THE PHARMA TRANSFORMATION
Pharma business is undergoing a major transformation on multiple concurrent areas affecting the whole product lifecycle from the medicine development to the patient care.
The era of conventional blockbuster medicines is ending and the big pharma focus is shifting towards high value but lower volume products such as biomedicines. At the same time, the increasing price pressure caused by the tightening market price regulations and patent expirations is forcing small and mid-size generics pharma companies to increase their number of products to maintain the revenue and profitability level.
Pharma manufacturing is understandably very regulatory, industry standards and good practices driven due to the stringent quality requirements and patient safety. However, the current pharma manufacturing and IT infrastructures –and even business models- can still date even decades back, and are not any more sufficient for meeting the future regulatory requirements.
In addition, the pharma manufacturing infrastructure implementations are already highly complex with increasing number of connected equipment, and internal and external system integrations. The pharma ecosystem is also highly networked with the pharma industry specific requirements e.g. for the collaborative R&D data management and supply chain regulatory compliance reporting.
These fundamental pharma ecosystem, business model and technology changes are the factors leading to a new manufacturing and product supply industry transformation called the New Pharma Reality .
However, maybe the most profound transformation for the pharma companies is cutting to their core businesses, developing the medicines and medicating the patients.
Not only the increased number of proprietary medicines turning into generics is eroding the profitability. In addition, the healthcare payers and insurance companies are demanding better data on the medication efficacy and improved patient quality of life.
This has created the need for new innovative treatments are not standalone medicines but combine the medical products with new technologies. They can range from patient specific biomedicines to medical devices with the capability to provide patients real-time information about their condition, and collect patient data for care analytics to improve the treatment.
New technology not only can help companies to address several major care challenges—such as compliance and chronic disease management—but also can help them to create hundreds of billions of dollars in value . This has already led the pharma manufacturers capitalizing the ‘beyond the pill’ business transformation. For example, pharma giants like Novartis, GSK and Novo Nordisk are already investing in partnerships and new business models with technology companies such as Google, IBM and Qualcomm .
TOWARDS THE PHARMA DIGITALIZATION
The New Pharma Reality and ‘beyond the pill’ will affect the whole product life cycle, from R&D to patients, and eventually it will bring patients and their quality of life to the centre of the pharma business. This industry transformation, Pharma Digitalization, consists of two major concurrent and complementing industry ecosystems: Pharma IoT (Internet of Things) and Pharma Industrial Internet.
The best way to conceptualize the Pharma Digitalization is to describe it from the product lifecycle and product supply network point of view: how getting the medicines from the development to patients will improve and change. This also helps to understand the differences between Pharma IoT (‘beyond the pill’) and Pharma Industrial Internet (The New Pharma Reality) ecosystems.
Pharma Digitalization ecosystem from the product lifecycle and product supply network view. The white dashed line represents the medical product lifecycle from the development to the patient use .
Pharma companies have long ago realized that selling the traditional medicines will not bring growth nor even sustain the competitiveness. This fundamental change moving ‘beyond the pill’ typically arises from one or two realizations: 1) medicines alone are often not enough for patients to achieve optimal clinical outcomes, and 2) as pharmaceutical pipelines dry up, ‘beyond-the-pill’ businesses can be valuable new sources of revenues . This has created the interest for utilizing the new technologies and business processes in development and patient care leading to Pharma IoT.
Pharma IoT conceptualizes the digitalization of the medical products and related care processes with smart connected medical devices and IT services (web, mobile, apps, etc.) in drug development, clinical trials and patient care. The outcome of the Pharma IoT in the development and clinical trials will be using the combination of advanced technologies and services for creating new disease treatment possibilities (Treatment 2.0).
In the patient care, Pharma IoT will enable the patients and healthcare professionals with medicines with advanced sensor hardware and personalized care services and processes (Product 2.0). It is clear that these new capabilities will facilitate new business opportunities for the pharma companies with the existing products as well as start-ups seeking for new disruptive platforms and business models .
Good examples of the Pharma IoT solutions are the connected sensor wearables for Parkinson’s disease and multiple sclerosis patients with the medication management improving the patient outcomes and the quality of life. In addition, the existing medical device products such as inhalers and insulin pens can be added with the sensor and connectivity technologies to collect data for the further care analytics and even personalized therapy.
All this will enable substantially improve the personal medication and care processes where the patient care data is the new source of innovation and competitiveness as the real world evidence.
