“Why should we invest in a digital therapeutic when it will never come close to generating the revenue we make from our drug portfolio? Why not reinvest into R&D to find the next blockbuster drug, which we definitely know how to do?”
For all the talk of digital disruption in healthcare and pharma, this pointed question from a client cuts to the heart of how many pharma executives approach digital, which in turn informs investment and resource allocation decisions.
Will Pharma ever generate more revenue from a ‘standalone’ digital therapeutic? I doubt it.
Add to the mix the investment required to:
👩⚕️ convince physicians to prescribe a digital therapeutic
💰 convince payers to reimburse a digital therapeutic (e.g., properly designed clinical trials showing not just clinical efficacy, but better longer-term efficacy than existing drugs)
🤼 convince internal investment committees and brand managers that a digital therapeutic will not risk or cannibalize the existing drug portfolio or upcoming launches
… and you’ve got a challenging business case to make, which explains why many Pharma companies are still ‘dabbling’ in digital and experimenting at the fringes.
And while dabbling and experimenting is great and often drives progress, when margins get squeezed, it’s often the cost centres (and not the revenue generators) that are impacted the most.
Unfortunately, the digital pharma graveyard is full of many an innovation lab, digital health departments and talented executives...
But that’s why we absolutely love working at the intersection of digital and Pharma, where the business cases are hard, hairy and require an entrepreneurial and non-obvious approach.
I'm optimistic because so far, we’ve seen a handful of strong business arguments able to convince Executive Committees to invest in digital beyond experimenting (and about a dozen arguments which were too indirect, theoretical and often used sexy terms like "AI" and "disruptive innovation" that trigger a lot of executive eye-rolls).
So there’s hope, but it certainly does sometimes feel like pushing a boulder up a hill.
But that's what you get for being a corporate changemaker 👊