"HaTS" - Healthcare as Total Service (c)

"The blockbuster is dead" according to the current industry mantra. Big pharma is gearing up for the new reality by laying off many of the expensive sales reps they formerly used to saturate primary care markets with their now-ageing cash cow drugs.

GSK and others have stated that they are now going for growth in developing countries and pulling back from their traditional, high-priced-but-stagnant, Western markets.  This may bring higher growth opportunities but will also expose them to dangers.  These include commercial threats from local competition and corporate liability from the brand knock-off products which are rife in developing markets.  Furthermore, developing countries cannot support US prices, so the industry acknowedges that business models will shift from reliance on lucrative but limited markets in developed countries to a global, lower-priced model.  The price trend, at least for drugs which treat conditions where several brands are available, will (in my view) inevitably lead towards commoditisation.

It occurs to me that the pharmaceutical industry could pre-empt this process and take price reduction one step further.  Why not supply the drugs themselves for a nominal fee, and realign the pharma industry to a service model.  Health management, including prevention, diagnosis, and treatment, could be provided and charged on a life assurance business model, with the state assisting those who can't pay. The current imbalanced medical industry, which encourages cure over prevention by prioritising the development and prescription of drugs, could be altered to a more sensible model where health is managed, disease is avoided where possible, diagnosed early, and treated when needed. 

The idea is admittedly a bit simplistic but it doesn't have to be an unattainable vision of Utopia.  The drug industry becomes the healthcare services industry and still makes money and profits for shareholders - it just doesn't put all its eggs in the drug sales basket. Some companies are inching towards this scenario by developing diagnostics businesses, but I think there is a much more disruptive business model in there for anyone brave enough to go for it.  Maybe the current woes will push the industry to innovate commercially as well as scientifically.

The HaTS acronym is available for licence. My first idea, Pharmaceutical Research as Total Service, PRaTS, didn't work so well.