Whatever Happened to Eisai’s “Dementia Ecosystem”?
What Does the Elephant Think?
It's an old, old Eastern story, the earliest version found in a Buddhist text dated around 500 BC, about some blind men who encounter an elephant in a village. As the blind try to make sense of what each feels, it's also a memorable illustration of how our views and understanding are shaped by our fragmented analysis and, as is so often the case, why we don't see a whole picture.
In most versions the men argue over what this strange thing is, convinced they themselves must be right. In some tellings, they may even collaborate to identify the elephant together, although that’s rare.
In no version of this story, however, a parable that has crossed many religious traditions and cultures and told over centuries, does anyone think to ask the elephant’s opinion.
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Eisai reports earnings tomorrow. All eyes will be staring at Leqembi, its Biogen-partnered Alzheimer’s drug whose sales continue to be “underwhelming” the analysts say, held back by barriers blocking access to the drug, such as prior authorization, infusion centers and time to diagnosis (i.e., ‘test-to-treat’).
“Investors have grown impatient and skeptical, in light of how long it’s been taking for the launch of the first ever disease modifying AD drug to really take off,” Stifel analyst Paul Matteis wrote in a note last quarter after Eisai cut its revenue forecast. Two weeks ago, Biogen restructured (again) to “avoid becoming obsolete”.
Matteis’ head-scratching about sluggish sales of something with so much technical potential — why wouldn’t the “first ever disease modifying AD drug” really take off? — reveals something deeper, though: The business (and professional risk) from using a deeply embedded, obsolete system of thought to frame and sell a roadmap to growth. The cognitive pattern of an entire industry no longer *works* in the era of wild dynamics, where 2+2 = Oranges.
There’s an infinite and recursive loop of crisis and collapse impervious to fixing technically, an epic enervation consuming conventional contexts for business and strategy.
Merck shares tumbled more than 11% yesterday after it gave 2025 revenue guidance short of expectations and said it was pausing shipments to China of its top-selling vaccine Gardasil. Cigna fell about the same last week when it missed forecast (on Monday, Cigna announced plans to start linking bonus awards for high-level officers to the company’s net promoter score, a measure of customer loyalty and satisfaction.) And as I’ve written elsewhere, the entire retail pharmacy market has collapsed.
Society has changed. The underlying economics have changed. Business has changed. The information environment has changed. We are in the midst of massive transformation coming at us with a speed and level of intensity that no one has faced before. Practically every pharmaceutical executive has been searching for strategic fit, saying the business needs a different approach for, well, decades.
Here’s Pfizer CEO Hank McKinnell, in 2005:
“I've been in postwar Japan, pre-revolutionary Iraq, worked in China during the Cultural Revolution, and I've never seen a period of such uncertainty.”
Lather. Rinse. Repeat..
When it comes to riding the steady-breaking set of Big Waves of Disruption, the hard thing to balance is the creative destruction part, how to “break the golden rhythm” of the place in our minds that we know intellectually, creatively and even philosophically has stopped working. Fast to find the new is only one half the innovation equation; fast to let go is the other important part.
‘Ecosystems’ Change the Center-of-Gravity
In September 2023 Eisai launched a first-of-its kind “digital business” that aimed to help predict dementia while also helping those living with the debilitating disease live better lives, wrote Ben Adams for FiercePharma (Eisai launches 'digital business' Theoria to build out a dementia ecosystem for patients).
“Eisai, which markets major blockbuster-in-waiting Leqembi for Alzheimer’s disease, a form of dementia, is launching Theoria technologies in Japan next April to “accelerate the development of a dementia ecosystem,” according to a press release.
On the social front, Eisai said that Theoria, which the pharma will wholly own, will “serve as the core of a highly transparent and neutral dementia platform, and the foundation for the development of an ecosystem to empower the people with dementia, regardless of the type or stage of the disease, to 'live their fullest lives,'” according to a statement.
Here is a slide from Eisai’s Q3 2024 financial presentation showing what that dementia ecosystem looks like. [Disclaimer: This slide is publicly available and I do not have a financial relationship with Eisai.]
Here’s my Hardcore Zen version of the same slide:
In physics, the center-of-gravity (COG) represents the point at which the forces of gravity could be said to converge within object, where its weight was balanced in all directions. If struck there it would lose balance and fall. The nation’s war colleges teach ‘center-of-gravity’ as part of the curriculum in strategic thinking, based on the idea that the COG represents the source of an opponent’s power and strength and was therefore “the point against which all our energies should be directed.”
