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Changes in the health industry are creating major shifts with regards to where and how value is created. They are also forcing changes in the different sectors within the industry, from brand name Pharmaceuticals to major drug distributors to care delivery systems and payers. At Pivot, we have extensive experience working across the different sectors of the Health industry, including with employers, insurers, providers, pharmaceutical and health information technology companies. Our broad industry experience allows us to understand how value is migrating across the different sectors of the Heath industry, enabling us to advise our clients as to where and how they could best position themselves to reap benefits from changes in the industry’s value chain.
Brand Name Pharmaceuticals
Restrictive market access conditions, combined with the patent cliff, the rising cost of R&D and cost-containment pressures from both public and private payers, is signaling the end of the traditional innovation-based model of big pharmaceutical companies. With shrinking revenues and margins, pharmaceutical companies are reviewing their business model in a number of areas. Areas of focus include outsourcing part of their research activities, diversifying into generics/OTC products and moving from a traditional physician-focused sell to a B2B model, which concentrates on market access, exploiting big data to prove value to payers.
Relevant experience includes:
  • Development of a new strategy focusing on patients and payers and transforming business models to incorporate solutions-based, business-to-business best practices
  • Helping a major biotech move from a research-based organizational model to a commercially-based model
  • Post-merger integration of an OTC drugs manufacturer and distributor by a major pharma (Europe)
  • Organizational simplification and delayering following genericization of a major product for a large Canadian pharma
  • Development of patient-centric launch strategies for new oncology products
Wholesale distribution
Current market conditions can be characterized by a major slowdown in total market dollar growth, an erosion of sell margins (due to the competitive nature of the market and pressure being brought on by clients with renewals) and shrinking buying margins caused by changing generic business models.

Furthermore, the ongoing consolidation of retail pharmacy will likely lead to a shift away from traditional wholesale distribution toward the self-distribution model. The traditional wholesale distribution industry is simultaneously facing additional government regulation and more complex logistics services. These factors are putting pressure on the legacy IT applications and distribution infrastructure which will eventually negatively affect the cost base.
Relevant experience includes:
  • Entry into niche, specialty pharmaceutical market and establishment of independent business unit to address a new set of manufacturer needs
  • Expansion of core distribution into new client segments
  • Downstream integration of traditional wholesale distribution offering into community and institutional pharmacies
Generic manufacturers
While the generic industry has profited from the patent cliff, the dramatic decrease in generic pricing has jeopardized a well-established business model and resulted in a shift of channel control in favor of the buyer, namely pharmacies and pharmacy chains. The emergence of private label generics controlled by retailers is relegating major manufacturers to the role of contracted manufacturer.
Relevant experience includes:
  • Description of private market dynamic and identification of key stakeholders and subsequent evaluation of potential value propositions
  • Education on the availability and use of private payer data to monitor market penetration and market share
Retail Pharmacy
Community pharmacy is currently undergoing dramatic changes driven principally by industry consolidation, downstream integration of wholesale distribution and shrinking margins historically derived through the sale of generics. Pharmacy chains are looking for ways to compensate for their loss of revenue by diversifying in-store merchandise and competing head-on with food retailers or, at the other extreme, by focusing on pharmaceutical care and complementary healthcare services. We are also witnessing attempts to increase market share by reaching out to new market segments, namely payers with a suite of innovative, patient-based services.
Relevant experience includes:
  • Preparation of an extensive retail pharmacy market overview and elaborating strategic options for the board of a major food/pharmacy organization
  • Impact assessment of cross-border/mail-order pharmacy
  • Establishment of retail pharmacy automation business
Healthcare providers
Given the cost constraints in the public healthcare system, healthcare providers will have no choice but to take a fresh look at how they deliver care to patients. Indeed, the experience of many best-in-class providers demonstrates that it is possible to improve outcomes and patient experience while reducing costs.

However, this requires major changes in the approach of most Canadian healthcare providers: moving from a volume-based, physician-focused, hospital-centric approach to a value-based, patient-focused and community-based approach. At Pivot, we work with academic hospitals, faculties of medicine and major medical research funding agencies to identify the best approaches to improve the delivery of care.
Relevant experience includes:
  • Strategic planning for a major academic hospital, leading to the rebalancing of secondary and tertiary activities and improved partnering with community-based hospitals
  • Collaborative planning exercise with community-based partners to identify opportunities to improve access, quality of care and patient experience across a major hospital network
  • Major transformation geared at creating patient-centered Integrated Care Units for specific medical conditions in order to improve outcomes and patient experience and reduce costs
Specialized, technology-based providers
Technology is a key driver for improving quality of care, improving operational effectiveness and facilitating payments in the Health industry. Leveraging our intimate knowledge of payers, care providers and technology suppliers, our consultants have helped Canadian-based and foreign technology providers develop winning strategies for developing the Canadian markets. And, we have helped payers, insurers and providers make better choices and achieve greater benefits from their technology investments.
Relevant experience includes:
  • Strategy development for a major Health Technology Canadian-based firm
  • Development of a health analytics strategy for a major Canadian Health Benefits Management firm
  • Development of a market entry strategy for a performance analytics firm
  • Realignment of the development strategy for a specialized start-up in biogenetics
Private Payers (Carriers and Employers)
A number of factors are causing private payers to become more critical of the cost and overall value provided by their Group Health & Benefits Plans. Ontario’s Drug Reform, for example, has raised employers’ awareness of the cost of drugs. Specialized players are stimulating the market with value-added Health Benefits Management (HBM) and wellness offers aimed directly at employers.

Employers and employees are increasingly recognizing the need to adopt cost management measures to ensure the sustainability of benefits programs. Employers are also increasingly focusing on health promotion in the work place as a means to improve overall productivity and enhance their value proposition to employees.
Relevant experience includes:
  • Survey of employers and key stakeholders in the Group Benefits market to develop 3-5 years product development strategies and plans
  • Development of an ambitious growth strategy for a major Group Benefits insurer
  • Development and roll-out of an extensive strategic business transformation program for a major group insurer
  • Implementation of a customer-focused organization and operating model in a large group insurer
  • Review of the operating model of disability management to optimize investments and accelerate return-to-work