Darwin’s MedicineUsing evolutionary theory to predict the future of the pharmaceutical and medical technology industries

Professor Brian D Smith

How does evolutionary theory help us?

What does it predict?

What’s the practical implication?

See “Complex Adaptive Systems: An Introduction to Computational Models of Social Life” by John H Miller and Scott E Page. Princeton University Press, 2007.

A population of replicators (e.g. Genes)

Variation of replicators within

the population

Variation in traits of the interactors (e.g. Organisms)

Selection of organisms by the

environment

Amplification of successful

phenotypes

Emergence of new species better fitted to the environment

The mechanismof biological evolution

A population of replicators

(e.g. Practices or “organisational

routines”)

Variation of practices within the population

Variation in traits of the interactors (e.g. Firms’ strategies, structures

and capabilities)

Selection of firms by the environment

Amplification of successful strategies,

structures and capabilities

Emergence of new business models better

fitted to the environment

The mechanism ofindustry evolution

Social technology environment of

regulation, economics, politics, healthcare

systems etc

Physical technology environment of basic and

applied physical and natural sciences

Business models of firms’ strategies, structures and

capabilities

A population of replicators

(e.g. Practices or “organisational

routines”)

Variation of practices within the population

Variation in traits of the interactors (e.g. Firms’ strategies, structures

and capabilities)

Selection of firms by the environment

Amplification of successful strategies,

structures and capabilities

Emergence of new business models better

fitted to the environment

The mechanism ofindustry evolution

Six Great Shifts

Demographics Healthcare inflation

Expectations of healthcare

Disease patterns

Global wealthGlobal segments

International tradeMultinational corporations

Capital marketsTransaction costs

Organisational capabilities

Business risk

BioinformaticsEnabling

technologiesSystems biology

Systems medicine

Platform technologiesConnectivityData analysis

Artificial intelligence

R&D technologiesSupply chain management

S&M methodologiesManagement approaches

The value shift The global shift

The holobiont shift

The systeomic shift

The information

shift

The trimorphic shift

The Value Shift Understand multi-dimensional, customer-perceived value and create context-specific value.

Understand only clinical value as defined by healthcare professionals and value-creation only in terms of products

Value as clinical, economic and

other outcomes, as defined by some combination of

healthcare professionals,

payers and patients or their proxies.

Value as improved clinical outcome, as

defined by healthcare

professionals

Demographics: Shaping both demand and supply

Healthcare inflation: Complex, inexorable and structural

Expectations of healthcare:

Rising, widening and politically embedded

Disease patterns: Driven by age and lifestyle

The Global Shift

Understand market heterogeneity, and deliver broad value to global segments

Deliver narrow value to clinical categories

Demand is global and

heterogeneous along multiple dimensions of

clinical requirements,

payer preferences and patient needs

Demand in developed

economies and heterogeneity is

limited and based mostly on

differing clinical requirements

Global wealth: Bigger, broader and more polarised

Global segments: Alike, different and transnational

International trade:

Different advantages, new directions

Multinational corporations:Powerful, hungry and truly global

The Holobiont Shift

Polycentric networks that aggregate capabilities and manage risk

Unicentric structures with fixed capabilities that concentrate risk

Polycentric networks with

fluid, ill-defined boundaries and

scope

Organisations with

predominant centres and

well-defined, stable

boundaries and scopes

Capital markets: Fluid, global and active

Transaction costs: Clearer and shifting

Organisational capabilities:

Wider, deeper and more dynamic

Business risk:Wider, larger and less predictable

The Systeomic Shift

Translate systems knowledge into an improvement in returns or a reduction in risk

Employ a reductionist, hierarchical, population based understanding of disease or injury

Healthcare is proactive,

personalised and

participatory

Healthcare is reactive,

population-based and

hierarchical

BioinformaticsExpanding in volume, type and application

Enabling technologiesShifting to a molecular level

Systems biology

From stamp collecting to information science

Systems medicine:From Osler to the 4Ps

The Information Shift

Adopt and adapt information technology to improve returns and reduce risks

Small scale, fragmented, unidirectional and deductive information use

Information use is large-

scale, integrated,

pervasive and inductive

Information use is small-

scale, fragmented,

unidirectional and

deductive

Platform technologiesProcessing power, memory, batteries,

sensor technology

Connectivity:Pervasive, mobile, wearable

Data analysis

Bigger, more integrated and influential

Artificial intelligenceTowards the medical machine age

The Trimorphic Shift

Focus strongly on NPD, SCM or CRM

Spread resources across the value chain

Organisations that are strongly

focused on either customer intimacy,

operational excellence or

product excellence

Organisations that are relatively

similar in how they distribute

effort across their value chain

R&D technologiesMore advance, specialised and expensive

S&M approaches:More granular and less complementary

Supply chains:

Global, polarised and protected

Management approaches:More rigorous and less compatible

Six Great Shifts

Demographics Healthcare inflation

Expectations of healthcare

Disease patterns

Global wealthGlobal segments

International tradeMultinational corporations

Capital marketsTransaction costs

Organisational capabilities

Business risk

BioinformaticsEnabling

technologiesSystems biology

Systems medicine

Platform technologiesConnectivityData analysis

Artificial intelligence

R&D technologiesSupply chain management

S&M methodologiesManagement approaches

The value shift The global shift

The holobiont shift

The systeomic shift

The information

shift

The trimorphic shift

Monster imitator

Genius

Genius

Genius

Monster imitator

Disease managers

Trustmanagers

Lifestyle managers

Health concierge

Value pickers

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Base Pairs(Shared and Variants)

Proteins (Active and Regulatory)

Phenotypic Traits(e.g. Brain Development)

Phenotypic Capacity(e.g. Speech)

Genes (Coding and Non-Coding)

Capabilities (Operational and Dynamic)

Business Model Traits(e.g. Strategies, Processes, Structures)

Organisational Capacity(e.g. MA Excellence)

Organisational Routines(Explicit and Tacit)

Microfoundations(Behaviours, relationships, skills, knowledge)

Organisational Routines:Leadership engagement in strategy - Market definition – Integrative Conflict – Customer Intimacy

Operational Capabilities e.g.: Dynamic Capabilities e.g.: Contextual Segmentation Capabilities Market Aligned Business IntelligenceExtended Value Proposition Design Capabilities Value Added Service Development

Business Model Traits e.g.:Bicongruent Strategy Formation Processes - Synthetic Market Insight Processes

Connected Marketing and Market Access Structures and Processes - Market Aligned Structures

Organisational Capability to Create Strong Market Access Strategy

Microfoundations:Goal orientation – Demarcation – Technical Competence – Knowledge Management