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I am pleased to forward the following 'Brief Report' from the Samsung Economic Research Institute. This is a short, high-level review of the dilemma facing the pharmaceutical industry. Much of this will not be new, but SERI's challenge to the Korean IT industry is of strategic importance to the global pharmaceutical industry.
All the best,Daniel I. Shostak
Strategic Affairs Forecasting
safiredshos@aol.com
301 758 2106Forecasts for Decision Makers
www.strategicaffairs.net
Industry Report -->
Disruptive Innovation in the Pharmaceutical Industry KOH You-Sang
Apr. 7, 2010
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Have you ever heard of "disruptive innovation?" The term was coined by Clayton Christensen, a professor at Harvard Business School, and was introduced in his book 'Innovator's Dilemma,' released in 2000. The term comes from his research on the changing landscape of competition in the electronics industry.
His subsequent book, 'Innovator's Prescription,' also attracted attention with a disruptive solution for the health care industry. The professor argued that with the emergence of generic drugs and customized health care, the competition landscape in the pharmaceutical industry is going through a fundamental change. Today, we are going to talk about the fundamental changes taking place in the pharmaceutical industry.
Traditionally, major pharmaceutical companies have competed against each other by inventing synthetic drugs for chronic diseases like high blood pressure and hyperlipidemia. However, this has started to change. With the patents of products that account for 42% of sales of the top ten pharmaceutical companies expiring by 2012, pharmaceutical companies are about to face fierce competition with generic drug producers.
Moreover, big discount stores such as Wal-Mart and Walgreens are increasing their market share by selling generic drugs at discount prices. For example, Walgreens is selling a 90-day supply of generic drugs at US$ 12.99, a phenomenon now common in the US.
The wind of change is blowing in the pharmaceutical industry. Only about 30% of new drugs are invented by major pharmaceutical companies while the remaining 70% are developed by biopharmaceutical companies.
If so, what could pharmaceutical companies do to prepare for this new situation?
First, pharmaceutical companies need to develop biopharmaceuticals customized for each patient. Research is under way in areas of cancer and dementia treatment where conventional medicine have not been effective. The anti-cancer drug market produced with biotechnology increased by 20% to reach US$39 billion in 2008. Sales of biopharmaceuticals such as Rituxan and Herceptin have also been growing by over 10% every year since 1998.
Gleevec, a medicine for chronic leukemia patients, recorded US$ 3.7 billion in sales in 2008, with an 86% 7-year survival rate. As the development of biopharmaceuticals requires sophisticated technology and is hard to copy compared to conventional synthetic medicine, companies can dominate the market once they succeed in developing customized biopharmaceuticals.
Second, pharmaceutical companies need to develop diagnostics combined with treatment. Biopharmaceuticals do not work for some patients. For example, Herceptin, for breast cancer, is effective in patients who have an excess of HER2 proteins, but these patients only account for 20% of all breast cancer patients. Furthermore, biopharmaceuticals are costly compared to synthetic drugs, and are not usually covered by insurance. This has created an obstacle to the expansion of the biopharmaceutical market.
If doctors can tell whether a medicine will work for a patient in advance, it would not only relieve the cost burden of patients, but also reduce national medical costs. In the US, the Food and Drug Administration Amendments Act of 2007 makes it mandatory to classify participants in clinical trials by genetic trait to improve the efficiency of the clinical trials from the initial stages. For these reasons, the development of diagnostics combined with treatment has become essential in the pharmaceutical industry. Currently, 145 drugs are under development with diagnosis kits. Pharmaceutical companies aim to shorten the approval period of new drugs, and increase sales through this process.
So far, we have talked about the changes in the pharmaceutical industry, and what direction pharmaceutical companies should take in the future. To sum up, there will be fierce competition over the development of biopharmaceuticals in areas where conventional medicines have not been effective. Furthermore, the development of diagnostics has become an essential part of new drug development. For Korea's part, it needs to work hard on developing diagnosis kits based on its capabilities in the IT industry. Why don't you set your sights on the changes in the pharmaceutical industry, and grab onto new opportunities?
Thank you for watching. I'm You-Sang KOH.
Copyright ⓒ 2010 Samsung Economic Research Institute. All rights reserved.
