For several years, pharma has attempted to move “beyond the pill” to offset declining product pipelines. The dream is to find new revenue opportunities. New business models.
But as we’ve seen, these new products and service experiments are rarely commercialized. If you study the revenue mix on any pharma P&L statement, you’d be hard pressed to find any real revenue beyond pills.
So, what’s the problem?
Well, it’s not just pharma. Successful new businesses that launch in the shadow of large legacy product portfolios are rare in any industry.
$100 Million or Bust
A few years ago, I was working with a global CPG company with a vibrant innovation team. But the success bar for moving a new idea or business model out of the lab was having visibility to least $100 million a year in revenue. Soon.
This meant that only the most obvious, non-risky ideas got the capital needed to grow. Promising but speculative projects were left to die on the vine.
So the challenge of commercializing innovation is not unique to pharma, but that doesn’t let us off the hook. There is an urgency to figuring this out.
The Urgency has Changed
A few years ago the focus was on finding new ways to backfill declining revenue from the patent cliff. But now the product pipelines for biologics and new orphan drugs for rare diseases could not be more robust. Revenue is growing again.
The real reason for today’s urgency is not revenue, it’s the changing customer environment. We now have the need to not only prove outcomes but to improve the patient experience. Soon.