Competition in Therapeutics (5 forces)
Introduction
Porter’s Five Forces is a seminal business concept for competitive analysis. It can be applied to therapeutics with a few modifications. Similarly, concepts like Adner’s “The Wide Lens” that map traditional value chains into more realistic value ecosystems, are essential best practice for therapeutics development.
What
Only the paranoid survives! Identify the power held by:
- Your suppliers (e.g. can you easily change CDMO between trial phases?)
- Your payors (e.g. how will your therapy be reimbursed per region?)
- Your clinicians (i.e. Porter’s threat of substitution, e.g. what other options might clinicians prefer – will they use the 5 generics before turning to an innovative therapy?)
- Your current competitors (e.g. commercial-stage companies currently selling into the market – how will they respond?)
- Future competitors (i.e. Porter’s new entrants, e.g. will your market be cannibalized by fast followers?)
Answers to the above provides a rational and informed view of the dynamics that define your subsector. Mapping all the key players, decision-makers, and influencers in your subsector is a complementary and highly valuable exercise. How is the purchase decision made for your therapy? Who pays for it? Who benefits from it? Who loses (e.g. the current SoC may benefit clinicians, or the Path Lab, or Radiology… how will they respond?) Who pays for it? These various players and their interactions form a complex web that will either accelerate your adoption or stop you in your tracks. Best to figure out which before you’re too far along to reposition.
When
As part of your analysis of the SoC and competitive landscape, certainly before you reach out to investors.
Why
Positioning and strategy. Understanding how you win in a complex and dynamic environment requires rigorous analysis and usually, a good deal of creativity. Planning to win in the market gives partners and investors’ confidence and prevents good science from dying on the vine.
Learning Goals
How to analyze a competitive therapeutics ecosystem.
Resources