Pharma-, Medtech-, Biotech- und Diagnostic-industries are experiencing ubiquitouschange. Strong silo-mentality and tough regulatory forces in the healthcare sector create challenges for employees and leaders alike. In addition to that, trends such as reduced innovation in R&D departments and mounting digitalization of products and processes are increasing the complexity in the work environment. To solve the tension between the constant pressure to change on one hand and the rigorous structures on the other, organizations are looking for tools and methods that increase innovative thought and action.
How can this be successful without overtaxing the change readiness and ability of the organizational culture nor underestimating the impact of existing rules and regulations? Potentially one key to solving the riddle is a school of thought that came up during the beginning of the Internet-age: Ambidextrous Leadership. In combination with clear expectation management, this leadership style can become a lever for high agility, which is needed by the innovation-dependent healthcare ecosystem.
The concept of „Ambidextrous Leadership“ is not new.
It dates back to the time when traditional “brick and mortar” companies were struggling to become operational in the online world at the advent of the Internet age: “Online” was not only new, but different: Changing strategies, new competitors, novel business models, adapted processes, diverse employee profiles. Companies that could manage these two worlds concurrently – as so-called two-speed organizations – were more successful than those who tried to run the emerging online business with the same structures and rules as their traditional business models.
Let sources of Innovation bubble up.
What does that mean in the context of pharmaceutical companies in the age of digitization?
Internal research departments are generating fewer innovations organically. More and more frequently university spin-offs, small research laboratories and start-ups are innovating through leaner organizations and cost structures, shorter reconciliation processes and fierce entrepreneurial drive. Since Big Pharma urgently needs these innovations for market growth, they acquire those smaller entities or forge partnerships.
In order to ensure that a newly identified source of innovation does not stall, it takes leaders who can master [read: foster, harvest and manage] the diversity of both worlds. To be agile means for Leader to do both:
- co-create, think and act within the culture of the co-operation partners
- keep an eye on how the idea, the prototype, the orphan drug becomes not only a marketable product gaining approval but also meets the commercial expectations of Big Pharma.
Successful leaders manage to achieve this “ambidextrousness” by a high degree of agility in their thinking and actingwhen working withthe differences in e.g., the speed of processes or mindsets of employees.
Expectation Management: The “Knowing-Doing-Gap”
We all know that clearly communicated expectations greatly contribute to smooth operations. Nevertheless, many have a hard time communicating expectations of results to be achieved, lived values and, to some extent, behavior in clear, simple and open terms to our environment. Fixed processes and lengthy planning horizons are often ineffective in today’s environments and are replaced by a results orientation, which is guided by values and cultural norms. For this to work in the daily operations, [some] managers have to leave their comfort zone and express concretely, whatthey want to see achieved, without intervening too much in the technicalities of ‘howit is achieved’. Then innovation can unfold.
9 activities leading to more agility for [healthcare] leaders
Simple actions can help us to become more ambidextrous and hence create more nimble organizations – here a few ideas:
- Focus on a goal that the team develops, shares and tracks.
- Monitor the market continuously, recognize changes in time and respond promptly
- Role-model changes with your behavior – do not just trigger change, [ie: do not stick rigidly to plans, but respond flexibly to suggestions and market changes]
- Demonstrate, promote and demand high-quality thinking [and thus achieve better results]
- Proactively and courageously ask for feedback [and build an effective feedback culture]
- Inspire and motivate others to bring their best self to work [Integrative management creates listen-up-speak-up cultures]
- Accept that leadership exists throughout the organization [if you give employees the freedom to act so they feel engaged, empowered and committed]
- Be open to being influenced and persuaded by others [because those who are directly confronted with the problem often have the best solutions – regardless of title or status]
- Allow errors as long as they are used as a basis for improvement and learning processes [to get into the fast pace mode of testing-learning-change-testing]
Conclusion:Simple actions ofagility allow executives to be more innovative in highly complex work environments, bridge the gap between the “old world” and digital transformation, between traditional drug selling and patient focus, between clinical drug approval trials in mass markets to personalized and digitized therapies, all the way to individualized drug manufacturing with 3D printers.
Start today with being more explicit in your expectation setting around what needs to get accomplished!
