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Kay Plantes is an MIT-trained economist, business strategy consultant, columnist and author. Business model innovation, strategic leadership and smart economic policies are her professional passions. A former Madison, WI resident, Kay now resides in San Diego, CA. The views on her blog are not those of her employer, IBM.

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October 25th, 2010

A patient-centered pharmaceutical business model strategy

UCB wisely places patients at the center of its business model

At $4.3 B in annual revenue, Belgium-based UCB S.A. would place about 14th among Fortune 500 US pharmaceutical companies.  But unlike its larger peers, whose industry-consolidating mergers have massive layoffs, all for the sake of cost-cutting earnings growth, UCB focused its business model innovations on unique advantage. As a result, UCB is delighting  patients and employees alike.

I learned about UCB’s business model innovation from UCB’s Loïc Elleboudt. He spoke at the recent Swedish Marketing Federation’s Annual Tendency Day in Stockholm where I was the keynote speaker. The terrific event focused on innovation – from business models all the way through to digital media.

Founded in the 1920s as an industrial chemistry company, UCB shed its non-pharmaceutical businesses and acquired two biotech drug companies to focus solely on “biopharmaceuticals,” a combination of large, antibody-based molecules and small, chemically derived molecules. Its business model strategy also includes focusing on the severe diseases of the central nervous and immune systems such as Parkinson’s disease, Crohn’s disease, bone loss disorders, lupus and rheumatoid arthritis. UCB’s scope goes beyond drugs.  “We’re a solutions company,” according to Elleboudt, helping people with these chronic diseases lead ordinary lives.

The narrow target market strategy is smart. Diseases of interest to UCB are treated by a relatively small number of specialists, enabling UCB to have a close relationship and regular dialogue with physicians and their patients. This relationship is essential to understanding and addressing the daily challenges of these diseases and for gaining insights upon which to build a better offering. According to UCB’s website, “Severe diseases also require a smaller sales force, so more resources can be devoted to R&D and other functions.” Focusing on both chemical and biologic drugs along with a narrow set of diseases will enable UCB’s drug-discovery resources to provide better cost leverage and deeper insights into the mechanisms for these debilitating diseases.

Elleboudt says that patients are now at the center of UCB’s business model, with direct patient conversations deepening UCB employees’ understanding of these diseases. As a result, “the company gains strategic insights that advance innovations in the pre-diagnosis, diagnosis and treatment phases of the diseases.” UCB innovations, according to Elleboudt, are not just in drugs but also in drug delivery devices and services to afflicted individuals.

A new syringe for easier self-injection by people with severe arthritis emerged from the patient-centered focus, for example. UCB partnered with OXO, known for its ergonomic kitchen appliance handles, for this project. UCB also adopted a skin patch delivery mechanism after learning from patients about the uneven uptake and distribution of oral medications for Parkinson’s disease.

These diseases are called the “silent diseases” as sufferers are “often hesitant to share their experiences and insights because they feel socially stigmatized,” according to Elleboudt.  UCB, as a result, is creating novel ways for patients and their families to connect, in-person and virtually.  Crohn’s And Me is one example. Elleboudt shared how at Live Beyond Epilepsy a person suffering from epilepsy learned from other users that there are epilepsy physician-specialists. Furthermore, these specialists, according to on-line patient-to-patient communications, offer ways to escape non-specialists’ multiple prescription regimes, enhancing patient’s day-to-day living.

In addition, UCB’s value-chain includes partnerships with other drug companies with specialized expertise pertinent to UCB’s target population. I had a sense that companies with useful drugs for UBC’s target population will use UCB’s sales force, just as UCB licenses drugs to other drug companies when the patient and physician targets are outside UBC’s core strategic focus.

In the Q&A session, Elleboudt established other benefits of the narrow target market focus and patient-centric model.  With the advent of affordable genetic profiles, drug companies will undoubtedly adopt one-of-one formulations (a kind of mass customization) to increase drug effectiveness. UCB will be ahead-of-the-pack when this industry-wide change occurs. And, UCB will have a strong brand name with patients when a drug’s patent ends and competition intensifies.

Elleboudt says UCB employees feel very passionate about the new business model and the company’s deeper purpose. They have a sense of urgency for improving patients’ lives. I found UCB’s business model strategy refreshing, and a welcomed improvement in one of the most important markets in the world – the market for better health.

If ever there was a sector in need of smarter leadership, pharmaceuticals is one. Thank you UCB.

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