Physicians and scientists considering a career change often ask what industries and companies they should consider. Continuing on the theme of perspectives into the healthcare industry, in this issue I will talk about similarities and differences, to help you think strategically about your approach. This may also be helpful for those considering changing industries, for example from Pharma to Diagnostics. I look forward to your feedback!
The “Big 3” healthcare industries referred to here are Pharma, Diagnostics, and Medical Devices. In this chapter, we’ll take an inside look at how the companies and organizations in these sectors support the direct delivery of medical services worldwide, to patients in hospitals, clinics, labs, nursing homes and beyond.
Pharmaceuticals
The Pharmaceutical industry consists of companies that develop and/or sell medicines, with global revenues of USD 1.48 trillion in 2022 and over 20% of budgets spent on R&D (statista.com). This is a highly regulated industry, with a high level of professionalism in all roles, which are also very competitive in comparison to non-healthcare industries. Even entry level positions require a strong education and work ethic, and some of the manufacturing or technical roles require years of apprenticeship. Every aspect of research, development, manufacturing, packaging, marketing and after-market safety surveillance has regulatory or industry standards that employees are expected to know and adhere to. The focus is always on the end patient, even if they are not typically the “customer,” as health insurances or governments typically pay the bills.
Reimbursem*nt for new drugs is determined by an assessment of patient benefit compared to cost. The customary way for Pharma companies to get the best price for their medicines is to prove that they deliver additional benefit for their patients, which means a commitment to the long and complicated clinical trials process. Most physicians and scientists will find the greatest prospects for their expertise in the research, clinical development and medical functions of these companies, as those roles require a certain understanding of the world and practice of clinical medicine.
Pharma is of course a complex and heterogeneous industry, with “big pharma” consisting of multi-billion-dollar international conglomerates like Pfizer, Roche, Astra Zeneca, GlaxoSmithKline, BristolMyersSquibb and a few others, which represent a constantly-shifting constellation of mergers and spinoffs, acquisitions and alliances. At the other end of the spectrum is a vast zoo of tiny biotechnology startups, bootstrapped or spun out of big companies, research universities and other incubators. These companies are single-mindedly focused on developing their drug or technology to be safe and interesting enough to one of the bigger pharma companies who will license the technology or acquire the company outright. In between is a middle layer of companies that specialize on one or a few products, typically focused on a particular medical specialty or niche in the healthcare system, where they can gain some advantage as experts.
Regardless of size, the Pharma industry is characterized by focus on the patient and the need for large and lengthy clinical trials to secure regulatory approval and market access. Pharma is where I received the most thorough training, skills and leadership development, and over time I have come to prefer the fast-paced and entrepreneurial nature of work with smaller startups over the intensive planning and specialization of larger industry roles. This is very much a personal preference, and I know many very happy and fulfilled colleagues spending their work time on highly specialized work.
Diagnostics
The Diagnostics industry (with a market size of USD 79.81 billion in 2023 according to mordorintelligence.com) consists of those companies that make or sell tests for use in a healthcare setting, for screening, diagnosis, therapy selection and monitoring, for health and disease states. Parts of this industry are highly regulated, as some tests have outsized impact on public health, such as tests used to screen the blood supply for HIV. Other parts of the industry are less regulated, such as the “tests for entertainment” like 23andMe and Ancestry.com. These services can imply a wide variety of claims with dubious supporting evidence, but since they pose little real risk (aside from your data being stolen), regulators let the buyer beware.
The biggest part of the Diagnostics industry is the in-vitro diagnostics (IVD) sector, which makes machines and reagents to test for analytes in blood or other body fluids for diagnosis, screening, clinical decision making or monitoring. It is difficult to imagine a world without these tests, which form a vast and complex ecosystem of manufacturers and test providers thatsupply clinical laboratories, which then run the tests and report the results to the clinicians or researchers to interpret and apply.
When considering medical and scientific roles in this industry, it is important to note that the customer of this industry is usually the laboratory, not the patient or even their healthcare practitioner. The industry is dominated by an engineering mindset: these companies deliver solutions that are optimized for accuracy and standardization across thousands or millions of tests that are highly reproducible, with workflow and cost optimization for the clinical laboratory that purchases them. While there are in many cases strict clinical trial programs required for the most highly-regulated tests, lower-risk tests can enjoy relatively little oversight. Medical and scientific roles in the Diagnostics industry are strategically important. You will be expected to follow the clinical advances in disease detection, infectious disease outbreaks, and research into clinical biomarkers (such as cardiovascular risk factors or predictive markers for cancer chemotherapy response) in a wide variety of disease states.