COG matters to pharmaceutical brand teams because ‘market access innovation’ in the pharmaceutical industry is a three-body problem whose solution starts with a different objective: how to position a storyline of value that aligns the business, growth and innovation agendas of payers and providers. That value alignment is not about drug. It’s about drug positioned within the context of everything else.
[Susan Shiff and Curt Mederios wrote a piece in Health Affairs nearly six years ago on their experience trying to find "mutual understanding" between the drug market and the payer market. At the time, Shiff was a Senior Vice President at Meck and Mederios was the President of Optum Life Sciences Life Sciences.]
Said differently, the adaptive market of the future will be more like an ecology of organisms than a single being, more like a jungle than a dog. There are four stages to an ecosystem-centered strategy:
Stage One: “Genesis” — Here is where the basic architecture of a new economic system is worked out. Novel linkages between keystone components are made. Goal is to establish the basic capabilities to create new value.
Stage Two: “Expansion” — Proof-of-concept is established. An ecosystem has taken root, and the keystone partners who established it broaden the scope, reach and offers within the new system.
Stage Three: “Authority” — The system becomes established as a reference point. A new economy organizes its work around this reference point, and the system attracts new components that can access new customers and create new markets.
Stage Four: “Renewal” — Systems are “ideal seeking” – this is why they can never be optimized, and you should never try. The only stable system in life is at death. Continuing innovation to improve system performance must take place for the ecosystem to thrive.
For Eisai's 'ecosystem genesis' to happen, strategic thinking will need to sort of like this:
Markets aren’t about “efficiency” — they’re about power and control.
And market innovation is the deliberate process of finding and positioning power, of building ‘lateral strength’ to link markets in an organized and persistent way (e.g., Eisai + Best Buy + Cigna will go further faster than just Eisai alone). The end state is/are a new economic system (“ecosystem”) that becomes a new center-of-gravity, a way to displace an embedded economic network.
Growth happens through stories told and sold at a system level.
Whoever does the better job combining and positioning their business into new care and service infrastructures will emerge the sustainable winner. The decision for “digital” isn’t how to do the past enterprise better with new technologies, but how to extend the concept of enterprise beyond a single organization. Once that conceptual leap is made, then strategy becomes a process of managing the ecosystem as a single economic unit, progressively integrating more and more value into it over time.
Making the Elephant Part of the Loop
It’s no secret the pharmaceutical industry is in an era of transition. Seismic shifts are taking hold across the span of competitive, economic, political, regulatory, and social systems the industry operates in.
But as difficult as it is for pharmaceutical manufacturers to find a way to transcend their current environment and begin shaping change rather than becoming a victim of it, they are not alone. Accelerating issues of complexity, commoditization, and industry evolution are confronting the global marketing, music, information technology, automotive, financial services, media, defense, airline, telecommunications, and consumer packaged goods industries.
This Big Rethink, ideally, should be in the form of a new form of competitive and creative strategy, conceptualized in collaboration with the elephant, who is not ‘out there’ as a separate target for product promotion campaigns, but ‘inside’ as a partner developing the economic system of which it is also a part.
By the time Derek DelGaudio wrapped up In & Of Itself, his indefinable stage show’s 560-performance theatrical run, he’d amassed a collection of bold-faced blown minds, including Stephen Colbert and Bill Gates.
“We’ve been conditioned to believe that stage magic means deception, keeping secrets — but In & Of Itself is a radical attempt to teach us the opposite. The magic in this show, as DelGaudio recently told Vanity Fair, is “a representation of the larger metaphor, which is about the illusions we create for each other, in terms of who we are in this world and how we present ourselves, which is not necessarily the truth. It’s something we’ve crafted. And even if we are being authentic, are people seeing what we’re putting in front of them? Or are they projecting some sort of illusion on top of us?”
Because the nature of the network economy seeds disequilibrium, fragmentation, uncertainty and churn, new anchors of meaning and value are in short supply. The stereotypical “patient” is already a rather thin character. He or she is like a balloon: possessing an inflated identity stretched to its limit.
The same search-for-identity holds true for ‘drug companies’ — Are you in the business of producing drugs, or are you in the business of orchestrating the production of health, of which your drug is a keystone?
There’s more upside in crafting the latter.
Can elephants dance? I supposed you have to ask them first.
/ jgs
John G. Singer is Executive Director of Blue Spoon, the global leader in positioning strategy at a system level. Blue Spoon specializes in constructing new industry ecosystems.