And to make the transformation even more challenging, at the same time pharma companies need to take into account the forthcoming EU data protection and privacy legislation, which will give the control of their care data to patients . For example, patients will be allowed to transfer their care and health data across the service providers leading to the emergence of totally new kinds of service platforms and business models.
Pharma Industrial Internet
The study by NNE Pharmaplan  investigated global pharma companies’ perspectives of the future successful pharma manufacturing sites. The study identified changing expectations of success moving from site stability to site agility with three key requirements:
- ‘Flexible production’, a site’s ability to accommodate changes in production demands,
- ‘Integrated quality’, balanced and integrated quality systems; and
- ‘Entering new domains’, having the ability to quickly absorb knowledge to implement new practices.
This means that pharma companies already clearly perceive that their future competitiveness is at stake due to the external and internal drivers. This is called The New Pharma Reality .
External and internal drivers for the New Pharma Reality .
Pharma Industrial Internet conceptualizes the digitalization transformation of the product supply infrastructures from manufacturing the medicines to dispensing the medicines to patients. In other words, the industrial internet infrastructures manufacture and supply some or all medicine/sensor/device/apps/services/patient care processes capabilities (Product 2.0) to the market whereas IoT is the ecosystem and market for utilizing, analyzing and monetizing the use of the products and ultimately, the care data.
The key infrastructures and capabilities in the Pharma Industrial Internet are the (1) manufacturing intelligence (lean and automated manufacturing); (2) software controlled packaging execution (serialization and aggregation); (3) integrated supply chain (traceability and collaboration); and (4) enterprise back-end IT services utilizing the data from the product supply (analytics, life-cycle management and regulatory compliance reporting) .
In addition to the manufacturing and service infrastructures, the Pharma Industrial Internet will enable drastic changes in business models and global manufacturing operations. With the high level of automation and real-time global ecosystem connectivity, the medicine manufacturing and packaging can become globally transparent and distributed in more controlled fashion given the regulatory constraints and requirements.
The third-party manufacturing and global product supply could be then managed centrally in real-time by the marketing authorization holder, and yet the products can be traced and verified on a sales unit level throughout the supply network even up to the point of dispense. In the longer term, this can lead to a platform economy where the ecosystem and innovation management will be the source of the competitive advantage rather than owning the manufacturing and product supply assets .
THE NEW PHARMA REALITY, BEYOND THE PILL
The FDA’s a vision for the 21st century pharmaceutical quality manufacturing is a maximally efficient, agile, flexible pharmaceutical manufacturing sector that reliably produces high quality drugs without extensive regulatory oversight . At the same time, pharma companies need to remain competitive in their core business i.e. developing and marketing medicines, which are not only effective and cost-efficient but also improve patient outcomes and quality of life.
Putting it bluntly, pharma companies need to start thinking literally The New Pharma Reality and ‘beyond the pill’. The future defining question is whether the inevitable very diverse and complex changes can be implemented with the current manufacturing infrastructures, product supply networks and –most significantly- products.
To turn the transformation into the competitive advantage, new technologies, competences and business models will be needed paving the way towards the Pharma Digitalization. Eventually, the outcome of the digitalization will be a more patient centric pharma business.
Novartis CEO Joseph Jimenez has described the transformation succinctly: “Beyond-the-pill is a logical and inevitable path forward for all, creating value by embedding products into a holistic offering with the aim to improve patient outcomes and provide tangible competitive advantages. I really believe that in the future, companies like Novartis are going to be paid on patient outcomes as opposed to selling the pill.” 
Disclaimer: The views presented are authors’ personal opinions and do not reflect those of employer or customers.
Pasi Kemppainen is entrepreneur and executive consultant in strategic digitalization advisory and initiatives for biopharma and pharma companies. The customer assignments range from helping with the digitalization/IoT strategies in clinical trials and patient care, to implementing the global regulatory compliance with manufacturing IT/industrial internet, especially medicine serialization and traceability. In this capacity, he is also a senior consultant and advisor for NNE Pharmaplan, a leading life science engineering and consulting company.
Sammeli Liikkanen is a Pharma and Healthcare professional with strong flavor of digitalization in his background. Working in different roles and projects within and outskirts of Orion Pharma he’s known as innovative, resilient and determined in everything he does. He loves working with people, yet his biggest personal satisfaction comes from challenging objectives and paradigm shifts. One might describe him as an intrapreneur and a change agent.
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