Abstract
Professor Brian D Smith reviews the latest peer-reviewed research relevant to medical marketing.
This month’s selection of research published in other journals, but selected for relevance to medical marketers, covers pharmaceutical, device and diagnostic markets from a variety of perspectives.
Our first paper looks at the problems shared by health service managers and industry when they face significant challenges in implementing and delivering innovations for healthcare. As the authors point out, 1 shrinking budgets mean there is a need to understand more clearly the value of innovations. They argue that an articulation of the value proposition, that is the value created for users by technology, is the key starting point for current thinking on open and innovative business models. The aim of the research this paper reports is to develop a framework for ‘valuing’ a new medical device at the concept stage that balances benefit to the healthcare provider against commercial costs. This paper proposes that appropriate evidence-gathering activities such as determination of the clinical value proposition and early health economic tools such as the ‘headroom method’ can be utilised as part of the development process to contribute to the early stage estimates of value beneficial to both the health service and industry decision makers. I have not seen work of this kind published before and I think it is very useful for medical technology marketers and their R&D colleagues.
Our second paper, 2 looks at technology brokerage in the Chinese pharmaceutical market. The paper aims to understand the demands for pharmaceutical technology brokers in China and provide a theoretical basis for its development. It surveys university research organizations and pharmaceutical associations, collecting 480 valid questionnaires, so a reasonable sample size for such a specialised area. The results indicate that most respondents agree that the application and industrialization of pharmaceutical projects is underdeveloped and pharmaceutical brokers in both high demand and short supply. They conclude that the Chinese pharmaceutical industry and the academic community should develop a better understanding of the role of pharmaceutical brokers and they propose to strengthen the supervision, management, training, and assessment of professionals in the sector. For an industry sub-sector with such catalytic effects on the rest of the industry, this is an important paper.
Japan has, of course, long been an important country in our industry and our third paper 3 looks at R&D expenditure there. The argument of this paper is that since they are characterized by a high level of R&D expenditure, pharmaceutical firms are also subject to specific risks that are reflected in their financial policies. In contrast to other firms, whose investments are directly related to internal cash flows, Japanese pharmaceutical companies do not appear to rely on this source of funds to undertake R&D investments. The authors’ analysis reveals that R&D expenses largely depend on the firm’s size and the strength of its balance sheet. More precisely, high levels of debt appear to hold back R&D expenditure, especially when debt has a short-term maturity. As the paper concludes, these results highlight the importance of funding risky investments with the adequate type of capital to avoid putting firms in financial distress. Despite the risk, R&D investments seem to be justified by the fact that they are generally associated with higher sales growth. However, the difficult conditions prevailing in Japan’s pharmaceutical industry make these benefits less visible. For anyone with an interest in, or facing competition from, Japanese pharma companies, this is a valuable paper.
Still on the subject of pharma R&D, our fourth paper 4 looks at learning from success and failure. Beginning with the obvious, that pharmaceutical innovation is a trial and error process in which both successes and failures contribute to knowledge creation and destruction, this paper tests theoretical predictions about the role of failures in new product development on private and public knowledge and interfirm knowledge transfer. The authors analyse the outcomes of worldwide R&D projects in the pharmaceutical industry, and proxy knowledge flows with forward citations received by patents associated with each project. They find that patents covering successfully completed projects (i.e. leading to drug launch on the market) receive more citations than those associated to failed (terminated) projects, which in turn are cited more often than patents lacking clinical or preclinical information. They further find that failures by specialized firms are cited more frequently than the ones of generalist companies. This is indeed useful evidence for how the pharmaceutical industry learns.
Our final two papers look at medical diagnostics. The first of these 5 focuses on the issue of diagnostic error wherein much evidence suggests that it may be an unmeasured source of preventable mortality, morbidity, and cost. The authors mention the Harvard Medical Practice Study which found that diagnostic errors were the second leading cause of adverse events in the US and argue that diagnosis is not just an error question, it is also about cost effectiveness and productivity. The second 6 presents an overview of medical diagnostic imaging, focusing on advancements in digital technologies and trends in the utilization of advanced data processing techniques. The paper notes that imaging software has become increasingly diversified, enabling protocols which are optimized for specific medical fields of specialization. Examples such as virtual computer tomography colonoscopies, dental implant planning software, and image-guided surgery are discussed, as well as ‘added value’ feature such as customizable report management functions and computer-aided diagnosis. For anyone with an interest in this area, this is an excellent overview.