What innovative business models can be triggered by precision medicine? Analogical reasoning from the magazine industry

Abstract:

Presently, the health care industry is facing many technological and organizational challenges, and the emergence of precision medicine is bringing innovation and potentially a complete redefinition of the industry. This study suggests several paths for incumbent biopharmaceutical companies to follow to address the disruptions brought by precision medicine and renew their business models. Two case studies are examined to analyze two business model-innovation aspects that magazine-industry incumbents share with biopharmaceutical incumbents: a transition toward user-centric business models and a reshaping of the value chain to a value network. We identify the challenges presented by business-model innovation and important processes managers must consider, such as changing logic, acquiring new skills, and establishing new networks. The importance of experimentation and prototyping of different business models is highlighted. Furthermore, we explain that companies must change their positions in the value chain, and by creating new links they can thus transform the value chain into a value network. This paper offers biopharmaceutical industry managers a road map to better adapt to the challenges through innovation of their business models in order to take advantage of the numerous possibilities and opportunities for innovation brought by precision medicine.

Keywords::

• business-model innovation
• biopharmaceutical industry
• business model
• user-centric
• value chain

Acknowledgments

The authors would like to thank Editor-in-Chief Professor Rubin Pillay and the journal’s three anonymous reviewers for their constructive comments and feedback. The authors also thank the participants of the Business Model Reconfiguration research team at Grenoble Ecole de Management and Ms Maureen Walsh of the Skillful Wordsmith for her careful copyediting. We also acknowledge the financial support of ANR ANR-13-SOIN-0001 (http://www.agence-nationale-recherche.fr/?Project=ANR-13-SOIN-0001). The usual caveats apply.

Disclosure

The authors report no conflicts of interest in this work.