The hidden connections between Competitive Intelligence and Innovation in Pharma

Most of the pharmaceutical companies continues to face crescent competition in the operating markets from different sources. Some of the solutions to overcome the current difficulties and barriers, may be a constant search of new R&D methods and new operations mechanisms in order to obtain economic scale and gain new commercial capabilities that can drive or improve effectiveness from R&D investments.

Currently Pharmaceutical companies are searching for new disruptive strategic methodologies through innovative methods of business models, in a quest to reduce the business risks and prepare the commercial models to a more ready technological approach.

There is no doubt that the pharmaceutical landscape and drivers for growth are changing, with new patterns around a crescent aging worldwide population,  technological advancements, products innovation, new standards of living and transformed health care access systems.

While pharmaceutical companies continues to face strong difficulties resulted from a crescent competition, decreasing revenues, product patents expiring and limited access to physicians, most of the competitors such as Medical technology companies, personalized medicine, diagnostic technologies, medical devices and biotechnology companies continues on maintaining their good momentum, with strong predictors of continued success.

Increasing the complexity of pharmaceutical effectiveness operations it’s evident the constant pressure and increased regulatory scrutiny from the official authorities with serious impacts from health care reforms and fewer drugs approvals across all world but particularly in Europe, where the escalating costs of products forces the global authorities and local governments to impose new pricing rules, fair trade conditions and price decreases. Therefore is not only crucial for today’s pharmaceutical companies to continue leveraging and growing geographic scale, creating strong positions in dominant markets and acting as global serving points on global needs, is also crucial and key for those same companies to have long-term supporting processes and monitoring capabilities to face the constant business influential factors.

Although global life sciences sectLife-Sciences-week-SEURAT-1-reports-progress-on-animal-testing_strict_xxlor persists to exhibit some resilience in such market conditions and crescent constrains, the need for reinvention of the current business models continues to be one of the biggest market demands and patients expectations for more efficient products.

The way that global life sciences sector can project new research and developments (R&D) efforts and step back in some ongoing projects to add fragmented pieces of science innovation is a capability that not all the companies can simply adopt.

The concept of Innovation

In the last years, several researches has produced new concepts and beneficial analysis to innovation, contributed greatly to the academic and corporate knowledge. It is a concept of great relevance that influences not just the corporate procedures but also various products and services obtained from business dynamics and models.

It is a process that includes techniques, conceptions, development and work tools, which originate improved products or procedures, which are then readily available for promoting and selling.

Innovation can be identify through 4 distinct levels:

  1. Incremental: Considers the improvement in products and/or procedures that upgrade the quality and still are able to reduce costs and increase productivity. Identifying the role that technology plays, specifically in equipment compatibility.
  2. Radical: Discontinuous result of actions regarding R&D in corporate, academic or state environments organizations.
  3. Modification of the “Technological System”: Technological changes that affect certain economic sections and originate completely new sectors.
  4. Shift in the “Tech-economic paradigm” (Tech revolution): Result from the evolution of technological systems, such as new products, procedures, changes in the economic and social structure and in the behaviors of the main economic agents.

Radical innovations can frequently create or destroy specific market niches and client segments, or even profoundly change a market or sector, resulting in new paradigms, skills, abilities and knowledge in the same market.

Reversely to the incremental model, radical innovation usually follows along technology-push, which is to say that new concepts and paradigms are created inside the corporations, many times being led by researchers or professionals dedicated to research and development of new products. On the other hand, radical innovations are very rarely altered or changed while in their development stage, mostly to protect the main idea, which does not give way to accepting new concepts or developments in this stage.

Presenting radical innovations to the market complies a great deal of effort, which is exponentially higher than in incremental innovation, where not always positive outcomes are obtained, regardless of the quality of the innovation.

Innovations is a new way to do things, which can be marketed.

The various types of innovation are: Product Innovation & Technological Innovation; Innovation of Procedures; Innovation in the organizations; Marketing Innovation.

