As global industries grow and develop, the need to innovate and evolve persists amidst changing economic conditions around the world. New technologies, marketing techniques, developing markets, and competition all must be considered for effective business management. For some industries the change is more radical than it is for others: government regulation, changes in consumer preference, and stronger scrutiny upon prices can all facilitate unexpected challenges. The global pharmaceutical industry, having witnessed a period of unprecedented growth at the turn of the millennium, is currently being challenged to evolve due to a number of market dynamics.

More specifically, the phenomenon at hand can be considered under the general label, ‘The Globalisation of Pharma’. For the first time in human history, the pharmaceutical supply chain is becoming global: products are sourced and manufactured from around the world, and then marketed and sold to an equally large proportion of the global population. What such globalisation entails, and why this matters for health care systems, consumers, and startups is the topic of the current article. In order to address such a topic holistically, a preliminary explanation will be given concerning the nature of globalisation in the pharmaceutical industry: what this means, who is affected, and how it compares to the past. Next, the major trends and questions currently influencing pharmaceutical companies is also discussed. From such a position, the need and advantage of the Ambrosus Ecosystem is broken down and its applicability to the globalisation of the pharmaceutical industry is discussed in detail.

How does Globalisation Effect the Pharmaceutical Industry?

The pharmaceutical industry is currently being disrupted on two major fronts: first, geographically, new markets, new competition, and new government regulatory-environments are pressuring global pharmaceutical companies to accommodate to their prices, demand, and methods of providing medicine to citizens. Second, internally, pharmaceutical and medicinal research is transitioning from a chemically based ‘small molecule’ model of production to a biologically based ‘large molecule’ model: genetics, DNA, and other biological factors have taken precedence in the current research and development initiatives that continue to evolve — new styles of medicine are being built.

Importantly, when one refers to the globalisation of the pharmaceutical industry, they are more specifically referencing the growth and expansion of pharmaceutical companies into global markets. To be precise, a pharmaceutical company can be one which researches, manufactures, produces, or markets any of the following products: medicines and the research and creation of them through clinical test trials, medical equipment including monitoring devices and other support services, health care services including insurance and patient care, and finally, biotechnology. In general, the pharmaceutical industry is consolidating and changing in light of the rise of such personalized biotech drugs, medical equipment and health care.

Within the context of globalisation, such medicinal companies are in the process of integrating and cooperating alongside one another in the form of pharmaceutical networks around the globe; in their development and marketing of products to new markets and in their research and testing of new drugs, pharmaceutical companies are increasingly leveraging diverse populations and resources in order to bolster growth. In terms of future growth models, by 2020, prescription drug sales are estimated to be valued at close to $1 trillion dollars a year. However, on average, development of new drug costs $1.2 billion and takes up to 12 years to get it to the market. With increases in regulation, and rising consumer demands, the entire industry landscape is in the process of re-inventing itself.

What does Globalised Pharma Mean?

According to an article by ScienceDirect, the orientation of pharmaceutical companies has been significantly restructured over the past twenty years: In the 1990s and 2000s large pharmaceutical companies strategically operated Research and Development (R&D) footprints in “multiple global hubs” while mainly concentrating on primary care and ‘generic’ prescription drugs for developed countries. Since the 2010s however, large pharmaceutical companies have transitioned away from such a model of significant research and development, and have rather embraced a “leaner and focused model” concentrating on outsourcing research capabilities, and focusing more on mass manufacturing products to specific markets both in the developed and the developing world.

The new markets in question expand beyond the tradition development triangle of the United States, Western Europe, and Japan; in the past three decades the rise of the BRICS economies (Brazil, Russia, India, China, and South Africa) as well as the CIVET group (Colombia, Indonesia, Vietnam, Egypt and Turkey) has exponentially increased the market for pharmaceutical products. As health is a fundamental need for all people, the demand among citizens for quality yet affordable healthcare has equally become a mounting concern. According to a recent article from Lionsbridge, “demand in these markets is expected to increase, and at a faster pace than elsewhere; aggregate annual spending may reach $499bn by 2020.”