Based on hypotheses of the Agile Business Consortium – Culture and Leadership Workstream April 2017 https://www.agilebusiness.org/resources/white-papers/culture-and-leadership-the-nine-principles-of-agile-leadershipPharma M&A: Agile Shouldn’t Mean Ad Hoc, McKinsey and Co., (Accessed Aug 2018) – https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/pharma-m-and-a-agile-shouldnt-mean-ad-hoc see also “Innovation, Diversity & Market Growth”, Center for Talent Innovation, 2013 – http://www.talentinnovation.org/_private/assets/IDMG-ExecSummFINAL-CTI.pdf
A company like SpacePharma, supplier of automated testing procedures in space, has a very favorable point of departure: they have found an extremely innovative topic – without competition thus far – and have a unique product for which there is currently no market but a need. Backed with sufficient financing, they can further develop and implement their ideas for years. But market segments that are already developed can also be targeted successfully. This article takes a look at current conditions on the German market and provides useful tips for successful market entry.
Worthwhile sectors for investment on the German healthcare market
Germany, the world’s fourth-largest industrialized economy, spends EUR 4,213 per inhabitant on health. With a volume of EUR 344.2 billion, the German healthcare market is very attractive for companies from all over the world. High-quality medical equipment with a good price-performance ratio that keeps up with the trends in computerization, molecularization and miniaturization has the best prospects here:
- Besides the convergence of medical technology and information technologies, computerization includes the development of high-performance implants through improved hardware and software, model-based image processing, and the intelligent control of dialysis and ventilation systems.
- Molecularization includes, inter alia, nanoparticles that release drugs in a controlled fashion and the development of new functional biomaterials that imitate natural tissues.
- Devices meet the miniaturization trend that, for instance, enable an examination directly at the doctor’s office and the application of implantable micro-systems that work sensorially, by telemetry, or with a connection to nerves.
Other areas also promise high potential for suppliers from Germany and abroad. These include these fields of research into which most investment in Germany is currently going1:
- Imaging techniques, such as 3D imaging combined with navigation and representation of instruments or hybrid imaging procedures
- Prostheses and implants, like prostheses with sensors, actuators and control loops, fall detectors or biofunctional implants
- Telemedicine and model-based therapy, such as process optimization by deploying IT, Critical Incident Reporting Systems (CIRS) or
- Clinical Decision Support Systems
- Operational and interventional devices and systems, like the connection between instrument and data record, augmented reality or combined methods (endoscopy with imaging)
- In-vitro diagnostics (IVD), such as POC diagnostics with lab-on-a-chip systems or multi-array systems for complete analyses with small sample quantities
- Technology for “regenerative medicine”, such as artificial tissue models.
Specific features of the German healthcare market
The challenges on the German market are above all in competition, in reimbursement and with customers. The German market is widely distributed; relationships between suppliers and care providers are strong – meaning that even a company with a product with a persuasive USP has to face up to the competition.
About 58 percent of the market is financed by statutory health insurers; an additional 8.9 percent comes from private health insurers. The requirements from reimbursement are thus clearly defined. The German Technical Aids Register serves as the “gatekeeper” for reimbursement in outpatient care. Often, the new product does not match the product groups, and for that reason alternative sales channels must be developed.
In B2B business, the focus is on hospitals, doctors’ offices and pharmacies. Business with hospitals is complex since the decision-making processes – particularly for capital goods – vary greatly. A survey of 404 hospitals2 identified twelve different decision-making bodies: from the chief physician to the managing director to the IT, medical technology or purchasing department – and various combinations thereof. In addition, doctors’ offices are difficult to reach with a dispersed sales force.
The challenges – taking mobile apps and e-health solutions as an example
A large share of the companies that want to capture the German market come from the booming segment of mobile applications. Successes here are few and far between, as there is often a lack of business models3. Only a few approaches are promising for medical apps in Germany. One possibility is financing by statutory and/or private health insurers or the sale of the application to the end users. Selling to existing care providers is another option. Thus, for instance, providers of emergency call services are a sought-after target group for providers of monitoring apps (wearables).
Apart from the question about the business model, suppliers of mobile applications and those of other e-health solutions should have answers to questions that are crucial for success:
- What existing (medical care) process is improved by means of the application?
- What are the advantages for users in everyday use (e.g., real time savings)?
- How significant are the changes for users?
- How much effort must be expended for IT administration, data or decision management?
Many applications on the market reveal an alarming lack of knowledge about real medical care processes in hospitals, doctors’ offices or at home.
Step-by-step support for market entry
The decision on which market segment to position one’s product helps define the guiding principles for going forward, particularly what path one embarks on to the source of money. On the market for statutory health insurers, these guiding principles are the obstacles to reimbursement, while on the market for privately insured individuals it is customers’ own budgets.
The challenges, not just in the B2B segment, are in driving out the existing relationships between manufacturers and customers. Besides in marketing and sales, there are also often care concepts that have to be implemented together with the care providers, such as pharmacies or medical supply stores.
