The future

of oncology
A focused approach to
winning in 2030
Thriving on disruption series

Spiralling costs in research and development

(R&D), shorter product lifecycles, fragmented
patient markets and an increasing requirement
to demonstrate value through a wider range of
outcomes, are all limiting the potential return
from expensive treatments. Incumbents failing
to evolve in line with these trends are in danger
of being outmaneuvered by new entrants. In
this paper, we assess how current business and
operating models can be adapted to mitigate the
effects of a changing oncology paradigm.

kpmg.com/cn KPMG China

The end of an era
To date, successful oncology treatments have promised patient and payer benefit for a generation. But
some of the highest returns for pharmaceutical capitalizing on this is not without significant challenge
manufacturers; in 2016, oncology assets represented 5 for manufacturers. We are already witnessing a
of the top 15 best-selling drugs globally.1 The market is dramatic reduction in eligible patient populations
expected to continue to show strong growth, with for novel treatments, as labels will only be awarded
a forecast Compound Annual Growth Rate (CAGR) of to highly-responding subsets, increasingly linked to
10.9% to 2030 for oncology prescription sales, driven companion diagnostics. Additionally we see multiple
by factors such as an aging population and lifestyle manufacturers studying similar mechanisms of action
changes predisposing to disease.2 (MOAs), creating an intense competitive landscape.
Consequently, this confers limitations on the depth of
However, the industry’s status quo and the success market penetration expected by individual therapies.
of incumbents' business models are both being These facts, in combination with shorter time-in-market
challenged. Growing budgetary pressures are leading and loss of exclusivity, are heavily impacting return on
payers to demand a more robust demonstration of value investment and, in an environment requiring increasing
from oncology treatments, increasingly being measured R&D spend, threatening profitability.
in terms of superiority to standard of care rather than
stand-alone efficacy. Outcomes-based arrangements Pharmaceutical companies will also be required to
are directly linking drug value to price as healthcare shoulder increased R&D risk. An asset’s value only
systems seek to hedge their risk and cut costs, a goal holds true against an unchanged treatment paradigm,
at odds with the shift in treatment paradigm towards which as the competitive landscape becomes
the greater use of expensive combination therapy increasingly fragmented is fast vanishing. The age
regimens. Advances in technology are enabling these of the 'one-size-fits-all' therapy is ending, and with
changes, with novel platforms expanding the potential it the blockbuster model that has for so long driven
for detection of responsive patient subsets, defined shareholder value.
by specific immunogenic, genomic, epigenomic,
proteomic, metabolomic, microbiomic and phenomic To remain successful in the oncology market, change is
profiles in comparison with hitherto broadly defined now a necessity in order to adapt to this altering market
tumor types. dynamic.

Enter the age of personalized medicine - without a

doubt one of the greatest trends to provide substantial

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 2

Key drivers of change
in the oncology market
By 2030, it is predicted
there will be 41 mega-cities, The number of older people
with more than 10 million (aged 65 and older) living
inhabitants.3 Urbanization is with cancer is set to treble
leading to changes in lifestyle, between 2010 and 2040, and
predisposing populations to by 2040, >65s will account
the emergence of cancer (e.g. for 77% of all people living
diet, activity, etc.). with a cancer diagnosis.4

Circulating pollution is
being attributed to an
increasing proportion of
Increased cancer Healthcare budget
lung cancer cases, and it incidence pressure
is widely recognized that
further decreases in ozone
levels are likely to result in
an increase in the number
of cancer cases globally.

Increased pharma Rising spending on healthcare

R&D costs
will place ever increasing
Total global R&D pressure on public budgets.
spending in the Without action, healthcare
pharmaceutical expenditure in OECD countries
sector is on the is forecast to double as a
rise, with a forecast share of GDP by 2060, which
CAGR of 2.84% is considered unsustainable.6
Reduced revenue
from 2010 to 2022.5 potential

Pharmaceutical manufacturers are facing increased risk

of revenue erosion as the window between market
approval and patent expiration shrinks, as payers look
increasingly to generics and biosimilars. It is estimated
that by 2020, only 18% of traditional product volumes in
developed markets will be for branded assets.7

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 3

Implications for the future
oncology landscape
Increasingly payers are seeking to more The healthcare industry is shifting away
closely tie the value of a drug to its price, from the 'one-size-fits-all' concept, in the
leading to the increasing penetration of search for the most responsive patient
outcomes-based payment strategies in subsets for each therapy or combinations
the oncology space. regimen. This approach covers not only
treatment but also the prevention of
cancer.