Innovation models can be presented the following way: Push-pull Model; Funnel Model; Disruptive Innovation Model; Closed Innovation & Open Innovation.

We can also perceive innovation through four types of innovation: management innovation; strategic innovation; product/service innovation and Operational innovation. Each of the innovation levels result in asymmetrical levels of competitive value outcome, all though not all the levels necessarily originate competitive advantage. Some innovations can be incremental, where the competitive advantage is strongly dependent on the changes made.

Innovation has in its core different new concepts and ideas, which can come from innumerous places. Several innovation sources can play a major role in creating new ideas and exploring innovation opportunities. These sources can be internal and external to the organization and also formal and informal.

The external sources are: 

  • Internet and the Media;
  • Specific studies;
  • Client Surveys;
  • Market Surveys;
  • Opponent companies benchmarking;
  • R&D entities or design.

The informal external source are: 

  • Internet and the Media;
  • General surveys;
  • Customers Feedback;
  • Competitor’s products and services;
  • Distributors and Partners advice;

For formal internal sources:

  • Innovation programs;
  • Informal brainstorming,
  • Internal processes;
  • R&D Departments;

As far as Informal internal sources we have:

  • Associates ideas;
  • Products;
  • Procedures;
  • Services;

It is therefore essential that the organization arranges its activities and procedures to identify market tendencies and opportunities, in order to reinforce their competitive advantage. Having the ability to develop tools to monitor the competitor’s competitive advantage, clients and social context surrounding are very relevant. This surrounding can be defined as contextual, transactional and intracompany.

The contextual surrounding incorporates economic factors, technological, political, social and cultural factors. The transactional surrounding includes the clients, opponents, suppliers and the community. Relating to the Intracompany surrounding is the knowledge of the organization when compared to its opponents and its sector.

Innovation is a result of the investigation and development procedures, focused mainly on the development. We will consider however that innovation is the center of these interactions where R&D is considered a source of procedures directed at innovation and as one of the processes that itself catalyzes innovation.

As far as influencing innovation outcomes, we have: Organization location, specific region, pertaining sector, dimension of the organization, globalization level and relation in environments with catalyzing abilities. A continuous innovation in a company has as crucial factors of influence the external and internal sources of data and information, along with client, supplier and partner relationships.

Innovation sources are miscellaneous, but consumers, products and suppliers are the most relevant. It’s crucial to emphasize the functional sources of innovation, where the role of each source is actually inside innovation and is related to the implementation goals. The functional sources of innovation include the organization or the people that will directly benefit from the products innovation, procedures or services. These same organizations or people are not passive bystanders of innovation, they vary according to the innovations analysis, due to the functional relationship between the innovator, the user and the innovation.  Given the right conditions, any functional class can be a potential source for innovation. Many innovation sources can be explored by the manufactures, be it in internal or external context, having a strong influence by the economic market, cultural and social factors, clients, suppliers, opponents, stakeholders or partners. One of the biggest challenges that life sciences companies faces are the methods to efficiently and productively turn innovation into commercial products. Many of the solutions can be explained through the use of multidisciplinary activities around collaboration and cooperation between internal and external teams. The main characteristics of these life sciences companies are the risk-sharing activity models.

Life sciences sector currently needs to support the innovation efforts with a multi prolonged strategy to cope with the current market environment and constraints, preventing the future decline in sales revenues by a decreasing potential market or simply with patent expirations of some of the drugs available in pipeline.

Competitive Intelligence definition

Competitive Intelligence (CI) is an area of investigation and corporate applicability that is expanding, reaching a clear peak in knowledge, as can been seen in worldwide research and in many of the more recent corporate procedures.

Competitive intelligence is a part of everyday economic competition of various subjects (companies, national economies, multinational concerns, economic integrations, etc.) at both domestic and world markets. For many analysts the key feature of competitive intelligence is that it functions are based on strict ethical codes and standards, in other words that it uses legal devices for collecting and analyzing data and turning them into the economic knowledge of a company or country.