The Changing Pharmaceutical Value Chain

Globalised pharmaceutical companies, now responsible for effectively distributing their products to physicians and hospitals around the world, have redefined their value allocation. When it comes to the various stakeholders that contribute to the pharmaceutical value chain, the following graphic can best display the complex nature of the process:

As the graphic demonstrates, there are multiple steps and parties involved in ensuring that proper medicine reaches the end consumer. In relation to the globalisation of pharma, the value chain displayed above has changed in terms of ownership: before, large pharmaceutical companies were vertically integrated. This meant that the majority of the supply chain was controlled by one or a few companies who ensured the effectiveness of the process. Now, however, with the globalisation of pharma, the industry has become increasingly horizontally integrated: large pharmaceutical companies are outsourcing more specialised or technical tasks to other companies, and only integrating or manufacturing products to market around the world to specific populations. In a study by Kasic et al, from 2011, the biggest pharmaceutical companies invested on average around 16% of their sales into R&D and around 25% into marketing and sales activities. For more specialised biotechnology companies and niche pharmaceutical markets (i.e. chronic diseases) these numbers are proposed to be even higher.

What thus becomes evident from the horizontally integrated value chain of pharmaceutical products, is the fact that the entire architecture of ‘big pharma’ is in the process of being recreated. The broader global landscape, combined with the outsourcing of crucial functions has opened up the playing field to smaller companies, while also increasing the need for enhanced marketing and relationships with specific governments and health care providers.

Trends and Changes: A Highly Personalized, Outsourced, and Competitive Environment

In light of the environment from which the globalisation of pharma is taking place, a number of key trends and changes can be identified, to better explain the opportunities that currently exist. All of such trends should be understood in relation to the Ambrosus Ecosystem, whereby a more in-depth analysis of its specific applicability is provided below.

Ageing populations in Europe: Statistics for People Aged 65+ (2011)

Expanded Markets — Aging Populations: In 2015, 15% of the population in the United States was estimated to be 65 years or older. By 2050, the number is expected to increase to 22.5%. In China, at the same time, 130 million people were ages 65 or older comprising close to 10% of the entire population. Due to the effectiveness of current medicine practices, life expectancy is rising around the world, leading to an increase in the amount of health care the average person age 65 or older will require.

Beyond the two economic giants of the modern world, the developing world (South America, Africa, Asia and the Middle East) has witnessed a surge in demand for quality health care in the past two decades and has restructured many of their government programs accordingly. Based upon this trend, the current reality for pharmaceutical companies, is that more often than not, their top clients are government sponsored, or government based health care providers. As such, the need for localization is thus becoming a necessity: customizable ways of engaging with very specific groups of a population is required for effective performance in an open and aging world.

R&D Changes — Personalised Medicine: As the market for generic and ‘small-molecule’ medicines has increased, large pharmaceutical companies have devoted more resources and time into developing ‘specialty medicines’ and biologically based (large molecule) solutions such as antibodies and proteins, for specific diseases. According to ScienceDirect, two camps have emerged with differently structured research and development objectives: on the one hand, some large pharmaceutical companies have sought to diversify their business strategy by developing a mixture of “diagnostics, generics, medical devices, innovative drugs, and consumer and animal health businesses.” On the other hand, others have focused ‘primarily on innovative drugs’ that fill a specific niche in the market. In both cases, the traditional generic drug pipeline has been significantly disrupted for more personalized or area-specific medicines.

In the future, in order for truly personalized medicine to take root, better data management is required: according to an article from 2012 by Qattan et al, more thorough analysis and accumulation of patient data sets still needs to obtained. Meanwhile, health professionals and researchers must be educated and trained differently for more individualized care. Overall, a JSB intelligence estimate provides the most holistic overview: “emerging biotechnology and targeted treatment solutions are dictating the future market size of the pharma industry, and the winners in each segment.” (15)

Clinical Test Trials — Data Management: With a larger scope of the world in need of pharmaceutical products, companies are increasingly capable of broadening the reach of drug trials at a cost-effective rate. A large sample allows for a more exact understanding of the underlying effectiveness (and potential side effects) of the medicine in question. As such, investment in clinical test trials in the future is expected to increase across the board. At the same time, when it comes to the security and accessibility of such data, a number of digital improvements are needed. As explained by AmerisourceBergen, “when it comes to patient data, registries are often unconsolidated, meaning manufacturers must first mine through disparate data siloes instead of accessing standardized banks of data that cover their initiatives across the globe.” Ultimately, large amounts of value can be generated through better management of customer data, specifically as it pertains to patients but also in clinical test trials.

