Tunnah’s musings: What would an Uber for pharma look like?
As numerous other sectors see disruptive businesses taking the lead over established companies, Paul Tunnah muses on what an Uber for pharma might look like and where such an organisation might emerge from in the pharmaceutical industry.
The Internet has definitely unlocked new business models that would simply not have been possible in the pre-digital world of ‘physical’ business. For example, you may have seen the following observation doing the rounds online:
• Uber, the world’s largest taxi company, owns no vehicles
• Facebook, the world’s most popular media owner, creates no content
• Alibaba, the world’s most valuable retailer, has no inventory
• Airbnb, the world’s largest accommodation provider, owns no real estate.
Each of the above businesses has completely disrupted its sector, challenging traditional ways of doing business and using the power of modern connectivity to connect millions of small ‘sellers’ with their audience of ‘buyers’.
“Uber Pharma, the world’s most valuable pharma company, owns no ….?”
But is this disruptive force likely to come to the world of pharmaceuticals and, if so, what does it look like – what is the secret to Uber Pharma? Let’s explore a few iterations of the phrase:
Uber Pharma, the world’s most valuable pharma company, owns no ….?
The obvious word to put in there is ‘drugs’ and such models do already exist in the distributors who get medicines to patients and, perhaps a better analogy, the growing wave of online pharmacies. For example, the biggest healthcare company in the Fortune 500 last year was CVS Health, the US drug retailer and pharmacy benefits manager. In fact, these sorts of companies dominate the Fortune 500, with the first pharma company, Johnson & Johnson, only coming in at number 8 in the healthcare list and 37 on the overall ranking. Pfizer, which is the highest-ranking, predominantly prescription-focussed pharma, only appears at number 56.
While there are all kinds of interesting drug distribution models, you could rightly argue that a pharma company that does not bring new medicines to market is not really a pharma company in the purest sense of the term, so perhaps we can strike out ‘drugs’ from our list of words.
… Sales reps?
A successful pharma company with no sales reps is (with apologies to the reps) a more likely candidate for the model behind Uber Pharma. While sales rep numbers are not declining at the rate some pessimists predicted 10 years ago, the return on investment for the pharma sales force is under scrutiny, especially as the evidence for effective digital engagement with prescribers builds.
In addition, we already have established providers of contract sales reps, who would be ready and willing to support Uber Pharma if it felt that it needed selling feet on the ground. Indeed, these contract sales organisations (CSOs) themselves could evolve from permanent headcount towards hiring freelance reps as needed. An online CSO operating globally and tapping into freelance reps could be a rather neat, Uber-like model if enough sales people were happy to work on this basis. However, this in itself is not a ‘pharma’ company in my view.
“An online CSO operating globally and tapping into freelance reps could be a rather neat, Uber-like model”
This is where it gets a bit more interesting. The pharma industry prides itself on its investment in R&D – it’s a research-based industry, so surely it could not exist without its own scientists and labs, right? Well, maybe it could. Clinical research organisations (CROs) have long been established as critical partners for an industry that is seeking to manage clinical trial costs. In fact, the larger CROs employ more people than many pharma companies, so the opportunity to completely outsource the development part of R&D is entirely feasible.
On the early research side, most pharma companies conduct a mix of their own in-house operations and business development functions that focus on scouting for opportunities from smaller biotechs and academic centres, but the potential exists to focus purely on the latter model. In fact, companies already exist that operate this way, such as the Swiss biopharmaceutical Debiopharm. So could this be scaled up for the world’s biggest pharma company and, if so, what would be the critical assets of Uber Pharma?
I would suggest two things – deep understanding of what the most commercially-valuable medicines look like and connectivity with key ‘buyers’ in every market. Both of these are driven by possessing the right data and insights.
“What would happen if a 23andMe or Google decided to buy a big pharma company?”
So does anyone fit the bill yet for Uber Pharma? Not quite – but it provides some hints of where to look – and it might not be within the current ranks of established pharma companies. I’ve written before about how disruptive some of the emerging technology companies like Google and 23andMe could be in healthcare. Google’s Calico has acquired significant industry expertise in its senior ranks and is already partnering with a number of research centres, in addition to investing in research facilities with AbbVie (so it kind of breaks the above rule in that it does own labs, at least in part). 23andMe has had a different story, which has seen it move from selling DNA testing kits, to selling genetic data to pharma, to considering its own drug development.
Arguably, neither has great connectivity with the key buyers (prescribers and payers) – yet – but their data-driven approach could see them steal a lead over current pharma leaders in time. It could happen sooner rather than later too. What would happen, for example, if a 23andMe or Google decided to buy a big pharma company for exactly that reason?
Uber Pharma may not be with us at this point – but it’s an interesting thought experiment. In five years’ time it might be an interesting reality.
Until next month, feel free to share your thoughts on Uber Pharma and, as always, stay well.
About the author:
Paul Tunnah is CEO & Founder of pharmaphorum media, which drives better communication and collaboration between the pharmaceutical industry and other healthcare stakeholders. Today, the group encompasses both the digital thought leadership publication, www.pharmaphorum.com, and pharmaphorum connect (www.pharmaphorumconnect.com), the trusted healthcare media consultancy, which helps clients tell a clear, engaging story that connects with the right audiences and influencers using pharmaphorum’s global healthcare networks. Dr Tunnah holds a BA in Biochemistry and DPhil in Biological Sciences from Oxford University.
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