Abstract

Novartis International AG, a Swiss multinational pharmaceutical company based in Basel, wanted to go in for digitized medicine as well as use different mobile applications to effectively serve the patient fraternity. Under its CEO Joseph Jimenez, Novartis had begun employing digital technologies such as Microsoft Corporation gaming technology and embedding Google Inc. sensors in contact lenses to reinvent the company, one of the world’s biggest drug makers. The company’s first-ever smart pill called Proteus used stomach fluid as a power source to broadcast signals back to its battery-powered companion patch. The data included vital information such as the time of ingestion, the patient’s heart rate, body temperature, and other activities. That data was then sent to a smartphone app used by physicians to better gauge the patient’s condition. Novartis collaborated with many tech companies to use the technology in its medicines to provide hassle free solutions for many diseases. Through many initiatives such as these, Novartis was preparing for a time when drug makers would be paid only when they could demonstrate that their products improved patients’ conditions. Further, Novartis announced in July 2015 that it planned to offer an outcomes-based plan for its newly approved drug Entresto. Insurers would initially pay a lower price, and if Entresto succeeded in keeping patients out of the hospital and reducing associated costs, then they would make an additional payment.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the issues and challenges involved in Novartis going in for digital medicine.
• Analyze the pros and cons of Novartis going digital.
• Explore ways in which the pharmaceutical companies can venture into more digital applications.
• Analyze Novartis’ move to shift to an outcome-based model.
• Analyze the challenges faced by pharmaceutical companies in adopting such a model, and how Novartis can overcome these challenges.

Keywords

Digitization,Digital transformation,“Smart pills”,Digital medicine,Robotic pill,Consumer behaviour,Drug adherence behaviour,Outcome-based pricing model,healthcare,Pharmaceuticals