Today’s society is built on a complex system of information and competitiveness. It’s therefore crucial for an organization survival to be able to process quickly and systematically, large volumes of data regarding the surrounding context and converting these into corporate knowledge, allowing some room to anticipate external, internal and market changes.

CI is based on gathering, analysis and processing data and information regarding the economic information about the market, competitors, current economic development, consumers, customers, suppliers, government, regulators, partners and all the surrounding entities or factors, in order to obtain competitive advantage in a specific organizational context.

The concept of Competitive Intelligence began drawing more attention in the 1960’s, when it was mostly looked at as a corporate procedure of gathering and processing information about internal and external data, with the aim of obtaining strategic advantage to benefit the overall strategic plan. Basically during the 60’s and 70’s CI activities were basically associated with data gathering, informal and tactical activities.

After the 80’s all the analysis around the competitors and industries became popular where CI converted from informal activities to marketing and strategic functions.

After the 1990s CI assumed a more strategic position than other functional areas such as Market Research to most of the sectors but especially to Life sciences. Market Research activities were not able to provide more strategic and decision matter intelligence, providing content with lack of context and lack of follow up strategic items. CI receives moderate attention from top management and is often a valuable contributor to strategic decision-making.

CI concept and scope has been frequently studied in the last years in developed countries, being considered a subject of investigation prior to the organizational performance. Therefore CI is actually the main influence in the strategic planning and competitive advantage in organizations, not acceptably inserted in other information models or strategic management, but actually a systemic and cyclic process of corporate intelligence, being classified as a product and as a procedure.

If knowledge is the source in competitive advantage, then the access to information is used to create knowledge and the process used for to retain and transfer that same knowledge is vital for the institution. In an efficient organization, since the moment that knowledge is absorbed and processed, it originates completely new knowledge and it is a force to create intelligence. This same intelligence is the result of the collective cognitive process inside the organization. The culture, society or each situation inside the culture and society, determine an individual’s intelligence, which in its turn is affected by ones the values and believes and the interaction between all these factors. With the constant evolution of science, intelligence is still at the heart of many research and investigation, still there is not a common ground or understanding as to what is intelligence.

The primary or internal sources are those that can be obtained by personal contact with people and specialist (Analysts, consultants, journalists and others), customers, suppliers and employees. These sources are prone to direct contact and create competitive advantage, which makes them intuitive and informal. Primary sources account for almost 90% of the analyzed information in the CI procedure. The secondary sources or external pertain to the information that is widely available publicly, such us: databases, publications, legislation, radio, television, interviews, technical reports, patents, among others. These sources account for almost 10% of the information analyzed in the CI processes.

The CI system allows a close monitoring of both the external and internal environment. By monitoring the opponent’s external environment, it analyzes their potential, suppliers, negotiation potential with clients, new threats by new players, products or services. CI also incorporates macro environmental factors, such as political, economic and social, that directly affect the company in all the industrial segment and services. The uses of CI are very broaden: in marketing, where the constant search for new products and opponents is frequent; in the production departments, where there is a constant quest for competitive costs and procedures; in human resources, where the institutions HR policies are compared to those of the market.

Most of the pharmaceutical companies are already understanding the overlap and scope between Market Research (MR), Market Access (MA) and Competitive Intelligence activities, improving as well all the understanding around CI and how can be integrated with the other functions available for companies.

So the action to proceed with an understandable integration between MR, MA and CI for some pharmaceutical companies should come in a structured way and having formal boundaries for each of the scopes. Nevertheless the full understanding of each function scope and operations should be perceived as main factor to have an efficient combination between all.

Currently in several pharmaceutical companies CI plays already a fundamental paper in the operating strategy, where for several cases of M&A or R&D complex processes, is CI the main responsible for the positive and effective strategic impact on those operations.