Novel pricing Personalized

strategies care

Pharmaceutical companies will have

to modify their business and operating
models to align with a need to enhance
health outcomes as well as sustainability,
rather than just cost containment within
Novel business oncology.
and operating
models

Converging
technology
Data gathering and predictive analytics
will become increasingly essential in
defining treatment value. Live tracking
will increasingly reveal aspects of the
patient journey which represent barriers
to 'best practice' care delivery.

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 4

Unsustainable care costs are
a driving force for change
Globally the costs associated with oncology care are higher than the treatment
costs for any other disease, leading to demands for more robust evidence of
treatment success.
Costs associated with oncology care extend beyond the demanding more robust evidence of treatment
acquisition price of the individual treatments, to include success, leading to the stratification of once broad
aspects such as expenditure for diagnosis, surgery, oncology indications.
hospitalization, and palliative and end-of-life care. In
total, oncology spend globally is forecast to rise by 53% It is no longer the case that one treatment is necessarily
from 2015 to 2020. KPMG expects this trend to persist suitable for all patients with a broadly characterized
to 2030 and beyond, unless the approach to care is tumor type. Scientific advances are resulting in tumors
fundamentally altered. becoming increasingly well defined, and this is driving
the stratification of these once broad indications.
Global Oncology Spend (2010-20, USD bn)8 Payers are recognizing this trend, and seeking to offer
180 reimbursement only where efficacy is demonstrated
162.9 within these smaller niches. Therefore, it is forecasted
160
13%
that the number of indications per therapy will rise, as
140 13%
developers resist the narrowing of their potential patient
120 7%
106.5 pool, in an effort to maximize return on investment and
100 19%
83.6 13% recoup development costs.
13%
80 14% 8%

60
10%
21%
Anticipated number of oncology products with
11%

24% 49%
single vs multiple indications (2014-20)11
40

20 46%
41% 80 67

0 60 48
2010 2015 2020F 40
40
21
US EU Japan Pharmerging* Rest of World 20
0
However, the efficacy of treatment has been reported Single indication Multiple indications
to be as low as 25% across all cancer types.9 This 2014 2020F
low efficacy, along with the very high costs associated
with many of these treatments, is representative The likely result of this effort to gain approval in multiple
of a significant wastage in the healthcare system.10 indications per therapy, is an increased data requirement
Consequently, this is driving payers to change the way for reimbursement. This will force market players towards
they approach the procurement of oncology therapies. specialization within oncology, in turn requiring both
incumbents and new entrants to align their business and
To alleviate the rising cost pressure, payers are operating models within this new paradigm.

Note: Pharmerging - This category was coined by IMS Health and a detailed definition can be found in the quoted source. In summary, it includes those emerging
markets which were deemed to meet minimum added value criteria for the pharmaceutical and healthcare industries between 2012-2016. There are 21 markets within
this category, including China, Brazil, India and Russia

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 5

Where is the value?

Cost-constrained healthcare systems and insurers are seeing real potential in

value-based pricing, and the high cost of oncology therapies has led the sector to
become one of the critical early adopters of this strategy.

