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A 4 minute read
September 18, 2019

The healthcare industry is changing rapidly. From alternative payment models (APMs) to market-wide consolidation, the landscape looks vastly different than it did just ten years ago. Yet the need for new and generic pharmaceuticals is still high – particularly when it comes to specialty drugs and generics.

To remain proactive in addressing market demand and reducing revenue loss, the entire pharmaceutical industry is restructuring. We looked at the major actions pharmaceutical companies are taking and compiled the top three drivers of these drastic operational changes.

Cause 1: New technology implementations

When properly implemented and monitored, technology can enable pharmaceutical companies to address a wide variety of challenges. Integrating technology into existing workflows and systems can offer visibility into risk management, clinical effectiveness, operational efficiency, and other challenges. Technology is already modernizing drug delivery via partnerships and acquisitions, like that of PillPack and Amazon earlier this year.

Even at the clinical trials stage, technology can improve productivity and lower costs. Artificial intelligence (AI) can aid in research automation, offering insights for drug repurposing during the earliest stages of development. This technology can also enable real-time data analytics by aggregating existing clinical trial and study data for easy consumption and pattern identification for researchers. If lab technicians can see barriers other researchers have faced, they can proactively adjust to regulatory and other issues, saving time and money.

The goal of implementing any new technology is to reduce the incidence of human error to improve efficiency and improve profit margins. So-called Industry 4.0 technologies encompass the internet of things (IoT), smart technology, machine learning, and big data. Experts believe that successful integration of these applications can lead to risk mitigation in manufacturing, quality improvement for products and delivery methods, flexibility in manufacturing, improved visibility into regulatory changes, greater efficiency and speed of production. This combination would, ideally, lead to lower manufacturing costs and higher profit margins.

Pharmacy Technology Vendor Market Share

pharmacy technology market share

Fig 1 Image and data from Definitive Healthcare’s comprehensive DHC Visuals platform, which offers interactive dashboards enabling custom market insights. This chart shows the top vendors for the following pharmaceutical technologies by number of reported implementations: drug reference database, eMar, ePrescribing, and pharmacy management system.

Cause 2: Rising healthcare costs

Both patients and care providers are grappling with the growing costs of care delivery. To control this inflation, the Centers for Medicare and Medicaid Services (CMS) offers alternative pricing models for hospitals and care facilities. These programs, such as value-based care, encourage providers to address the primary causes of cost increases – unnecessary or duplicate tests, high readmission rates, and complications – by approaching patient care holistically.

Pharmaceutical companies are also being forced to implement cost containment measures. Every year more patents expire for landmark drugs, allowing generic competitors to enter the market and drive prices down. To combat this, drug companies are constantly testing and altering new formulas and delivery methods to reapply for patents and stay competitive.

In March of this year, the patent expired for the name-brand drug Symlin. Generically known as pramlintide acetate, Symlin is used with insulin to help moderate blood sugar in people with diabetes. In 2018 alone, more than 4.8 million patients were diagnosed with diabetes according to Definitive Healthcare data. That same year, Symlin accounted for more than $11.6 million in total charges. A generic form of Symlin, which is delivered via injection pen, could make a major dent in profit margins for its manufacturer.

Simbrinza is another drug with a patent set to expire in December of this year. Generically known as both brimonidine tartrate and brinzolamide, it is used to reduce the volume of fluid in the eye, decreasing pressure. In 2018, Simbrinza accounted for more than $25.6 million in total charges. To avoid losing revenue to generic competitors, drug manufacturers must find new ways to manufacture or deliver these drugs and reapply for patents.

Cause 3: Shifting networks and new affiliations

One way pharmaceutical companies are combating generic suppliers is to create new partnerships and manufacture generics and biosimilars themselves. Generics suppliers may also consolidate, which can both stabilize prices and allow the combined companies to offer products with high barriers of entry into the market. Consolidation among pharmaceutical companies can also help address shifting regulatory demands domestically and internationally, with integration offering greater financial and technological resources.

The beginning of 2019 already saw two high-profile acquisitions in the oncology space. Bristol-Myers Squibb (BMS) and Celgene announced an agreement at the end of August in which Celgene would divest the rights to the arthritis drug Otezla (generically known as apremilast), selling them to Amgen for $13.4 billion. An official closing announcement for the merger between Celgene and BMS is contingent on this deal with Amgen. In January, Eli Lilly acquired Loxo Oncology for roughly $8 billion, which would allow Lilly to address treatments for genetic cancers.

Pharmaceutical mergers and acquisitions mirror the continued shifts happening in the wider healthcare industry. Healthcare consolidation, in the form of IDN mergers, facility acquisition, and new network building, makes it difficult for suppliers to sell and market into this complicated space. Referral patterns and affiliations change with every merger, acquisition, and new facility built, forcing suppliers like pharmaceutical companies to identify new decisionmakers, influencers, and key opinion leaders.

Learn More

Staying abreast of the ever-shifting networks of healthcare providers can be a major barrier throughout a pharmaceutical company’s development and sales journey – from finding locations for clinical trials to establishing a go-to-market strategy. Ensure your organization has access to the vital market intelligence necessary to stay competitive in this complex market.

With Definitive Healthcare’s comprehensive platform, you can:

  • Search prescription volumes by physician, drug name, or NDC code
  • Analyze diagnosis and procedure trends in the inpatient and outpatient markets
  • Identify which clinicians are designated key opinion leaders
  • Map and understand referral patterns, affiliations, and other healthcare networks
  • Build custom reports of your ideal prospects and export them directly to Excel or your CRM

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Alanna Moriarty

Alanna Moriarty

Alanna Moriarty is a healthcare industry writer and content strategist. As the Content Marketing Manager for Definitive Healthcare, she most enjoys connecting the dots between data and care delivery. ...

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