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Even though public opinion polls show a general distaste for partisan divisions, a rising tide of political partisanship is sweeping into many aspects of American public life. Witness the several recent examples of how partisanship and ideology have replaced civil discussion and pragmatism. How many times have players from both sides of the political aisle tried to persuade the other side to think a certain way? And how many times does this actually work? Both sides continually struggle to understand where the other is coming from…oftentimes with very little to no success.
Theorists have long speculated on how factors such as age, gender, race, marital status, education, income, home ownership, political knowledgeability and church attendance affect and influence political leanings. But we are learning that these external factors do not play as much of a role as we once thought.
Increasingly, political positions are seen to be largely determined by biological factors. According to John Alford (political scientist, Rice University, Houston), “Political tendencies are like being left-handed or right-handed — you’re born feeling more natural using one hand or the other. It doesn’t mean you can’t switch — for many years lefties were taught to be righties. But it’s not easy.”
Based on a 2008 article in the New Scientist called “Born That Way,” opinions on a long list of issues from religion in schools to nuclear power and gay rights were found to have a substantial genetic component. Liberals and conservatives even have different patterns of brain activity.
Two groups pulling in different directions will always characterize politics. However, if these groups are genetically hard-wired to disagree, what does this mean for the future of debate and policy analysis?
Erica Orange
Vice President
Weiner, Edrich, Brown, Inc.
200 E. 33rd Street, Ste. 9I
New York, NY 10016
212-889-7007 (office)
212-679-0628 (fax)
http://twitter.com/WEBfuturetrends
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From the article "Stephen Hawking: Humans Should Fear Aliens" in The Huffington Post:
World renowned scientist Stephen Hawking believes extraterrestrial life almost certainly exists -- and humans should be extremely cautious about interacting with it.
"To my mathematical brain, the numbers alone make thinking about aliens perfectly rational," Hawking says in a new Discovery Channel series called Stephen Hawking's Universe. "The real challenge is to#more work out what aliens might actually be like."
He suggests that aliens might simply raid Earth for its resources and then move on: "We only have to look at ourselves to see how intelligent life might develop into something we wouldn't want to meet. I imagine they might exist in massive ships, having used up all the resources from their home planet. Such advanced aliens would perhaps become nomads, looking to conquer and colonise whatever planets they can reach."
He concludes that trying to make contact with alien races is "a little too risky". He said: "If aliens ever visit us, I think the outcome would be much as when Christopher Columbus first landed in America, which didn't turn out very well for the Native Americans."
Previously, Hawking has argued that humans must colonize space in order to survive and thrive. "Sooner or later disasters such as an asteroid collision or a nuclear war could wipe us all out," he told Britain's Royal Society in a 2006 speech. "But once we spread out into space and establish independent colonies, our future should be safe."
Read more about the Discovery special in the UK Times Online, watch video here, or browse through other Hawking videos below.
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posted.
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"I’ve been a full time futurologist since 1991, part time since I started work in 1981 on missile systems that didn’t enter use the late 90s. I am irritated when people say you can’t predict the future, because in some areas driven by basic technological progress, it is obvious that you can. With experience you can get 85-90% of it about right at the ten year horizon. The downside of thinking about the future full time is that the present is way behind in terms of what it offers, so it is hard to be content with today’s gadgets and services, and of course there are far fewer surprises in life. The upside is that when stuff finally does arrive, it is already much more familiar so takes much less getting used to.
But the pace of change is usually much slower than the imagination in the short to medium term, and faster in the long term. For example, the new ipad from Apple is pretty much the sort of coffee table tablet we have been talking about since 1991. It is still too thick, hard, heavy and underpowered compared to what we knew even then will one day be routine. We knew that because of Star Trek. We knew it would take a long time to implement, but it has actually taken a bit longer than we thought, and it still isn’t quite there. In IT, the pace of change is falling slightly behind what should have been the case. Mobile phone capability has run way ahead of our expectation curve in the last 20 years, but bandwidth and AI are falling behind, while memory, processing speed and storage capability are pretty much as expected (though poor software badly lets down the speed of computing actually delivered to the user). But perhaps the biggest surprise during my time as a futurologist is the lack of surprises. Mostly, tech has rolled out more or less as we thought it would.
