An interview with futurist and Steinbeis expert Professor Dr. Heiko von der Gracht
Copies of brand-name drugs whose patents expired are already having a huge impact on healthcare systems around the world. So-called generics and their biotechnological mirror images – biosimilars – increasingly conquer hospitals and private households all over the world. But will these off-patent drugs still prove lucrative for producers if technological developments significantly accelerate the innovation cycles of original manufacturers in the future? Among others, this was a central issue investigated in a current scientific study at the School of International Business and Entrepreneurship (SIBE), which was conducted in partnership with the German association of generic and biosimilar companies (Pro Generika). Professor Dr. Heiko von der Gracht, scientific director of the research project and holder of the Chair for Strategic Foresight at Steinbeis University, offers insights into the results of the study.
Professor von der Gracht, could you start by telling us what’s special about your study?
Well, on the one hand it’s the first publication to use scientific methods to examine the future of the generics and biosimilars industry. It does this not just in a unilateral fashion, but multilaterally. We based our study on the opinions of a wide spectrum of industry stakeholders, both from companies and academia, but also people working in the political environment of the industry. Then, on the other hand, our study doesn’t just revolve around one central development, but draws on a whole variety of trends, including developments in related or distant industries. The idea was to illustrate four plausible and consistent scenarios for the future of the generics and biosimilars industry in Europe.
And what do these scenarios look like?
In one scenario, we focused on the trend towards a platform economy. According to this scenario, new technologies will enable the decentralized production and distribution of pharmaceuticals. When this happens, manufacturers will do well to establish their own platforms and seek direct contact to patients. Moreover, we developed one scenario focusing on strict regulations concerning sustainability. Having a positive environmental footprint can be considered standard practice for companies, including the pharmaceutical industry in this scenario. Keeping these tight requirements in mind, the generics and biosimilars industry focuses on producing and distributing its products in Europe. So what we’re seeing here is clear de-globalization. These were just two exemplary insights into the extensive scenarios that resulted from our research.
If you consider the expert opinions in your study, how do you view the current mindset in the generics and biosimilars industry?
Clearly, some insiders in the generics industry believe that the future is a done deal – based on the previous, successful business model. However, what’s actually the case is that after 50 successful years, generics manufacturers’ business models face disruption from various developments, for example personalized medicine. Similarly, completely new possibilities occur in the field of biosimilars, for example concerning mobile bioreactors. For both industries these developments implicate action. They must react now and establish strategic alliances, new business areas, partnerships, and technologies in time.
Speaking of new technologies, what does the situation in the generics and biosimilars industry look like in this regard?
Everyone’s talking about the digital revolution, digital health, and 3D printing. Yet the generics industry still doesn’t feel affected by these sweeping changes. Actually, I think it’s inevitable that the impact of the platform economy will also extend to the manufacturers of generics. It’s crucial that platforms not only create new sales channels, but also harness the power of data.
What causes do you see for this rather conservative thinking within the industry?
At this point, I have to take up the cudgels for generics manufacturers. The most frequently cited argument you hear in the industry – as a reason for resisting change – is the price. The argument goes something like this: “Generics and biosimilars will always be around, because without low-cost alternatives healthcare will collapse under an avalanche of costs.” Put in those terms, the conservative thinking stems from routine, which in turn is supported by politics. So I think there’s a responsibility for politicians, not only to reduce cost pressure on the generics industry, but also to prevent the biosimilars industry to get pressured to such a degree in the first place.
Given this background, what advice would you offer to companies in the generics and biosimilars industry?
They shouldn’t wait for politicians to act. One potential action proposed in our study is a call on companies in the industry to innovate rather than copy. The current business model still works today, but the question is how long things will stay this way, especially if nothing changes from a political perspective. Those who take the initiative – and drive innovation today – can be more optimistic about the future.
This brings us to another key component, and an additional action recommended by our study: Companies should push ahead in developing future competencies internally. If you don’t just track megatrends but also observe weak signals, you’re less likely to fall into standard traps. Strategic foresight processes help organizations drive innovation and provide useful support for avoiding mistakes. One notable example of this is Blockbuster, the video store franchise. In 2000, it turned down the opportunity to buy Netflix. If it had systematically observed weak signals, it’s conceivable that the company’s development would have headed in a different direction.
Based on a survey using the real-time Delphi method, “The Future of the European Generics and Biosimilars Industry 2030+” provides scientific insights into the perceptions of more than 60 experts regarding the future of the industry. It examines future developments that experts consider probable, influential, or desirable. Based on their assessment, the established scenario technique is used to outline four suspenseful and plausible scenarios, not only for the future of the generics and biosimilars industry but also for related sectors. Beyond scientifically sound insights into scenarios provided by the Delphi method, the study outlines potential areas of action for companies operating in the pharmaceutical industry, especially in the generics and biosimilars sectors. These actions address a broad spectrum of opportunities for organizations, many of which can already be witnessed today. The scientific study is rounded off by interviews with leading figures in the industry. For example, thought leaders such as Biontech investor Dr. Thomas Strüngmann and CureVac founder Dr. Ingmar Hoerr offer their visions for the future of the pharmaceutical industry and foreseeable disruptive developments. The study was published by Steinbeis Edition and is available here.