Survey Highlights Healthcare Industry’s Innovation Gap

We know that money can’t buy you love. Apparently, it can’t buy you innovation, either, according to the Innovation Index released jointly by consultancy Strategos and stock research company wRatings. Even though R&D spending among US pharmaceutical and biotechnology companies increased by 2% in 2009, when virtually every other sector cut back on research spending, the healthcare industry was conspicuously absent in the most recent BusinessWeek list of the 50 most innovative companies. Only one company made Fast Company’s Top 50: Novartis. Given the poor innovation performance, it’s no wonder that pharmaceutical and medical device companies are experiencing low returns on their investment in R&D, states the report.

Although the report’s usefulness to medtech analysts is problematic since it paints medical devices and pharmaceuticals with the same broad brush and it is focussed on North America, it does make a few salient points about overturning industry orthodoxies:

• The blockbuster business model, which the device industry has begun to toy with, can be harmful to a company’s economic health. We are entering an era of personalised medecine, where drugs and, to some extent, devices will be tailored to small populations and even individuals.
• Processes and procedures in provider settings have traditionally been designed to maximise the use of expensive equipment and highly trained personnel. Patient comfort or convenience is rarely considered. In the years ahead, expect to see more delivery options designed for patient—rather than provider—convenience.

“Healthcare is on the brink of profound change driven by the inescapable forces of new regulations, demographics, consumerism, and costs of new technology,” write the authors of the Innovation Index. “In the face of these changes, there will be a great shift in the competitive landscape.”

The report can be downloaded (free registration required) from the Strategos website.

Tags: Innovation Index, Strategos, wRatings