Devices like the ipad will be very common when the technology is mature and costs have fallen, and general purpose interactive displays will lie on surfaces all over the place. That will be nice, but not surprising. It will be another decade before this trend fully catches up with early 1990s expectations. That puts the future as 30 years away. Obviously just for the ipad in this case, but perhaps that figure applies elsewhere. Let’s check a few areas. Virtual reality, first uses in military in the early 1980s, civil world by 1990, still only embryonic due to display limitations today, but promising perhaps to finally hit the big time in a decade or so, boosted substantially by its cousin augmented reality, 30 years again.
When I was at school, doing religion O level, we did a project on euthanasia, picked up by our teacher as an area we would have to deal with during our careers. He explained that although it would be a long time before it would be legal to kill people who were in pain or suffering, it might eventually be allowed. UK law started allowing assisted suicide in some circumstances last year, after a few years of unclarity. 1976-2009, just over 30 years again.
Genetic modification is another area that entered serious public debate in the late 80s/early 90s, now commonplace. 30 years
Car design follows suit. The sci-fi comic cars of my childhood became the standard shape of most new family cars about 30 years later.
So the 30 year period applies in some areas. In other, such as android and AI technology, the imagination has been more powerful. We still don’t have the machines envisaged in the 60s, so we have past the 50 year mark already and still at least 20 years from some of those visions. Visions of direct brain-machine links go back to the 60s at least and although there are some primitive connections today, the whole thing won’t be a reality this side of 2040 and it won’t be common till the 50s or 60s, 100 years after the imagineers came up with it. So I guess the 30 year period is actually quite a short horizon for futurology.
Satellite navigation is probably an exception though (in normal civilian life). We saw very little expectation of its impact before the mid 1990s and it is already quite mature. So it has only really taken 15 years. Maybe that is because it was important in military and aviation prior to that.
Of course there are always some smaller scale surprises, people invent new things every day. Most of these are incremental improvements on stuff already around, or eventual implementations of things thought of decades earlier, where the technology has finally caught up and it is possible to build it. Things like the ipod and memory sticks are examples of this. So when new things appear on the net, they are usually well expected in terms of kind, it is only the specifics that vary. Social networking was very well anticipated 25 years ago, but implementations such as Twitter or Facebook are just more recent instances and still very far from mature. I think we need at least another 15 years of development before electronically mediated social networking can be considered a mature technology. 40 years, but then it’s a big field. Some may argue it is limited by social rather than technological evolution, but actually the technology isn’t anywhere near mature yet either, and people have actually been fairly quick to adapt to what capability there is. But I am waffling. Back to the point.
The point is that apart from a few big areas well developed in science fiction such as robots, brain-machine links and AI, most things we can think of are not very far away, just 3 decades. Using my favourite analogy, futurology is like looking through fog. Some things are visible quite far ahead such as bright lights, but details are not visible until you get close. We could argue that a few bright lights such as full machine-brain links, conscious machines and electronic immortality are visible now even though they are several decades away, but mostly we are limited by imagination at that range. Our mental fog limits futures reasonable visibility to about 30 years. And visibility is excellent at 10 years.
I’m sure there is a deeper point in this, I’m just thinking out loud at the moment. I’ll blog the rest when the fog clears a bit."
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Update on nuclear energy expansion from Next Big Future:
Japan is planning to build nine new nuclear power plants by 2020, and 14 by 2030, according to a draft strategy document by METI, the Ministry of Economy, Trade and Industry.
Nuclear power's security of supply and low-carbon output have made it a strategic priority for the country, the report said. The report said that the 2020 plants should have a load factor of 85%; Japan's reactors had a load factor of 84% in 1998, prior to the 2007 earthquake that shut down all seven units of Kashiwazaki-Kariwa, among others. The 2030 plants would have an even higher load factor of 90%.
The Japanese energy plan also the goal of halving carbon dioxide (CO2) emissions from homes and passenger cars by 2030.
The Finnish Ministry of Employment and Industry says preliminary permission has been given to Finnish utility TVO and Fennovoima, a consortium including Germany's E.On AG, to build the reactors by 2020. The government proposal requires parliamentary approval, expected this summer.