In relation to the patient suffering from a sickness, pharmaceutical companies are tasked to find new and digital means of engagement with such patients to better understand their experience and how it can be improved. According to a study by PricewaterhouseCoopers, digital solutions “could be used to improve patient compliance, which is even lower in the growth markets than the mature ones.” Equally applicable to the selling and buying medicines are mobile applications, which “could also be used to sell certain medicines in very small units, with daily or weekly payment via a service…” (13).

Centralisation — Outsourcing: The decline in R&D productivity in the early 2000s resulted in concentrated ‘mega-acquisitions’ among the largest pharmaceutical companies of the industry. As explained by ScienceDirect, research units consolidated under global pharmaceutical companies: the largest five possessed at least three to five different R&D hubs around the world. As the article goes on to explain, “these sites created self-contained silos that were used to research units for high-throughput technologies in an attempt to throw more money and hands at solving scientific challenges.” (ScienceDirect).

In contradistinction to the ‘mega-acquisition’ trend in global pharma, the more personal and specialised nature of medical development has created, at the same time, large windows of opportunity for smaller companies and startups in specialising in certain aspects of the health care industry: chronic disease research, biotechnology, elderly care, etc. A new type of dynamic has been created whereby large pharmaceutical companies focus on manufacturing, marketing and selling products, while the vast majority of the remaining supply chain (specific research, clinical trials, product design, etc.) is outsourced to smaller or ‘niche’ companies specialized in a certain area.

Rising Customer Expectations — Necessary Consumer Engagement: Perhaps most notable of all of the currents trends in the global pharmaceutical industry, is the evident shift towards the customer or patient. As Shaw and Whitney (2016) explain, since the pharmaceutical industry has become more globalized, an increase in competition coupled with a more diverse range of services has resulted in more choice among government health experts. Due to the variety of jurisdictions, self-regulation and promotion of company products is the main source of business traction, especially in developing markets. While most global pharmaceutical companies must abide by the IFPMA (International Federation of Pharmaceutical Manufacturers and Association’s), this is often times insufficient for satisfying customer expectations.

According to a recent study by PricewaterhouseCoopers, “As a growing number of treatments come off patent, they’ll (patients) soon be able to buy the same medicines at lower prices anyway” (12). Ultimately, pharmaceutical companies are challenged to better engage with their customers in more flexible ways. If done effectively, the PwC study goes on to explain how each patient possesses ‘rivers of data’ that can then be re-used to develop more personalised and satisfactory medicines and services (14). The point is re-emphasised by Kasic et al (2011), who goes so far to claim that: “marketing management is by no doubt, besides R&D function, the most important function of the innovative company’s business performance. Thus it is important to react and act quickly and to be proactive,” in order to survive the fast-moving and competitive global environment (35).

Ambrosus: The Essential Ingredient for Globalised Pharma?

The various opportunities that the Ambrosus Ecosystem possesses for disrupting the fast-changing pharmaceutical industry, are numerous and extensive. The simple fact that applies to all of such solutions is that Ambrosus is capable of providing a flexible architecture for companies to leverage for their specific needs in a cost-effective manner and readily available manner; the full extent of disruption is only limited by the creativity of the company in question. More generally however, a number of solutions immediately stand out, that can drastically change business performance for both large and small pharmaceutical companies alike:

Private Clinical Test Trials: With AMB-NET pharmaceutical companies have the opportunity of collaborating to share data from patients engaged in clinical test trials from all across the world. At the same time, the companies in question are capable of maintaining private information surrounding the patient’s identity as well as specific research factors behind their products. The currently ‘siloed’ and unproductive research environments used for clinical test trials can take up to 10 years to finally produce a new drug: with AMB-NET global pharmaceutical companies can collaborate, share data, minimize costs, yet still access personalised information from a vast data set of patients. The process can therefore become ‘streamlined’.

