At a recent meeting with a molecular diagnostics client, I went around the room and asked each executive to tell me what business he/she was in.
Each one had a similar response: “We’re in the diagnostics business,” or “we sell lab equipment,” or “our customers look to us for innovative assays.” But when I came to the head of sales, he had a more thoughtful take. He talked about how their tests generate critical information that drives treatment decisions, and how the value of the tests is derived from the accuracy of the results. Finally, he concluded “if you think about it, we’re really in the information business.”
Pharmaceutical and biotech companies bring products and services to market through a well-established and understood industrial supply chain, in which value is created and captured throughout production, sale and distribution. However, this manufacturing-based model overlooks opportunities for value creation and capture that are arguably more important and meaningful to our industry today. Companies should be looking at their growth strategies through the information value chain, to identify opportunities to turn data into competitive advantage.
I first used the information value chain about 10 years ago as a consultant to the publishing industry, demonstrating how the digitization of their content allowed them to both create and capture new value. Now I’d like CROs to apply this framework to their industry, in order to make strategic decisions about where to focus and invest and how to better deliver value into the healthcare system.
While CROs represent nearly 10% of the $245 billion R&D market, according to a 2014 ISR report, growth in total R&D spending has flattened out, resulting in more intense rivalry among CROs. To grab a bigger share of the pie, they will need to examine the information value chain globally to identify new opportunities. Here are a few:
CROs have an opportunity to create value by closing the loop between upstream crowdsourcing and downstream dissemination of important trial outcomes among key stakeholders and influencers through social media.
Matthew Howes is head of strategic services at inVentiv Digital + Innovation, the digital center of excellence for inVentiv Health. A leader in digital strategy, Matthew has provided the fuel for digital businesses visited by over 100 million people every month and generate billions of dollars in revenue every year.
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