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This is an Institute for Workplace Studies (Cornell University) summary of a report on Multinational Workforce Health Strategies.
http://www.towerswatson.com/assets/pdf/1454/Workforce-Health-Strategies-Survey.pdf
http://www.towerswatson.com/press/1555
[circulated by Daniel I. Shostak, Strategic Affairs Forecasting www.strategicaffairs.net]
As obesity, work-related stress and chronic disease accelerate among the non-U.S.-based employees of multinationals, the number of multinational companies that are taking a global approach to mitigate these so-called “lifestyle diseases” will double by 2012. These findings were revealed by the Workforce Health Strategies: A Multinational Perspective, a survey conducted by Towers Watson, a global professional services company. While only about one in four (26%) multinational companies has a global health strategy in place today, an equal number plan to implement a global health strategy by 2012. Among companies that currently have a global health strategy in place, 74% apply that strategy to 95% of their employees or more, and 71% apply it to all the countries where they have significant business operations.
continues here:
Another revealing trend is the high number of multinationals that offer employer-sponsored health care coverage overseas. The survey data also show that 77% of the companies surveyed offer employee health programs in lieu of, or in addition to, publicly provided programs in all or most of the countries in which they operate. The role of this supplementary coverage is to either “top up” the local socialized system or fill an important gap in countries where there is a significant deficit in the public health system.
“Contrary to popular belief, the United States is not the only country where employer-sponsored, private health care coverage is the norm,” said Nicole Serfontein, senior international consultant with Towers Watson. “However, the tools used to manage health risks in the United States are not yet as prevalent or developed elsewhere. This not only hinders many multinationals from effectively mitigating these risks, it also could lead to a U.S.-like escalation in employer health care costs.”
With chronic conditions, stress and behavioral issues driving medical inflation, multinationals are beginning to shift the focus of their global health care programs from the cost of care to the prevention of illness. Many companies indicate that stress (83%), chronic conditions (77%) and obesity (63%) can have a high or moderate impact on their health care costs and workforce productivity, but few multinationals today have implemented the tools to effectively manage them on a truly global basis.
According to the survey:
* Only 40% of respondents provide case management programs (in most or all countries), which typically monitor, coordinate and help improve patient care, quality and costs for individuals with complex conditions.
* Only 25% of companies provide disease management programs (in most or all countries) aimed at addressing chronic illnesses.
* Just over 30% offer health promotion, health screenings and behavioral health programs in most or all countries.
* Only 25% provide health risk assessments in most or all countries.
The slow adoption of many of these tactics is partly due to the challenges multinationals face when implementing them outside the United States. Survey respondents indicate that non-U.S. markets lack available or reliable health care cost data (51%), health care products and services (44%), and desired health care vendors (39%).
“To mitigate growing health care risks and associated costs as well as boost worker productivity, multinationals can increase their use of health strategies that are truly global,” said Francis Coleman, senior international consultant with Towers Watson. “In particular, forward-looking multinationals are using leading indicators of health and well-being to proactively and effectively focus their resources rather than react to the rising costs caused by lifestyle diseases and increased adoption of advanced medical technologies.”
Conducted in late 2009, the survey includes responses from 106 organizations that have at least 500 employees and significant business operations in more than one country. Ninety-three percent of the participating companies are based in North America and manage, on average, 25 health programs and operate in 20 countries around the world.
About the Survey
The survey, conducted online from November 19 through December 23, 2009, included human resource and health and wellness executives in North America and Asia. The survey included 106 participating organizations that had at least 500 employees and significant business operations in more than one country to qualify. Ninety-three percent of the participating companies are based in North America. All percentages cited are based on 106 respondents unless otherwise specified.
Related information at http://www.towerswatson.com/research/1454
Press Release 14 April 2010
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One of the world's truly able futurists, Dr Peter Bishop, is taken through his paces on the future of technology, health, the economy, energy, education, etc. My favorite image (paraphrasing): 'These days with drugs, it's like Vietnam - we just bomb everything. But with advances in medical biotechnology, drugs will become more like missiles. We'll be able to get them to exactly the target we want, even exactly through the window.'
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To register email Thomas Crowe (crowe@ztg.tu-berlin.de)
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