With AMB-NET pharmaceutical companies have the opportunity of collaborating to share data from patients engaged in clinical test trials from all across the world. At the same time, the companies in question are capable of maintaining private information surrounding the patient’s identity as well as specific research factors behind their products. The currently ‘siloed’ and unproductive research environments used for clinical test trials can take up to 10 years to finally produce a new drug: with AMB-NET global pharmaceutical companies can collaborate, share data, minimize costs, yet still access personalised information from a vast data set of patients. The process can therefore become ‘streamlined’. Traceability of Ingredients and Conditions: Track and trace is a well-known use case of AMB-NET. In pharmaceutical supply chains however, it will be essential for companies to leverage such technology in order to justify prices to consumers and to also build customer trust. By providing the ingredients, transportation conditions, health expert checks, and any other related information, pharmaceutical companies stand to capably demonstrate the quality of their products while also marketing the enterprise brand to consumers with the scan of a QR code or a click of a mouse.

Track and trace is a well-known use case of AMB-NET. In pharmaceutical supply chains however, it will be essential for companies to leverage such technology in order to justify prices to consumers and to also build customer trust. By providing the ingredients, transportation conditions, health expert checks, and any other related information, pharmaceutical companies stand to capably demonstrate the quality of their products while also marketing the enterprise brand to consumers with the scan of a QR code or a click of a mouse. Regulatory Compliance and Specific Consumer Outreach: As regulation increases, and developing world markets become potential clients to global pharmaceutical companies the need for customisable and easy-access entry point documentation will inevitably increase as well. With AMB-NET, government authorities and companies can collaborate in order to design and implement a ‘customised’ solution to ensure quick and efficient compliance for a specific country, thereby ensuring smooth flow of goods between borders.

As regulation increases, and developing world markets become potential clients to global pharmaceutical companies the need for customisable and easy-access entry point documentation will inevitably increase as well. With AMB-NET, government authorities and companies can collaborate in order to design and implement a ‘customised’ solution to ensure quick and efficient compliance for a specific country, thereby ensuring smooth flow of goods between borders. Patient Health Data Management: Beyond pharmaceutical companies, AMB-NET has the potential to serve as the core of an entire health-care ecosystem: health care providers, insurance companies, patients, and hospital personnel can jointly collaborate to share, process, and manage data related to patients, inventories, and costs, so as to better plan and provide health care services. Patient information, as well as feedback on products, treatment methods, and one’s experience of a particular doctor, can all be used to deepen customer relationships and implement more personalized care practices.

In the future, the advantage of AMB-NET is that due to its easily customisable nature, new trends or new demands from governments or patients, can ultimately allow pharmaceutical companies to quickly react to the situation at hand, in order to maintain or build customer relationships. With the Ambrosus Blockchain, trust is effectively outsourced to the point that pharmaceutical companies can justify prices and services, based upon publicly disclosable information that is open to the end-customer, the regulatory body, and the enterprise itself.

The Dawn of a New Era

In perspective, the globalisation of the pharmaceutical industry is only the beginning of a much larger transformation to health care practices. Personalized medicine, synthetic biology, private and individualised clinical test trials, and end-to-end quality assurance are among only a fraction of the innovations that are set to transform the current industry. Amidst all of these changes, the Ambrosus Ecosystem is positioned for the most concerned parties involved: large pharmaceutical companies, customers and patients, regulatory bodies, biotechnology firms, and even entrepreneurs. The full extent by which the Ambrosus Network will be capable of dramatically improving a particular problem will depend upon the creativity of the stakeholders involved. AMB-NET in itself is a foundational tool from which customised solutions using any range of smart devices can be designed for a specific need. At its core however, AMB-NET is a grand equaliser that will allow business of any size to transparently earn the trust of customers, in a cost-effective and business friendly manner.