Pharma Should Acquire Software Startups

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The idea and concept of this post’s plot is the brainchild of both of Franz and Lukas and is the outcome of lots of discussions on this topic

The pharmaceutical industry has been dormant throughout the last decades when it comes to finding new business and sales models. The big ones have been keen on keeping competitors out of their businesses by close surveillance or legal action. In order to sustain and grow their revenue, the pharmaceutical industry has one of the most effective salesforces out there, which is why those companies have been doing really well financially – and still do.

We’ve previously written about potential new sales saviors for the industry, but in this post we are taking the concept one step further. According to various reports and the fact the numerous blockbuster patents will expire in the next years, the pharma industry will somehow need to save money. And as it is with any business out there, the employees are the most expensive (and most important)  asset of a company. Thus, they are the ones who’ll likely be suffering from such cuts. Especially the pharma representatives are going to be reduced significantly. Pharma is intensively looking for new ways to distribute their products and market them within the very strict legal requirements. This is different in Europe and the US. Whereas the industry may market their products towards the customer a.k.a. patient directly in the US, this is not allowed in Europe, because it’s being regarded as unethical.

In need for new models on how to access patients and physicians there must be something new, something disruptive. eDetails are not going to be pharma’s sales savior; neither are tele-reps. Generally speaking, we believe that pharma needs to move away from a push-marketing approach and immediately start moving into a pull-marketing direction. The often cited “pharma rep as a partner to the physician” needs to transformed into some real life model. But how do you present drugs and new products to physicians and products without actively approaching your clients?

Surely not the only one, but definitely an arguably interesting one, is through software. An electronic gateway between the pharmaceutical industry and it’s single most important partner – the physician. Pharma is already doing online advertising on physician-centered platforms such as Sermo or Patientslikeme.com, but why not dig deeper? Why not acquire these startups and software companies and fully make use of a loyal userbase that is believing in a service, rather than in a sales rep? There are lots of risks and fears assosciated with such bold moves, but they simply need to be done right and honest,then they’ll work out. By acquring these types of companies there is chance of significantly gaining access to doctors. Not by buying postal adresses and sending them info material (current practice), but by owning and operating a service that actually generates value for the physicians. Thus the pharmaceutical company will gain the physicians’ trust and as a nice side effect, actually provide something that benefits the doc -much more than one of those dozen of pens on your desk sponosred by company XYZ.

Obviously, there is a big risk of loosing all of the aforementioned through such an approach, since neutrality would immediately be doubted. Thus it’s important to be open and transparent about such endavours. Imagine what would happen if Pfizer was to acquire Healthtap tomorrow? Would it kill it’s business model and make a mockery out of it? If you do it wrongly, then this will definitely be happening, but if you are transparent about this change of owernship, about the future plans with such a service, then this has the potential to totally open up new ways to interact with other stakeholders.

 

3 COMMENTS

  1. It makes sense for pharma to use this approach – but as a physician, can I ever trust a site owned by a drug company? In any case I hope ownership is openly declared by the companies. To my knowledge – some patient advocate sites or online forums of affected patients are already controlled by pharmaceutical companies – it’s all in the small print..

  2. Thanks for the thoughtful article.  I am skeptical on a few counts.  First, if Pfizer bought Healthtap, then what would GSK or Bayer or Eli Lilly, et cetera, buy?  It’s not feasible that every drugmaker can run its own social-media pipe into the doctors’ offices.Second, I expect the managerial diseconomies of scope would be impossible to overcome.  Would these huge corporate bureaucracies allow the acquired companies to innovate? Not likely.  They would try to staple them onto the current sales function.  Big Pharma doesn’t even acquire innovative biotech companies anymore, preferring licensing deals.  If they fear that their culture will destroy innovation in their own industry, how could they hope to spark innovation in a different industry?

    Third, I think it unlikely that regulators would allow this to happen.  The ability of drugmakers to communicate with doctors (and patients) is already heavily regulated and is getting more strict all the time (at least in the US).  If the acquisitions you put forward were proposed, the FDA, FTC, state attorneys-general, and a host of political actors would intervene to regulate against it.

    I look forward to more of your articles.

  3. Instead of acquisition, investment crowdfunding could offer additional growth opportunities for pharamaceutical companies by supporting research and product development. Although the final rules and implementation date has yet to be determined by the U.S. SEC, the Investment Crowdfunding and entrepreneur ecosystem site iCrowd can help you establish your business in their community and get you ready to launch your pharmaceutical campaign when the time comes.

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