Competitive Intelligence and its influence in Innovation

Innovation is the mechanism through which new products, services and systems arise, that are necessary to keep up with a constant market, technology and competitiveness.

Many of the worldwide organizations have developed sophisticated CI abilities, that represents a constant search for opportunities and threats, which allows for a greater corporate knowledge and promotes innovation that accompanies the organizations’ strategic planning.

Many organizations support their development and their business’s importance in a constant effort to differentiate, adapting to change and trying to obtain the most return on investment. Another solution is innovating procedures, products and services, with the help of CI, to allow for a better understanding of the competitive surroundings. CI is used as an objective factor in the competitive advantage of many current organizations, where through an adequate perception of the surrounding context, a better knowledge and understanding of the various influences around and the market risks are understood.Dynamic Tree

 Figure 1: Dynamic tree influential level between Innovation, Competitive Intelligence and strategy.

As a result of the greater knowledge of the variables that surround the organization, also the internal processes regarding competitive advantage are helped by this new knowledge offered by CI. In the last few years several corporate systems have appeared to aid the decision centers, in data analysis, market behavior and tendencies statistic models, gathering and processing of data. CI is a cross-functional way to answer all of the aforementioned systems and in addition it is also completes the decision and analysis center, almost simultaneously as the market and its external variables. Therefore CI can be considered as knowledge generating tool to the innovation process, market observation, customer’s strategic behavior analysis, suppliers and opponents, as well as all the external environment and market necessities. Since CI is focused on gathering and processing information to gain a strategic advantage to the main corporate decision makers, it facilitates the creation of strategies and solutions towards the critical stages of the innovation process, with a financial and strategic perspective of the investigations and development assumptions.  The innovation is evaluated, monitored and controlled by means of using the knowledge acquired by the organization, for innovation to reach its higher potential, the market must have a necessity to obtain this product or final service. This necessity implies a duty for innovation to have the maximum possible knowledge about the market, to create these necessities in the customers or in the market.

In the aforementioned model, the search for market knowledge with high potential, creates an internal and external corporate quest that allows new products to be developed, that match the markets necessities.

Even though organizations create internal market necessities, by means of innovated products or services, another necessity still exists as a result of the competitive markets nature. This necessity is based on the competition towards the opponents and towards the customers’ needs. CI can also aid a pharmaceutical organization in helping to understand the market, as an opponent develops their unique capacities and strength in the market. Another advantage in using CI for innovation in products or services is its abilities to gather and analyze consumers’ perceptions and opinions towards specific products and services available. This ability can directly change the way innovation is made and developed, allowing for information to be collected through CI in response to the consumers’ specific innovation. Studies conducted regarding CI, shows that organizations that have developed CI systems are actually better prepared for competition than others, also creating a competitive advantage by means of innovation. It is therefore sensible to conclude, that after this review on CI and its influence on innovation that is does play a crucial role in innovation, in organizations that intend to gain a competitive advantage in the market and to gain added value to their products and services.

Organizations that have CI procedures are capable of gaining considerable competitive gains in innovation, as compared to their opponents. This advantage results in lower costs in the overall business procedures, improves the general perspective on the market and creates sustainable innovation.

The practical Competitive Intelligence context

 As already described, the current global life sciences sector constraints and difficulties are increasing the importance of new commercial models, new sales and marketing analytic solutions, new business effectiveness methodologies, competitive and scalable systems, more efficient business processes and more flexible and agile tools.

Although it is not always clear what the best commercial model is, many pharmaceutical companies are looking at a range of options, from total re-organisation, to the use of alternative selling channels (such as e-detailing, Closed Loop Marketing (CLM), digital platforms, telemarketing or simply a full re-organisation of the entire commercial systems) in order to engage more successfully with all their customers, physicians, payers and partners.

Currently several pharmaceutical companies are being able to collect in a very efficient way several details from different type of influential sources by simply using Closed Loop Marketing (CLM) or service digital portals into their commercial strategies. However the gaps exists between the colleting phase up to the decision making phase, where the focus of the decision problem falls down in the analysis phase.