Figure 1: Market segments for positioning
For each step, you need competent support from the market – and that’s what the Healthcare Shapers offer: the network can provide experienced experts with the appropriate knowledge from development, approvals (medical technology), to market access with topics like reimbursement, market know-how, sales concepts and care models, to implementation.
1 Aachener Kompetenzzentrum Medizintechnik – AKM und AGIT mbH; Zur Situation der Medizintechnik in Deutschland im internationalen Vergleich [On the Situation of Medical Technology in Germany in an International Comparison], Feb. 4, 2005.
2 FAQ Consulting GmbH, survey of 404 German hospitals, 2011, for results ask the author.
3 mHealth App Market Sizing 2015 – 2020, Research2Guidance.
“You can not describe virtual reality (VR), you have to experience VR by yourself”. In line with this knowledge, the following article is addressing all “Healthcare enthusiasts” who like to become inspired during the search for innovative solutions in the healthcare sector. On this voyage of discovery through virtual worlds many further links and finds are deposited, which should animate the reader to test one or the other use case in his own business.
Virtual Reality – a revolutionary Technology
Although there have been numerous attempts in the 1990s to produce better virtual reality smart glasses with the development of computer technology, all attempts failed due to the inadequate immersion of users in the virtual world and the poor quality and performance of computers and displays.
Enormous progress in the development of high-performance computer processors and graphics cards has influenced a 19-year-old young man named Palmer Luckey and founder of Oculus, who decided to merge these components in 2012 to create an innovative head-mounted display (HMD). This enabled him not only to experience immersive gaming experiences in front of the screen, but to have the feeling that he himself was part of the virtual world.
Facebook’s USD 2.3 Billion acquisition of Oculus in March 2014 and the rapid development of the VR technology over the last five years have not only exploit new business opportunities for innovative and fascinating non-gaming business applications. Also very interesting case studies for medical applications and for the use in the healthcare became the focus of interest.
With the VR technology the users of VR goggles are teleported into another virtual world. The experienced feeling in this world – also called “the sense of presence” – is so strong with the new developed VR glasses, that this opened up completely new therapeutic, training and marketing approaches.
Many potential use cases have already been tested and implemented in the medical and pharmaceutical industry. Selected reference projects that have generated corresponding added value in various business areas are summarized below.
Applications for Virtual Reality
VR in healthcare focuses on three main aspects:
- surgical education and training
- medical and health prevention
- medical rehabilitation and psychological therapy
In the pharmaceutical and service sector, the current focus is on the areas
- product marketing
- company presentations.
Education and Training
- The experience of a surgery
- Make surgical interventions virtual. Simulate and train risky interventions in virtual surgeries, plan surgeries
- In-Device Experiences (functionality of a medical device such as a hearing aid, prosthesis or joint)
- In-Body Experiences (Understanding a mechanism of a drug, cellular functions and organs of the human body)
- Visualize point-of-care and patient perspective (in the nursing, in the clinic, or at home)
- Drug development and drug discovery
- Visualization of complex data
Medical and Health Prevention
- Relaxation applications
- Sports fitness and rehabilitation applications (virtual flights and bike tours, virtual tours for the disabled). Gambling elements (gamification) are used for motivation
Medical Rehabilitation and Psychological Therapy
- Exposure therapy (in case of phobias, post-traumatic stress disorder or to overcome fears
- Pain therapy (the pain center of the brain is distracted and the sensation of pain during treatment significantly reduced)
- Rehabilitation of stroke patients
- Nutrition counseling and exercise trainer (in case of obesity or diabetes)
- Gaming app for understanding and behavioral training of diabetes patients, reduction of the drug failure rate in children through virtual gaming concepts
- Parkinson’s simulation from the perspective of a patient
- Diabetes Voyager – Product presentation at trade fair booth (Novo Nordisk)
- Rheumatism – Patient experiences and product features (AbbVie)
- Dermatology – The flight through diseased skin layers (AbbVie)
- Biotech marketing (CAST Pharma)
- Recruitment – pharmaceutical companies present themselves through 360 ° videos
- Clinic tour – inspection of a clinic and presentation of services by means of 360 ° panorama photos
- Trade fairs – innovative storytelling at the exhibition booth
- Innovations and corporate image – visualization in VR creates new perspectives and insights, companies as innovative pioneers.
The Look into the Future
The first concrete implementations in other industry segments and in the areas of eCommerce, entertainment, corporate training and trainings suggest further areas of application: the virtual pharmacy, the virtual consultants, virtual home visits, the patient exchange in social areas with those affected and their own avatar.
