Big Pharma's Iron Grip Starting to Loosen?

In the same way major music labels have been impacted by the dematerialization of music, Big Pharma could be facing an economic revolution. New players who offer innovative services are challenging the pharmaceutical industry's control of the market.


The rules of the game are starting to change. "In a market dominated by one industry, the governing logic is that industry actors have the same understanding of how to create value. For the pharmaceutical industry this translates into big corporations who sell drugs in a market where they control the supply chain from research to the end customer." explains Valérie Sabatier, a researcher at Grenoble Ecole de Management. Yet this equilibrium is slowly shifting away from the industry as small companies, patient associations and large corporations from other fields enter the health market.

A small yet important impact

The first change to be noted is the arrival of small companies. These new challengers have been partnering with industry leaders in semiconductors, agribusiness, information, communication and other sectors. Such partnerships are causing the first cracks to show in the pharmaceutical industry's control of the market. "The market's business models are evolving from a simple linear model to complex and varied models." adds Valérie Sabatier.

In addition to small companies, patient associations are increasing their influence. "Certain associations, such as the AFM Téléthon, function like companies. They have research laboratories, run clinical tests and develop drugs. Others back healthcare initiatives by offering financial support, a framework and an infrastructure for clinical development." comments Valérie Sabatier. The loss of control over clinical trials would be a serious strategic failure for the pharmaceutical industry.

Giants lending their weight to the revolution

Real change is being instigated by the arrival of new players who follow their own rules. "Take the example of the music industry. The internet brought about numerous new business models, yet the major labels continued to earn money without changing their ways. It's the arrival of Apple that truly launched a business model capable of impacting industry leaders. Small players simply don't pack a big enough punch to change the rules of the game." observes Valérie Sabatier.

Digital technologies are opening the door to new frontiers in the health market. Large corporations are looking to take advantage of this uncharted territory. Google, for example, has launched Calico, which it hopes will lengthen life spans and slow aging. Other technological actors are taking the plunge as well: Samsung is already producing biotechnological generic drugs; Sony is considering video games designed to track and evaluate our health.

Big Pharma vs. Big Data

In addition to new players, the Big Data revolution has become a major stake for the industry. Collecting, analyzing and using healthcare data is THE challenge of the future. As Big Data thrives on our ever-increasing connectivity, SO-LO-MO (social, local, mobile) solutions are becoming an integral part of everyday life. This technology will inevitably transform how patients, families, healthcare professionals and companies act.

"The value of the healthcare field is no longer solely based on the sale of drugs. The impact of new services and solutions, such as personalized medicine, is on the rise. Furthermore, these new options are being exploited by actors outside the pharmaceutical industry." concludes Valérie Sabatier.

With new business models, new players and new services, the scene is set for a revolution in the healthcare market. In a not too distant future, Amazon, Google or Apple could well end up as healthcare providers. It remains to be seen if pharmaceutical companies will learn to master this technological and Big Data revolution. If they don't, the industry will have to be restructured.