As a consequence, marketing teams are getting isolated from the senior management levels, IT departments, external analytical influencers and internal or external commercial players. Is being asked to the marketing teams to react as intelligence connecting bridges with the other involved departments, being not only the brand and products management decision makers but also the intelligence and market insights experts. However the real scenarios don’t place Marketing as the strategic internal partner inside an organization.

Many pharma companies are not being fast enough in the data analysis to be able to make meaningful decisions, effectively failing to close the loop. Nowadays in some of the cases the sector is relying in CRM solutions to capture different types of market indicators, opportunities, customer segmentation, targeting and profiling, organizational understanding and market access conditions on the various different levels of action.

Holistic CRM solutions have as main premises the joining combination of business process management (BPM), Competitive Intelligence (CI) , Business Intelligence (CI), Multi-channel Marketing (MCM) and as well social CRM. There is an evident need for holistic solutions that can support the business services integrating all the offering aspects into a robust customer experience and customer centricity vision. This is particularly true when the business owner (Marketing, Sales or Market Access) is the primary driver of any solution and important part of an initiative to shift how the enterprise interacts with customers.

From another perspective we have today a more meaningful perspective about data information, where new forms of analysis have appeared in order to use the concept of information science with Big Data new capabilities and data science powerful analytical and statistical power.

The combination of new methods of analysis for decision support system such as Big Data brought another type of value to innovation and technological development for any pharmaceutical company. Today’s pharma companies are able to collect several patterns and data sets from the marketplace using the most recent technology available to improve traditional business methods, such as iPad platforms, where new mobile sales force automation (SFA) are having an incisive effect on overall pharma sales and marketing activities.

While new systems and new IT paradigms are bringing dramatically new capabilities into commercial and marketing interactions, there are visible signs that the ability of the sector performing meaningful analysis and create strategic outcomes that can bring value to the decision makers is not being effective and productive.

Although the main job of competitive intelligence is to support management decision making, having a formalized competitive intelligence system in place can help any pharmaceutical company address several different issues.

Currently pharmaceutical organizations not only have technology supporting the main critical needs, also have human resources knowledge around new powerful concepts as Big Data and Data Science to bring intelligence and insights through data and information. However the gap resides in the connecting bridge between the Information technology systems and the human resources, where is fundamental to have processes and organizational structures to support and build consistent frameworks and methodologies to have on a systemic pattern critical insights, decision resources, analysis and answers to support the business strategy and decision committees. Thus CI processes are strongly related and from a technologic perspective to business intelligence (BI) and from a business perspective to knowledge management (KM). BI and KM can be both perceived as critical inputs to competitive intelligence processes.

A systemic CI process allows to anticipate changes in the marketplace, anticipate actions of competitors, relocate in an efficient matter investment from R&D operations and initiatives, monitoring of new technologies, products and processes that impacts the business and monitoring the political, legislative or regulatory changes.

CI outcomes can be described as cutting-edge data collection sets and ethical and professional human analysis that allows insightful competitor analysis to later corporate decision-makers at a reasonable strategic point. Therefore CI should not be consider as a function but as a process, that should be appear in several aspects of the business and as one seamless process not relegated to one area, division or unit.

Life Sciences marketers must find more effective ways to reach and understand their audiences. Dynamically addressing customer needs is difficult in highly regulated industries, presenting challenges never previously encountered. Marketing success in this environment requires different thinking and different capabilities. In order to provide real value to the customer, marketing requires internal collaboration with the full spectrum of stakeholders and external collaboration with health systems, biotech, academia, payers and governments.

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One comment

  1. […] phases. Pre-Marketing is key and crucial for any pharma or BioTechnology company. It’s where Competitive Intelligence or Brand Strategy Plan meet together. One of the major risks in this type of strategy is the […]


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