There are many reasons why these applications are still in their infancy for healthcare. These include legal requirements (patient protection and confidentiality of data), the complex ecosystem with patients, doctors, therapists, health insurance companies, authorities, clinics and pharmaceutical companies, as well as the fact that the high-performance VR glasses are still quite expensive especially for the end consumers.
Recommendations for getting started in Virtual Reality
Despite these challenges, there are already numerous ways to find a quick and cost-acceptable way to get started with this new technology.
With so-called cardboards you can already try out a lot of VR content with your own smartphone. Even though the immersion and the sense of presence are very limited with these simple but inexpensive models, especially 360° videos can create great experiences and provide a whole new perspective for many situations. These glasses are used when you want to serve end consumers or online marketing and communication channels (such as YouTube).
With mobile, wireless, high-quality VR glasses such as the Samsung GearVR, the ZeissVR One, the Google Daydream or, in the future, the Oculus Go comes close to a perfect presence feeling in virtual worlds. Such wireless systems are primarily used at events, in marketing and sales.
For medical simulations and for real-time VR experiences with as much freedom of movement, the more powerful high-end VR goggles connected to a PC or laptop with a powerful graphics card are required. Market leaders for business applications here are currently the Facebook system with the Oculus Rift and HTC with the Vive. Corresponding ergonomic controllers allow the complete immersion in the virtual worlds with high interactivity with the own avatar hands.
User-friendly and intuitive software tools such as The Virtual Reality Suite allows interested users without any programming knowledge to create their first impressing VR experiences and VR presentations in order to test and evaluate potential value-added case studies.
The author has summarized further inspirations and numerous qualitatively described use cases from various branches in the study “New Dimensions of Reality” published in cooperation with KPMG.
Source: © Fotolia, chrombosan
The electronic patient record is a good example of how far Germany lags behind countries like Scandinavia and the Baltic states in digitalization. It doesn’t look much better with other digital health solutions that could improve the dialogue between physician and patient. The lobbyists of the established players like to invoke legal barriers and data protection to explain why digitalization in the healthcare industry is progressing at only a sluggish pace. But in fact, the real motives, besides a lack of billing opportunities, are also the fear of losing control and fierce competition. In addition, change is usually experienced as a painful process accompanied by difficulties. That there are cases even in the healthcare sector where “Industry 4.0” is taking place today, can be seen in areas where patients are not directly involved.
Job descriptions shaped by digital requirements have arisen, for instance, in the drug development process. Here, researchers aim to identify targets where a medicament could be applied in the course of an illness. Quantitative system pharmacology supports them in describing biological networks as a numerical model. Take, for example, big data: large quantities of tissue or DNA samples of healthy and ill patients are compared in order to identify patterns. This would not be possible without digital tools such as learning systems and artificial intelligence.
Anomalies in, for instance, individual molecules are then analyzed more precisely in a dialogue held among IT experts, biologists and medical professionals. By means of algorithms, the studies are quickly screened that are relevant in a particular context from the thousands of medical articles published around the world. In this way, such pharmaceutical researchers compare their own results with the literature and recognize what substances may be effective and possibly alleviate or heal diseases.
Learning from others — practical experience
Speaking of researchers: as Lars Hanf, Director Marketing Communications at the pharmaceutical and laboratory equipment supplier Sartorius, explains in the video, 74 percent of scientists search for information online nowadays, no longer going to libraries. He explains in six and a half minutes how Sartorius started digitalization via e-commerce, and provides tips for digital projects. There is no one digital master plan, but rather every company has to develop the plan that best suits its individual circumstances. Lars Hanf advises beginning first with straightforward projects and then expanding them systematically. He stresses the importance of a learning and error culture, and proposes putting together teams with both specialist and digital skills. Above all, you need people who enjoy trying something different as an end in itself.
Starting out right and creating value right from the beginning
The hardest part is getting started, and digitalization doesn’t begin with e-commerce for every company. As experience shows, forward-thinking companies make use of digitalization for three different strategic aims:
- Optimizing processes
- Better collaboration with customers and suppliers
- New business models
This raises the question for healthcare decision makers of how and where the deployment of digital solutions should begin, what tools are useful for this, and how digital change processes can be managed.
When prioritizing possible topics and activities, it helps to evaluate the potential of digital solutions along the value chain. This view highlights what work steps become superfluous through digitalization. Since the actual disruption often begins here, a potential and competitive analysis along the value chain shows which other players are ahead in the game. It is first necessary to gain clarity about what areas of your company can achieve the greatest added value by using digital solutions, as well as to clarify at what junctures it would be better to work together with partners with greater digital expertise.
