How to Ride Chaos
Dealing with Predictable Unpredictabilty
Last week was a strange mix.
Novo Nordisk CEO Lars Fruergaard Jørgensen was either "ousted" or "stepped down" or "replaced" in a "surprise move" after losing the edge to Eli Lilly. Here’s Karen Gilchrist's take in CNBC ('Novo Nordisk ousts CEO as Wegovy maker faces growing competition'):
"The decision comes as Novo Nordisk’s stock price has taken a battering over the past year (currently down by more than 50% since the middle of 2024), amid increased competition in the ballooning obesity drug market and disappointing trial results for its next-generation treatments.
Board Chairman Helge Lund said discussions to replace Jørgensen had been ongoing for the past several weeks between Novo Nordisk and the Novo Nordisk Foundation, which controls the firm, according to Reuters. Reuters separately reported Jørgensen as telling Danish broadcaster TV2 that he was only informed very recently and that he did not see the decision coming.
“Novo Nordisk’s strategy remains unchanged, and the Board is confident in the company’s current business plans and its ability to execute on the plans,” Lund said in a statement announcing the decision.
In related news, Stephen J. Hemsley returned as CEO of UnitedHealthcare after Andrew Witty's “surprising” decision to leave UHC, which lost $300 billion in market cap over the past month.
Welcome to the era of predictable unpredictability, where the only surprise are management teams who continue to be surprised.
The radically pragmatic strategizing 'the market' will need to engage in as a single economic system (‘ecosystem-centered market strategy’) is this: how to reshape the thing of which we all are a part. The hard nut to crack is positioning 'the production of health' as the basis of competition, a new narrative layer to shape big system change, a metric on par with GDP as a measure of national wealth and wellbeing.
Writing and drawing are the same thing. We use lines to form shapes, and combine shapes to create symbols. The symbols come together to give meaning to things. Letters form words that, strung in a line, become sentences. Which is another way of saying: healthcare needs different sentences to construct different ideas.
“We need a new vocabulary for policymaking,” writes Mariana Mazzucato in her book, The Value of Everything. “Policy is not just about ‘intervening’. It is about shaping a different future: co-creating markets and value, not just ‘fixing’ markets or redistributing value. It’s about taking risks, not only ‘de-risking’. And it must not be about leveling the playing field, but about tilting it towards the kind of economy we want.”
Healthcare is an N-sided market that has never followed the rules of conventional economic theory. Partially because of this: it's not just one "market" that drives innovation and determines “value” but an infinite flow of them.
If you accept that premise as your jumping-off point, then what follows is this simple concept: real strategic advantage goes to the side with the skills to harness a carnival of markets and combine them as a single economic unit, as a unique 'system of markets' cohering and collaborating on shared space for growth.
Fortune favors the aggregators.
The next cycle of innovation in the business and economics of healthcare isn't about Eli Lilly vs. Novo Nordisk competing in the 'drug market’'. It's about how can Novo dissolve ‘the drug market’ in a larger context of value, positioning itself as a keystone with Abbott + Epic + Nestlé around the ‘production of cardiometabolic health’ as a new industry narrative, one with the power and gravitational pull to change the practice of medicine, at scale.
On his way out the door as FDA Commissioner, Scott Gottlieb wrote a memo issuing a challenge to pharma: be more innovative. More specifically, he called out the subsystem of CROs and other vendors to design new business models that are compatible with disruptive thinking::
Efforts to streamline medical product development based on advancing science can be frustrated by legacy business models that discourage collaboration and data sharing, and the adoption of disruptive technologies that make clinical research more effective. Without a more agile clinical research enterprise capable of testing more therapies or combinations of therapies against an expanding array of targets more efficiently and at lower total cost, important therapeutic opportunities may be delayed or discarded because we can’t afford to run trials needed to validate them.
“Unfortunately, we’ve seen a continued reluctance to adopt innovative approaches,” he noted.
According to Gottlieb, new research paradigms are needed to break down barriers between real world data and clinical research, so that evidence can be shared rapidly to improve both domains across a learning health care system. In some cases, the business model adopted by the clinical trial establishment just isn’t compatible with the kind of positive but disruptive changes that certain innovations can enable.
New forms of collaboration are part of this story, Gottlieb said.
Which is also consistent what Hemant Taneja, General Catalyst CEO, says now: “We have been of the strong belief that in order to really [align stakeholders], we have to be in radical collaboration with the ecosystem [as a whole], the healthcare institutions themselves.”
Which only underscores the why for a whole new innovation agenda in healthcare, the kind of systemic vision for transformation framed not long ago by Kevin Schulman, Professor of Medicine at Stanford University, and Barak Richman, Professor at Duke Law School, in the New England Journal of Medicine (Toward an Effective Innovation Agenda): “Business innovation in the U.S. health sector has fundamentally failed, in part because it lacks a disciplined approach to meeting consumers’ needs. Addressing the job that needs to be done requires shifting the focus from existing resources to needed services.”
Make Shift Happen
Regeneron this morning said it will acquire substantially all of 23andMe’s assets for $256 million after coming out on top at a bankruptcy auction. Regeneron said it intended to acquire 23andMe’s signature Personal Genome Service, as well as its Total Health and Research Services business lines and its biobank of customers’ genetic samples and data. (See Blue Spoon thinking on this here, published in March: Should PhRMA Acquire 23andMe?)
The sale comes after a wave of customers and government officials demanded that 23andMe protect the genetic data it had built up over the years by collecting saliva samples from customers. Regeneron pledged to comply with 23andMe’s privacy policy, which allows customers to have their personal information deleted upon request.
“We have deep experience with large-scale data management,” Regeneron co-founder George D. Yancopoulos said in a statement. The company “has a proven track record of safeguarding the genetic data of people across the globe, and, with their consent, using this data to pursue discoveries that benefit science and society.”
Said another way, Regeneron basically acquired an ‘evidence engine’ around which to build and guide whole new ecologies in healthcare, all for less than what one brand team spends on one small DTC advertising campaign.
Let the paradigm shift begin .
Subscribe to Hardcore Zen, a high spot in a new world.
/ 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.