Health Biotechnology: emerging Business Models and Institutional Drivers (by Maureen McKelvey)

Health Biotechnology: Emerging Business Models and Institutional Drivers, elaborado por Maureen McKelvey (Professor, Industrial Management School of Business, Economics and Law Göteborg University en Suecia), expone los escenarios de futuro en el horizonte 2030 que se vislumbran con la aplicación de la biotecnología en la salud y los nuevos modelos de negocio que emergerán. Este documento se ha incluido en el informe The Bioeconomy to 2030: designing a policy agenda  que expone las oportunidades y los desafíos para la bioeconomía del futuro. Este informe es el resultado final del proyecto de bioeconomía  promovido por el Programa Internacional de Futuros (IFP) de la Organización para la Cooperación y Desarrollo Económico OCDE.

Executive Summary
This report Health Biotechnology: emerging Business Models and Institutional Drivers addresses the future of firms and industry. In particular, the report focuses upon how and why firms involved in health biotechnology will evolve in the future. These firms will be diverse, ranging from the pharmaceutical firms and health service providers to specialised firms in biotechnology, bioengineering, biomedicine, and other fields at the intersections of biology, genomics and human health. Public policy faces major challenges here, because the developments in firms will depend upon a mixture of public and private incentives and organizations. The interface between the public and the private must therefore be analyzed and developed in future public policy. This matters for society, in order to stimulate growth and industrial competitiveness and in order to apply the advances of biotechnology to solve human health care issues.
Up until today, two business models have been dominant within the application of biotechnology for human health, or what is called health biotech in this report. One is the classical biotechnology model. In this model, scientific discoveries and technological inventions have been quickly developed within entrepreneurial firms, usually based upon venture capital. They compete through their specialized scientific knowledge, often sold to large companies, and they also compete through their flexibility, especially quick commercialization of new fields. The other dominant business model is that of the large, vertically integrated company. These large firms have integrated everything inside the boundaries of the firm, from research and development (R&D) to production to marketing and after sales monitoring. The ones in pharmaceuticals have competed through finding the next ‘blockbuster drug’ and the ones in medical devices have also competed through developing specific technologies and devices for large numbers of customers.
These two dominant models are being challenged, due to serious problems of profitability, changing technologies and medical knowledge and changing demand. Therefore many other ways of ‘doing business’ within health biotech are being developed. Indeed, as new business opportunities and shifts to the institutional context arise, then firms experiment with new types and new combinations of business models. This report concentrates on four institutional variables, which are helping to drive these changes within the business models of firms.
This report details a large number of alternative business models, as well as analyzing how the institutional drivers of change are likely to stimulate some specific business models rather than others. Future developments will be interesting, because new experimental business models are being developed, at the intersection between the two traditionally dominant models mentioned above. Some are a more refined version of today’s business models, but where new discoveries and inventions in areas like system biology and individualized health care will form the core business. Other experimental models will be similar to ones experience in other industries which have undergone profound changes. An example of this is the pharmaceutical industry, where some firms will move from an R&D driven block-buster strategy, in order to instead concentrate upon the flow of resources, supply chains, and competing on lower prices and more direct contact with customers.
The experimentation and implementation of new business models will affect society because the industrial transformation expected through health biotech will affect firms in many
sectors. The new business models will also involve different combinations of goods and services on offering, in order to deliver human health care.
Hence, this report relates the emerging business models in relation to four institutional drivers of change because these firms and also public organizations will play major roles in future scenarios about the Bioeconomy. The firms will be highly influenced by their context, including institutional drivers, or what we can call the broader sectoral system of innovation. The reason comes back to the core of our analysis, namely the “economic model” or “business model”. Many practitioners use the concept, as does the literature, to analyse how firms do business. These models specify the firm’s core competencies and how they are turned into offerings for customers, so that the firms can generate sales and possibly profits.
The report argues that four institutional drivers will form a very different context to deliver human health care. Those four institutional drivers for change are 1) Scientific and technological advances; 2) Public research and the public-private interface; 3) Public policy, institutions and regulation; and 4) Demand and consumers.