As soon as you have established your strategic aim in deploying digital solutions, you need to select, adapt or develop from scratch suitable technologies. But caution is advised. Though technology providers like to imply that IT solutions can be changed as needed and adapted to a company’s specific situation, the reality is frequently quite different. It is therefore crucial to recognize potential conflicts of interest and learn from previous experience. A dose of pragmatism is a good guide here.
In the subsequent technical implementation, which entails adapting and improving structures and work processes and thus involves cultural changes, the added value for companies is in consistent implementation. Only in this way will the gains in efficiency be reflected at the end of the day in results. Starting digitalization therefore requires, besides thinking and acting in an entrepreneurial manner, the right combination of industry experience, strategic competence and technological understanding.
In Germany already 27% of enterprises generate more than 60% of their revenue through digital means and channels. Following a monitoring report from the German Ministry for economy, healthcare and pharmaceutical industry are at the bottom of the digitalization table. The number of causes for reluctance may be many but the necessity to drive digitalization in the healthcare is high. There are only isolated examples where patient-care has gained considerably through digitally integrated and interlinked care.
Digitalization can be defined as “moving from individual, paper-based procedures to structured, designed, and repeatable processes supported by digital technology.” The core issue being so reluctant to embrace digitalization is that in many healthcare markets the demand-side or any other market-shaping power is missing. In addition, existing „market-powers” cannot solve the problem since paternalistic traditions stand against it. Physicians and other healthcare professions resist to democratize content, apply consistent and repeatable processes, and share knowledge by digital means. More thresholds exist to introduce new ways to serve patients, leveraging the power of digitalization. Digital in this context could mean, that everyone has access to the identical dataset, telehealth is a regular option, and patients own their health-record, grant access rights, and they add their own data. This widely is circumvented, and far from reality. Pharmaceutical companies peacefully rest on their profits, and a buzzword like “patient-centricity” is little more than a lip-service. On the other hand, this industry sits on unique and huge resources of disease-knowledge which could well be leveraged to better serve individual patients.
Digitalization means democracy and individualization
„Cave linguam“ was a set phrase when department heads were on their ward-round in earlier days. It meant to stop young colleagues to share too many details aloud with patients. Contrasting these days, today there are websites to translate medical terminology into patient-language, working groups to help patients better understand package-leaflets, and above all there is “Dr. Google”. The „patient“ is far from being an amorphous blob any longer. Patients of today are individuals seeking valid information „what they suffer from”, “what this does to them”, and “what they can do against it”. In the future patients must be better enabled to ask valid questions and understand the answers. This could allow them to become the future demand-side of the healthcare market. Supporting millions of individual patients can only be achieved leveraging digital technology. There are some isolated technical platforms available to provide such digital assistance to patients, allowing them to own, share, and enrich their individual health records. Not only the NHS in UK is dedicated establishing a paperless healthcare system in support of patients, leveraging the huge and disruptive power of digital informatics. The goal of digital healthcare is to grant active participation to patients, enable them to ask the right questions, allow access to appropriate and certified information about their own health conditions, and support patients in adding their own data to their individual health record. The central question is which player will commit to this goal when? Many players presumably wait for political interventions to become the driving force towards digitalization. Especially the pharmaceutical industry will probably carry forward their habits of the past: run the business as usual, wait, complain, and in case unavoidable, react.
Act before another Uber takes it all
It could well be a digital start-up turning healthcare upside-down. Disease prevention, patient care, and “radical patient-orientation”, could happen all of a sudden and demote pharma to merely be an exchangeable component supplier. In such a scenario, healthcare funds and insurance systems will remain being payers only. “Who does not change, will be changed.” will prove to be the rule. Do not forget that companies like Verily, the healthcare-arm of Google, having access to the world’s best talent, and Apple, owning abundant financial resources, are preparing their “entry-vouchers” into the healthcare-sphere. Digital disruption has only started and the momentum is high. It is worthwhile to remember that PayPal has not been founded by the banking industry, and AirBnB is not owned by a hotel chain. The “Ubers” of the world today are delighted being ennobled by the biggest car manufacturers acting as their major shareholders. Digitalization of healthcare will put patients into the situation to better manage their own conditions. Healthcare not only resembles the largest market in almost all economies and countries. Healthcare deserves, needs, and will receive a mighty push towards digitalization. The currently open “windows of opportunity” for corresponding industries are numerous.