A Note on the Launch of “PfizerForAll”
Creating a New Orbit for Competition?
Takeaway: “Not taking away business from the PBMs, but actually enhancing it” — Pfizer launches new telehealth and prescription drug platform, Yahoo Finance
Pfizer was actually here about a decade ago with its e-commerce platform for Viagra. That dissolved when the business forecast didn’t materialize as pitched.
There is essentially zero demand for Covid and flu vaccines, the lead product solution for PfizerForAll. That market has collapsed. Last month, Moderna shares tumbled by the most on record after the company lowered its sales guidance due to weaker demand for its vaccine. In its guidance cut, the company cited an increasingly competitive environment in the U.S. and very low Covid-19 vaccine sales in Europe.
Ditto for the market in telehealth services.
Look no further than unprofitable Teladoc Health, under new executive leadership and its stock at a historic low. Teladoc's revenue growth rate peaked in 2021; during the second quarter, the company's top line declined by 2 percent, due in part to a massive $790 million impairment charge related to future cash flow within its BetterHelp virtual therapy segment. (This isn't the first time Teladoc has had to deal with a similar issue. In 2022, it reported a net loss per share of $84.60 due to an impairment charge related to its 2020 acquisition of Livongo Health.)
Ditto for the retail pharmacy market.
Rite Aid filed for Chapter 11 in October 2023, after reporting $750 million in losses and $24 billion in revenue for the past fiscal year. Rite Aid, which had over 2,000 stores when it filed for bankruptcy, will emerge with about 1,300 remaining locations. Walgreens, its stock at a 27-year low, also with new executive leadership searching for “strategic fit” to an operating environment that stopped “working” long ago, at least in the conventional linear sense. (For the Blue Spoon take on this, see ‘Structural Collapse at Walgreen’s’ on Fresh Paint.)
The really big market opportunity in healthcare — ‘the next hundred billion’ from top-line innovation — is/was to intentionally create competition around the ‘production of affordable health’ as a new economic system (“ecosystem”). This can be done either with or without Big PBM collaboration/co-creation
Key to an ecosystem-centered market strategy is the idea of ‘progressive integration’ — you want to send things (products, services, technologies) down the slide and integrate them into your system faster than they can become commoditized.
Conceptually, the approach is about ‘market maximization’ versus profit maximization. As a new economy business concept, understanding how to create a flywheel of markets and market-making capability is as important as return-on-investment.
Said another way, the fastest way to amp up the worth of your own network it to bring smaller networks together with it so they can act as one larger network and share in the gain of the total N² value.
Which is why Lilly has the better strategy story: it simply “works” better within the context of a total change in context. Last week, they announced it will start providing low-dose vials of Zepbound through its direct-to-consumer platform, LillyDirect. It’s a move that that will likely ease supply constraints and draw more patients to the company’s online portal — i.e., create gravitational pull into its economic system.
“Lilly’s announcement also presents a highly unusual challenge to the many telehealth companies now offering weight-loss drugs, and underscores the threat they pose to Lilly’s hold on the market,” observes Lindsay Allen, a health economist at Northwestern Medicine, in the New York Times coverage of the news. But the deeper story here is about understanding power — how to position leverage and sustain pull into a new orbit for economic competition, a roadmap for market access innovation that intentionally displaces or degrades the control of Big PBM on the economics of the drug market in the United States.
In addition to connecting patients with providers, LillyDirect will also now allow patients with prescriptions from any doctor to purchase vials, needles and syringes directly from Lilly. Patients will have to self-pay for the drugs; Lilly will not accept insurance coverage for the vials. The company said it is able to offer what it called “transparent pricing” for the vials in part because it can sell the drug directly, “removing third-party supply chain entities [emphasis added],” according to Lilly’s news release.
It’s early innings, of course, but when it comes to an ecosystem-centered market strategy, the entity that understands how to manage their business to spark and then sustain ‘gravitational pull’ into their ecosystem is the one with the advantage over rival. The new leadership skill to develop: If you’re able to weld disjointed markets into a single piece of machinery — as a new care and service infrastructure — you not only invent leverage, but you have the ability to steer an entire economic system your way.
Lilly appears to have internalized this mode of being and thinking in a way that Pfizer so far has not.
/ jgs
John G. Singer is Executive Director of Blue Spoon, the global leader in positioning strategy at a system level.