What innovative business models can be triggered by precision medicine? Analogical reasoning from the magazine industry

Abstract

Presently, the health care industry is facing many technological and organizational challenges, and the emergence of precision medicine is bringing innovation and potentially a com- plete redefinition of the industry. This study suggests several paths for incumbent biopharmaceuti- cal companies to follow to address the disruptions brought by precision medicine and renew their business models. Two case studies are examined to analyze two business model-innovation aspects that magazine-industry incumbents share with biopharmaceutical incumbents: a transi- tion toward user-centric business models and a reshaping of the value chain to a value network. We identify the challenges presented by business-model innovation and important processes managers must consider, such as changing logic, acquiring new skills, and establishing new networks. The importance of experimentation and prototyping of different business models is highlighted. Furthermore, we explain that companies must change their positions in the value chain, and by creating new links they can thus transform the value chain into a value network. This paper offers biopharmaceutical industry managers a road map to better adapt to the chal- lenges through innovation of their business models in order to take advantage of the numerous possibilities and opportunities for innovation brought by precision medicine.