In Vivo Article: New Pharma Ecosystems
We now live in a world of mature medicines markets, where value is king. Incremental efficacy increases aren’t enough to open payers’ wallets. Consequently, a new paradigm is needed to assess value and long-term viability. This article illustrates an Oliver Wyman framework that consists of 10 “ecosystems” to help steer companies through the development process and determine business-wide priorities.
Each ecosystem is cluster of diseases that share common profile on dimensions of unmet need, value proposition to the health system, and traction for innovation. And each ecosystem has a common set of business challenges a different way of thinking about its component drugs.
This value-based lens reveals that disease states long grouped together – i.e. most cancers – do not all belong in the same ecosystem. For example, prostate cancer and lung differ on the dimensions of therapeutic headroom, prevalence, disease criticality & complexity, putting them different ecosystems. Prostate Cancer sits with other large spend diseases for which payers are seeking help in managing the overall disease burden, while lung cancer sits in a space that will likely face less scrutiny from payers in the near term
Why Cancer Isn’t One Disease
One great advantage of the ecosystem approach is that it provides a tool for distinguishing between diseases that are traditionally thought of as related—but present far different market opportunities and challenges. Consider, for example, prostate and lung cancer, two of the “big four” solid tumor types.
Historically, companies see both diseases as residing within the oncology franchise—after all, they’re both treated by medical oncologists, they’re commonly treated with a combination of surgery and other therapy, and they’re highly prevalent cancers. However, they have important differences. In prostate cancer, the treatment paradigm includes watchful waiting before expensive branded therapies are used. As a result, total medical expense per patient tends to be lower. In lung cancer, patients are treated more aggressively, but with a mix that includes both high-cost novel drugs and a range of less expensive chemotherapeutics.
These differences mean that these diseases should be approached differently. A prostate cancer strategy must take one of two approaches: either focusing on providing incremental value to payers through drugs that offer clearly superior results or treating patient niches with high unmet need (for example hormone-resistant prostate cancer, which is currently seeing a wealth of clinical activity). Meanwhile, the higher therapeutic headroom in lung cancer suggests that there are more areas in which to win. Placing these nominally similar diseases in different ecosystems brings out important context on the nature of the opportunity they offer.