A Market-Driven Approach to New Product Development

by Arun Bhatia & Oliver Richards

The advent of patent cliffs, value-based care, and increasing cost pressures in the face of heightened levels of investment have spurred numerous articles evaluating the healthcare industry's innovation gap. The task of filling this gap while remaining focused on near-term shareholder value has increased M&A activity across the industry. Although M&A offers short-term benefits designed for immediate survival, this approach may yield less long-term value when companies encounter difficulties extracting future growth opportunities. The principal challenge, as part of the overall value creation strategy, is to fire up the innovation engine of a firm by fostering more robust product development efforts that can both enhance internal research programs and supplement other models of growth. But what are the key forces that make this effort so difficult for pharmaceutical and medical device companies today? This white paper discusses some of the key challenges surrounding new product development efforts in the pharmaceutical and medical device industry and presents a market-driven model The Beacon Group (Beacon) utilizes to help facilitate product innovation