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Healthcare

Will healthcare be the new “green”?
By Wes Wilkes

In 2012, we will see three notable trends transpire within the healthcare sector. These trends include: an evolving brand model and expanded offerings; the increasing role played by medical devices and technologies; and the entrance of out-of-category companies into the healthcare space.

Healthy shift: Evolving models for brands and products
Traditionally, large-scale pharmaceutical companies employed a “holding company” approach with their product brands, in which the corporate brand was not promoted to the providers or the consumers. Separating the healthcare manufacturer from the product brands was a form of risk mitigation—reducing the impact of adverse events and product recalls. Nevertheless, with the proliferation of media, very little protection is ultimately offered.

This older brand model worked because most companies had a small set of products that fundamentally targeted different consumers. Now, however, most of the key players have a plethora of products that target similar therapeutic areas and similar consumers. Such organizations are now realizing that, in leveraging their corporate brands, they not only improve efficiencies, but also succeed in differentiating their product brands. The result is greater differentiation, competitive advantage, and increased revenue.

High levels of M&A activity is another factor that has forced traditional pharmaceutical companies to rethink business models and expand what they ultimately offer to the marketplace. These companies are no longer solely focused on selling pharmaceutical compounds, but have broadened into wellness and other areas. Many are venturing into end-consumer markets, fast developing markets, branded generics, and even animal health. Such moves indicate that these organizations are also revamping the fleeting small-molecule blockbuster model of the past.

The increasing role of medical diagnostics, devices, and technologies: Is hardware the new “pill” for improved outcomes?
Gone are the days when doctors and patients relied solely on pharmaceutical treatments for conditions like cardiovascular disease, diabetes, and neurological diseases. Companies that produce medical diagnostics, devices and technologies are transforming diseases -- making them more manageable.

Such players are also rethinking the role that brand plays in building relationships with key consumers. Just like traditional pharmaceutical companies, they are realizing the economic and operational benefits of building a strong corporate umbrella brand.

These companies can certainly drive product purchase premium and preference. Once they truly start to shift their promotional and brand models, we expect patients to become increasingly involved and engaged in the decisions around their overall treatment.

New entrants to healthcare: Is healthcare the new “green”?
Another notable trend is the accelerated rate at which companies that once offered only consumer brands are jumping into the healthcare space.

There are, of course, natural revenue streams that can be seized by applying a company’s core competencies in the healthcare sector. Many of these “new entrants,” however, quickly face a relatively steep learning curve. Entering the highly complex and highly regulated healthcare marketplace requires them to build strong brand relationships with both providers and consumers in an entirely new way.

As companies such as Bosch and Philips enter the healthcare space, they are realizing the important intangible benefits to be gained by creating a healthcare offering within their existing portfolios. These expansions are emerging as an important new trend when it comes to corporate image and corporate citizenship. This shift is not only driven by a new social awareness and consciousness of health, but also by an urgent need for business growth and diversification. We have no doubt that this will be a prevalent trend in 2012, which raises the question: Is healthcare the new “green”?