The Innovation Imperative

Innovate or become obsolete. This is especially true in the healthcare industry generally, and in the pharmaceutical/biologics industries specifically. The industry must urgently innovate relative to how it defines itself in a rapidly changing healthcare ecosystem. Individual companies must either aggressively innovate or risk falling behind on a daily basis. Though not everyone agrees on how to do so, everyone does agree on one thing - the time is now.

I was asked numerous times last week what I thought companies should consider while working to create a sustainable future in a morphing environment. For instance, how does the industry as a whole, and the companies working in it, create ideal environments and solutions for issues such as: payer and systems data needs and pricing challenges, metadata use, personalized medicine demands, pricing challenges, globalization, responsibility/ownership continuum for new product development, quality challenges, patent expirations, demands for meaningful clinical differentiation and higher (not lower) quality data, interactions with patients, commercialization, compliance challenges, industry perception, etc.

I do not pretend to have all the answers to these extraordinary challenges. The answers will be ever evolving, and will involve working at the tree AND forest level. We must think of healthcare in the broadest sense, using a wide-angle lens, not simply as drugs and devices - much like it is important to think of transportation as a whole, not just the train system. But I did spend some time contemplating this question last week, and in the spirit of strategic innovation, offer the following three strategies. They are not all-inclusive, but are intended to scratch this very rough surface. But, as with anything intended as a game changer, you have start somewhere.           

1.    Create a culture that demands innovation as an imperative at every level and rewards, embraces, and requires constant improvement.  Every company’s mantra should be, “THE STATUS QUO IS NEVER GOOD ENOUGH.”

According to David Champion in the Harvard Business Review (January 26, 2009), as long ago as 2009, “One Pennsylvania hospital, for example, was able to reduce infections caused by inserting catheters into a patient’s bloodstream from 37 occurrences to just six. Deaths from infections fell from 19 to one. The hospital also saved $1.4 million a year in the direct costs related to treating the infections. Achieving all this required virtually no investment, just six simple changes in procedure, such as requiring staff to completely remove faulty catheters and insert new ones rather than attempt to fix the faulty catheter.”

• a.    Hire employees based on their ability to innovate and foster innovation, develop them to be even more innovative, reward them for their innovation at every opportunity. Do not allow the old thinking of hiring based only on previous specific job experience to be the primary driver. Look for new ideas and for complimentary skills and strengths. Use hiring as an opportunity to infuse fresh thinking, whether hiring from within the company or outside. Insist on building a widely diverse workforce to enhance innovation.
• b.    Reward innovation in every department, every process, every small “win”, not just the major breakthroughs.  Ask every day, “How can we improve anything/everything by doing it better, differently, or not at all?”
• c.     Recognize that seemingly small improvements, even small process improvements, can create huge breakthroughs. Relentlessly search for these opportunities.
• d.    Determinedly scan the environment for new opportunities, innovations that you might leverage and improve upon, and futuristic business intelligence.
• e.    Make proactive listening, internally and externally, a cultural imperative. Constantly create opportunities for listening. Listen to learn and understand, not to respond or verify a preconceived idea. Listen, Listen, Listen.

2.    Commit to developing and commercializing truly innovative, medically critical, differentiated products with higher quality, value-driven data. The healthcare ecosystem is demanding it.

As Novo Nordisk CEO, Lars Rebien Sørensen, recently told Bloomberg TV, “The next line of products have to have an even greater height of innovation, which means those that do not have that height of innovation will have to be culled. We need to be innovative. Otherwise, it’s going to be difficult for us to get reimbursement for our drugs. Me-too or me-better drugs will not be good enough in the future and hence we need to prioritize.”

• a.    Develop products, recognizing all data needs, using “backwards planning.” In other words, develop products to demonstrate identified/desired information for approval, promotion and reimbursement.
• b.    Develop products that are clinically innovative, solve authentic medical challenges, and create demonstrable clinical value, not just variations of established products.
• c.     Commit resources to create high-quality data that address real value concerns to meet global payer and system expectations. Create these additional resources by decreasing the number of smaller, lesser quality studies that do not meet ecosystem expectations or requirements.
• d.    Evaluate possible mergers and acquisitions (and product acquisition) objectively with an expectation consistent with this commitment to high quality, innovative assets. Use multi-disciplinary teams for due diligence to honestly and openly evaluate for business success under this rubric, not simply to support an a priori decision to purchase.

3.    Change marketing incentive payment and expectations from revenue-based to profit-based. Perhaps the most difficult, it takes true business commitment and cultural change to make this happen. But, especially in light of drug pricing scrutiny, the need for targeted focus to increase profits is essential. It is easier to do this on the business/marketing side than on the sales side, as sales has less control of profitability variables. But, moving boldly moving in this direction, would:

• a.    Increase return on investment, through driving more careful targeting, planning, resource deployment, market understanding (especially payers and systems), promotional expenditures, and value-based focus.
• b.    Create a culture of vigorous authentic listening and questioning with all stakeholders throughout the asset’s life cycle, resulting in a clearer understanding of needs and more focused and effective programming.
• c.     Increase the quality, impact, and longevity of promotional materials and programs, while also increasing the quality of promotional execution and the alignment with compliance requirements
• d.     Decrease the volume of ineffective materials and programs, thereby preserving resources for more impactful promotion and increased clinical studies quality. 
• e.    Create vertical business data transparency and marketing alignment with overall business success measurements.

Healthcare delivery is changing at heightened speed. Consider recent innovation breakthroughs, such as - 3D printing, CRISPR, robotic surgeons, needle free dentistry, remote patient monitoring, prosthetic advances, health informatics, and light bulbs that disinfect and kill bacteria, to name a few. This is a defining moment for the healthcare industry. The question is not just one of relevance. More importantly, how does the industry define and structure itself to lead meaningful change that significantly, and authentically, contributes positively to the dynamic healthcare system?