If you like being a generalist, this is the industry for you: it is a banquet of interesting clinical and scientific and engineering challenges. However, since the customer interactions are largely not with HCPs directly, the need for medical staff and medical field forces is much lower than in pharmaceuticals. The IVD industry is where I enjoyed the fastest career progression and leadership opportunities, and quickly had to set aside my scientific interests to manage leadership responsibilities.
Medical Devices
Similar to the diagnostics industry, Medical Devices (market size of USD 471.80 billion in 2023 according to statista.com) are subject to a complex and variable framework of regulations, based on the risk posed by how the product is used. Bandages need to be reliably sterile and thermometers need to be accurate, but these devices pose much lower risk than an insulin pump or surgical robot (where malfunction can quickly kill the patient), so the regulatory scrutiny is more intense. Medical and scientific roles here often have some overlapping responsibility with regulatory, quality and safety.
The medical imaging industry is a subset of the devices industry and specializes in capturing and interpreting visual representations of the interior of the body for diagnosis, treatment planning and monitoring. This industry is characterized by long procurement cycles and complex financial amortization, such as for a multi-million-dollar MRI machine or surgical robot for a hospital (and the technical and building infrastructure necessary to support them). Medical and scientific roles in these companies are typically highly specialized, requiring expertise in the particular application or relevant disease area for all but the most senior leadership roles—and even in those, significant expertise is expected in order to effectively lead advisory boards and represent the company among external stakeholders.
The Problem with Pharma
At a recent congress I was asked about the widely-criticized industry practice of “creating new diseases.” Once a drug has successfully navigated the costly minefield of clinical trials to demonstrate safety and efficacy, there are enormous incentives for the pharmaceutical company to expand the drug’s use to as many patients who would benefit as possible, or as some would say “to as many patients as the company can get away with.” While there are certainly examples of over-exuberant sales efforts (see the COX2 inhibitors), there are also legitimate efforts to better define disease, which new medicines allow us to do.
Pharmaceuticals are a very risky business: thousands of compounds must be screened to identify potential new medicines, and long series of complex and very expensive trials must be conducted to ensure medicines or devices are safe and effective before exposing human patients to them. Once successful drugs are marketed—yes, there are outsized profits. However, it’s important to recognize that without those profits as an incentive, companies would not be able to undertake the inherent risks of research and development. Breakthrough therapies come from years of hard work, much of which goes unrewarded for a long time: consider the mRNA technology that was quietly languishing for decades before the unprecedented success of the COVID vaccines, in record time, literally saving the lives of millions of people around the world. Without the promise of significant profit, there is no way those and many other modern medical miracles would ever have been delivered for patients. Bear in mind also the limited patent life of drugs, which ensures that generic competitors appear on the market and quickly reduce drug costs and expand access.
When I worked in Business Strategy at Roche, we were nearing the launch of a new oral lung cancer medicine closely behind a competitor who had already launched a similar compound. Both drugs demonstrated sufficient safety and a little extra benefit in most lung cancer patients, enough to receive regulatory approval and be used in certain treatment settings, but they were hardly breakthrough medicines when positioned in that way. In 2004, a group of academic researchers discovered that a select subset of lung cancer patients (whose cancers harbor a particular mutation) respond much better to these drugs. So much better in fact that it made more sense to limit the label to only those with this mutation (identified through a particular test), and avoid all the other lung cancer patients who might only experience side effects without benefiting significantly from the drug.
This is my lived experience of personalized medicine, or precision oncology in this case, and it demonstrates how new drugs can also define new diseases. Before these discoveries in the early 2000’s, “lung cancer” was broadly classified as “small-cell lung cancer” and “non-small-cell lung cancer” with some subtypes, named for how the tumor cells appear under a microscope. But after the discovery of this mutation (which was suddenly very interesting because it predicts the response to a particular class of drugs), we now have “EGFR-mutated non-small-cell lung cancer,” which is arguably a new disease. It was already there in the “lung cancer” population, but was largely invisible before the drug made the distinction relevant and the test made the disease treatable. Since then similar sub-populations have been identified with ALK, RET, ROS1, HER2, BRAF and several other mutations, all identified because these cancers respond particularly well to certain targeted therapies.
Today we know that what we call “cancer” is a large collection of many, many small populations with molecularly-defined subsets of diseases, more and more of which are identifiable with good biomarker testing, and treatable with a growing number of targeted therapies. This progress would never have happened without the pharmaceutical industry’s investments of billions into new targets, tests to identify them, new potential drugs, and the clinical trials to prove they are safe and effective (and don’t forget, also paying for the roughly 90 percent of new drugs that fail those clinical trials). We have indeed created “new diseases,” and along the way improved the survival rates of patients with many types of cancer. We can look forward to many similar advances in the years to come.
