (Prime) customers, who become ever more loyal. Today 82% of American households now have PRIME. Example: Amazon Prime Video does not make money, but it is an add-on service (and platform) for customers that makes and keeps PRIME membership ever more valuable to customers. As a strategy, Amazon uses its (growing) cash to address its major cost centers by mastering them to the point that they become business assets and drivers. The first example is the data center. Rather than contracting this out as non-core (as pharma would have done), they did it themselves, and in fact so well, that it now drives their whole businesses. In fact, Amazon can now sell their customer understanding to other companies, as it already knows more about each of us than Apple or Google or Facebook. A second example is logistics: when the pandemic arrived, rather than working with contractors, subcontractors and partners, Amazon invested the growing cash (from more online sales because of confinement) into building its own and the very best distribution system. This included all processes as well as people (already over 1 million employees and hiring over 4500 people per week). Today the Amazon distribution system (at least in the USA, but also in other places) outperforms industry standards like Fed-Ex. Now that this distribution system is in place, Amazon can again sell it (at no extra cost and without the need for profit to Amazon) for new products and services (including pharma). Third example: having now so many employees, Amazon needs to manage the associated healthcare plan costs (as every US employer). Thus, Amazon invests in developing the very best and personalized healthcare service and product offerings, mainly to prevent sickness (and thus to reduce its own cost). Once this system is in place, it can again be expanded (at no extra cost and without the need for profit to Amazon) to Prime customers, who then have a hugely increased value of Prime membership. Amazon does not need to develop the product; it owns the rails to the customer (and one could say even the customer, as they have come to know better than others).
• Pharma takes off its mask for the first time. For years, pharma has maintained its silence and distance, even when attacked. This has in fact added to the reputation of pharma being cold and driven only by its own interests. Recently, in relation to the pandemic and vaccine development, Pfizer has taken the lead to change this traditional style, by communicating openly and -especially- with more empathy. Pharma needs to follow and show more the human side, to melt the frosty opaqueness that is historic. Storytelling and communication are key elements to lead to more trust. It is possible and needed to achieve this by opening up, with humility and empathy.

Responses to a few Audience Questions

• “What about Brexit?” Brexit is a side issue. We have much bigger challenges to deal with. Yes, there will be some annoying issues, including more administration and effort for some processes. But these are not so important in the global picture, and the basic issues will be OK because of the trade agreement that was achieved last-minute. So, expect a low impact overall this year (and probably beyond).
• “What about Medical Affairs?” Medical Affairs needs to break to its own glass ceiling. For years now Medical Affairs has been trying to become the central and most important business function, which is a role they should have. Indeed, Medical Affairs is uniquely needed for this central, integrating and connecting role. They are the best and privileged contact line between HCP and pharma (and in many companies also between patients and pharma). But Medical Affairs continues to fail to live up to this expectation and need, and should stop blaming others around them for that. Medical Affairs is often its own worst enemy, by being too medical and by lacking (often even not valuing) the other skills that are needed to break their glass ceiling. Admittedly, it is already very hard to be a competent medic, so adding these other expectations is almost inhumane and too few meet the mark. But the reality is that we need more other skills in Medical Affairs (than medical knowledge), especially, communication, engagement, motivation, business planning skills, management.
• “What about the Sales function?” Sales staff is critical but not for sales. If we are honest, then the data are clear: more and more of successful launch and commercialization is no longer driven by the face-to-face selling to HCP by sales staff. The Sales function is no longer the primary driver of sales, and in fact their direct contribution to the sales is dwindling. This said, they are the company’s most important in-market presence and asset, and the only true ears and eyes on the ground in real life, with practicing HCP, in running hospitals. We know more and more about our customers via data, big data and digital data, but these data mean little without the real-life understanding, which can only come from the sales function. The challenge is that this role requires a deep overhaul of the whole function, its members, its organisation and its processes. But this is needed, and those making the change first and best will have a strong advantage.
• “What about Patient Centricity?” Patient Centricity and Engagement needs to understand that quantity will never replace quality. First, we need to not forget that patient centricity is, and must be, really at the core. It is what we are all about, and there is still work to do. We already know that Patient Engagement during development is at least as important as commercial preparation for successful launch and commercialisation. At the beginning of 2021, our first priority must be to re-examine everything we know and think we know about patients. Indeed, the pandemic has profoundly changed the patient experience, beliefs and expectations. Therefore, we need to re-assess all patient needs, in all dimensions, including emotional and behavioral. In this regard it is crucial to not fall in the quantification trap. Numbers mean very little if anything in Patient Engagement. The number of patients on Zoom in a meeting is irrelevant. It is all about the quality of the engagement and the quality of understanding (in depth, diversity and breadth)

Please note: publication of these predictions by Paul Simms is expected soon. Above are my personal notes from the live webinar, so apologies for any misunderstanding.