Disruption and the pharma industry: Too big to fail?

16th March 2022
Disruption comes from different sources and can manifest in many ways. In this article, Imperial Tech Foresight explores what disruption is, how industries like the pharma sector might react to it and, more importantly, prepare for it. Quickly, a word about foresight. Foresight helps organisations to develop intuition about the future, accept the possibility of fast and radical change, and both prepare for and be resilient to this disruption. To demonstrate this, we present a future scenario for the pharmaceutical industry, where a paradigm shift in healthcare disrupts the incumbents in the area*. After that scenario we investigate the nature of disruption. *While presented as a thought experiment, emerging technology, current business practices and developments across society have been used to inform into this scenario.

Prototyping transformation, an example in the pharmaceutical industry

Incumbents in the pharmaceutical industry operate in an ecosystem that is highly regulated, where change has historically been incremental rather than transformative. Entry barriers in the market are extremely high due to large costs and complexity of infrastructure.

Often the biggest companies dominate markets and are able to either buy out potential disruptors or emerging competitors or guide how policy and processes are developed.

After all, people’s lives are on the line – which government would jeopardise its electorate’s health because they want to save taxpayers’ money, bring jobs to new areas or invest in innovations that can be owned by the state and its services or products sold to companies and countries around the world?

Thinking about scenarios of disruption proves to be challenging, but there is no shortage of emerging technologies and trends to play with, that have the potential to drastically transform the area.

Artificial intelligence, ‘In Silico’ (i.e., use of digital models of the human body) trials, Computer-aided drug discovery, 3D printing, nanotechnology and bio-electronic medicines are some very good examples.

Having said that, let’s dive into a future scenario developed by Imperial Tech Foresight, that imagines a disruptive change coming from beyond conventional boundaries of the industry.

Personal Healthcare in 2036

London, 2036. The concept of personal healthcare has taken a whole new form over the past years. The societal focus on continuous real-time, precision wellbeing supported by technology revealed a gap left untapped by public health services.

Whereas in the past people used to refer to doctors on a symptom-based paradigm, today everyone is interested in day-to-day prevention and monitoring. Ten years ago, groups of freelance doctors and pharmacists spotted this emerging need in advance. They joined forces to create an online Digital Health Service (DHS) that aimed at tackling it. The company, called Metahealth, promised to leverage immense amount of real-time data coming from smart wearables and ubiquitous diagnostics to provide 24/7 predictive and adaptive digital care to clients.

Within few years, multiple similar start-ups had emerged. Their services moved from the prediction of oncoming illness, with the provision of nutritional advice and paths for corrective medication, to a holistic personalised care service that quickly started to bypass both GPs and pharmacies. This transformation was accelerated by the introduction in the UK of the first licensed AMD (Artificial Doctor of Medicine) for public use. An expensive AI software that is legally allowed to perform accurate symptom-based diagnosis and provide medical prescriptions.

Today in 2036, more than 80% of UK families have moved to this new paradigm. The usual channels by which patients get access to medication have radically changed. Pharmacies are almost dead. New and agile high-tech pharma companies leverage AI, In Silico modelling and 3D printing to reverse engineer “one size fits all” drugs and apply proprietary, personalised modifications. Partnering with online DHSs to provide personalised and adaptive medications is as much a goal for big pharma as it is for data and lifestyle companies. Decentralised automated production is coupled with same day drone delivery.

This direct-to-consumer model badly hit large pharmaceutical incumbents that, unable to cope with the emergence of a new distribution chain, saw their market size dramatically reduced. In fact, almost all new medical prescriptions that go through DHSs include tailored pharmaceuticals coming from new partners using the latest tools.

As DHSs reduced the distance between lab and patient, they unlocked the flourishing of ATMPs (Advanced Therapeutic Medical Products), such as cell and gene therapy. Regulations changed and DHSs now provide a conduit for clinical trials and patient recruitment. In 2036, dozens of partnering Biotech SMEs, leverage a decade of precision real-time data and predictions to tailor treatments for illnesses years before they manifest. ATMPS are now the preferred approach to a large variety of diseases, from cancer to Parkinson’s, and they occupy a vast section of the pharmaceutical market. Many patients receive home treatments without ever entering a hospital. Some, get cured without ever experiencing symptoms.


Deconstructing the scenario

The scenario above describes a plausible disruption in the pharma industry. Decentralised and specialised SMEs overwhelm the market and overcome incumbents in many areas of the industry. Predictive healthcare changes medicine.

To get a feeling of its plausibility, one can explore Babylon Health, a digital health service provider started in 2013. In 2021 it became the first GP practice in the UK with 100,000 patients.

Let’s look at disruption and using foresight for preparedness.

What is disruption and what forms can it take?

We live in unprecedented times of technological progress and environmental shifts. Cautionary tales of disruption swamp the industry with illustrious examples of maladaptation to change. Among the most famous examples are Kodak failing to adapt to digital photography, Nokia failing to smartphones, and Blockbuster failing to adapt to streaming video. Such stories remind us of how overlooking change and risk aversion can have disastrous consequences on supposedly robust incumbents.  Let’s consider changes in progress as we write.

Disruption can take different forms, from drastic innovations reshaping the blueprints of industries to environmental stressors such as covid-19. The pandemic in fact, brought forth many paradigm shifts in the way industries conduct their operations. A particular mention goes to Elon Musk.

The disruptive quality of Tesla for example, comes not just from a breakthrough innovation in the field of EV (electric vehicles), but also from the way the company has been able to “disrupt” the old societal perception of EVs. It created a whole new narrative in which EVs are luxurious, desirable, powerful and high-tech. This changed the car industry, pushing global car manufacturers to adapt their value proposition to include electric alternatives.

Despite manifesting in different ways, disruption is always chaos knocking at the door of an enterprise. It is any environmental unknown that penetrates within the confines of the established business, compelling radical transformation and harbouring opportunity and risk. It lies beyond the “business as usual” narrative and needs appropriate mindsets to be identified and tackled.

An experimental, explorative, and open mindset

Foresight provides extensive tools to develop rich scenarios in which signals of change unfold. It reduces the dangers of uncertainty by leveraging the signals to narrow down plausible disruptions. Prompting ways to cope with them and establishing courses of action to welcome the unexpected. The practice is useful, as it strengthens the perceptual capacity of decision-makers to recognize hints of disruption in the environment and their preparedness to act on them. Practicing foresight means developing intuition about the future and openness to change.

Openness to change contributes to corporations being more “antifragile”, what risk-analyst Nassim Taleb considers to be the quality of a system that thrives in disorder.

To become antifragile, companies should learn to detect chaos around them and welcome its transformative potential.

Interested in knowing more?

Imperial Tech Foresight is foresight backed with the scientific community of Imperial College London. Get in touch to learn more about the possibilities, challenges, and opportunities ahead.