By Molly McGaughan and Kostja Paschalidis
The pharma industry’s rapid response to the Covid-19 pandemic led to dramatic changes and growth in the sector, rewarding shareholders. But what lies ahead for the sector is an even bigger shift. Investors will need to look at pharma companies in an entirely new way to make strategic decisions.
The rise of precision medicine and advanced therapies is transforming what pharma companies are and what they do. In addition to creating pills and vaccinations for the masses, they’re shifting to create personalized therapeutics for a wide range of health problems.
These solutions include gene therapy, cell therapy, tissue-engineered medicines and more. As a study on precision medicine put it, “In this way, therapeutics can be centered toward patients based on their molecular presentation rather than grouping them into broad categories with a ‘one size fits all’ approach.”
The global advanced therapy medicinal market is in for tremendous, rapid growth. An analysis by SNS Insider estimates that the personalized medicine market was worth more than $540 billion in 2022, and will reach $933 billion by 2030. Numerous factors are contributing to this growth, including the “escalating prevalence of chronic diseases, including cancer, diabetes, and cardiovascular disorders,” the analysis says. “Tailored treatment approaches offer a more effective means of managing these complex and diverse health conditions.” A transition to value-based healthcare -- in which patient outcomes are tied to payments -- also “aligns seamlessly with the principles of personalized medicine,” SNS Insider says.
From product to service companies
These new medical solutions can’t simply be shipped out to service providers to give to patients. Instead, for these to work, healthcare systems need to undergo big changes. And pharma companies play a major role in making those changes happen. To support these new treatments, pharma companies need to offer a wide range of services, including infrastructure and site readiness; precision diagnostics; made to order therapeutics; complex logistics; and digital, unified support across all stages of delivery.
Healthcare professionals need training in how these new kinds of treatments work, how to administer them, and more. Hospitals and doctors’ offices need to retrofit facilities and build new ones, such as ways to care for and monitor patients who may have radioactive waste due to a new treatment. These medical sites also need new ways to order individualized treatments and have them delivered and handled safely.
For pharma companies, providing all of this, with many types of interactions, means a dramatic departure from traditional models.
Betting on pharma winners
Soon, the excellence of these service operations will be the biggest differentiator among pharma companies. Those that provide the most holistic service will quickly gain a reputation for being the best ones to work with. Just as hospitals, doctors’ offices, and other organizations will be competing to offer the latest medical solutions, pharma companies will be in a race to serve as the best partners in making this happen.
Investors should do all they can to get their fingers on the pulse of these changes. Ask pharma executives what steps they’re taking to create the services that will allow healthcare providers to deliver these new treatments. Ask about their investments into internal teams, how they’re leveraging contractors and service providers, and what organizational changes they’re making to enable this transformation. Also, see what hospital and doctors’ groups say about each pharma brand, and the level of service and reliability it is providing.
The new approach to medicine is here. This month, the FDA approved “the first gene editing therapy ever to be used in humans, for sickle cell disease, a debilitating blood disorder caused by a single mutated gene,” the New York Times reported.
As more such treatments gain approval, demand will be off the charts. Meeting that demand will be the big challenge. The pharma companies that make changes at the speed required will be in the strongest position to deliver these treatments. By identifying the leaders of the pack and investing in them, shareholders will likely see the best returns on their investments. They’ll also do something more: help deliver new medicine to people in need.
Molly McGaughan is the co-founder of Firm, a consultancy which builds the services and capabilities that enable pharmaceutical companies to deliver advanced therapies at scale. Kostja Paschalidis is a Service Designer working in the healthcare and biotech sectors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.