There is an increasing perception among payers healthcare systems. Current advocates display specific
globally that the cost of cancer drugs is considerably characteristics, such as the presence of a rich data
higher than the benefits associated with their use. As a infrastructure and a healthcare system amenable to the
result, value-based, and increasingly, outcomes-based sharing of patient data. As more countries and systems
pricing is becoming more prominent in the oncology move towards these characteristics, we expect the
landscape.12 The primary goal of this strategy is to uptake of these contracts to increase. However at the
match a therapy’s price more accurately to its defined current time, it is the view of many in the industry that it
value. This value is not restricted to the clinical benefits is incumbent on pharma companies to push these novel
as has been the case historically, but going forward will contract designs to mitigate huge pricing pressures.
include the value to patients (both in clinical outcomes
and more patient-related outcome measures (PROMs)), Evidence of the implementation of outcomes-based
payers and the wider society. In doing so, payers aim schemes within oncology can be seen across a large
to limit cost expansion, increase therapy success rates number of major players, including Celgene (Vidaza,
and enhance access of a wider patient population to Revlimid), Novartis (Votrient), and Janssen (Velcade).13
effective oncology treatments. Outcomes-based strategies have allowed them to
overcome specific access hurdles, and gain a favourable
It is important to note that not all payers are necessarily share within their respective markets.
demanding such contracts now. Generally, emphasis is
more strongly applied to the simplicity of contracting It is the introduction of such outcomes-based, risk-
arrangements, with many payers still favoring standard sharing agreements that represents the largest market
discount and rebate strategies. This is demonstrated disruptor. Oncology players should consider how they
by the considerable variability in rate of implementation can respond in order to ensure they remain relevant in
of value-based contracts between countries and the 2030 landscape.

Note: In KPMG’s white paper, Value-based pricing in pharmaceuticals: Hype or hope? 14 we explore further the application of novel value-based pricing arrangements
across the pharmaceutical industry

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 6

Tech advances
wil enable a
paradigm shift
Advances in science and technology platforms are
likely to progress faster in oncology than in other
disease areas, due to terminal disease prevalence and
the corresponding increase in patients' risk appetite.

The goal of cancer treatment has abnormalities contributing to many

always been to cure the disease. cancers. It is the development
However current treatments have of treatments leveraging this
no guarantee of cure, and it is not knowledge that represents an
possible for physicians to be certain increased possibility of real cure.
of an outcome following treatment.
Consequently, patients require Metabolomics represents another
extensive follow-up, and in many field of research with huge future
instances suffer relapses requiring promise in the field of oncology. We
further, often more expensive, are becoming increasingly aware
second and third-line treatments. that the metabolic phenotype
of cells within tumors is highly
Panomics* is driving the heterogeneous, and importantly,
development of treatments and distinct from that of non-
regimens, enabled by novel malignant cells. The development
technologies, that can potentially of treatments targeting these
lead to personalized therapy and metabolic differences represents a
a significantly higher cure rate for novel anti-cancer strategy.15
many cancers.
Immuno-oncology is the fastest
Advances in genomics are growing segment within the
contributing to this positive future oncology field, and will likely
view for oncology patients, with continue to grow. It has allowed
gene-editing techniques enabling us to treat cancer in ways that
this progress. We are increasingly were unthinkable only five years
mapping genetic and epigenetic ago. Going forward, techniques

Note: Panomics - The range of molecular biology technologies including genomics, proteomics,
metabolomics, transcriptomics, etc. or the integration of their combined use

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of
the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

The future of oncology 7

such as Chimeric Antigen Receptor T-Cell (CART) use,
advances in checkpoint inhibition knowledge and a New technologies are potentially enabling
better understanding of how to rationally combine curative therapies in the 2030 oncology
these treatments,16 will drive progress in this segment, paradigm
enabled by technologies such as 3D cell printing and
organoid generation.17 Immuno-oncology is also being Personalized Cancer Vaccines
leveraged in combination with genomic techniques This strategy aims to prime the patient's immune
to drive personalized treatment of cancer, with response, against specific components of cancer
personalized cancer vaccines already showing promise cells, identified via gene sequencing of each
in clinical trials.18 patient's tumor cells.20
CRISPR-Cas9
The microbiome is increasingly being linked to the
The technique allows highly specific editing of
development and response of cancers. Modulation of
the genome. Recently, it has entered clinical
the microbiome with immuno-therapeutics represents
trials in the oncology space21 with the aim of
another avenue of treatment advance in oncology.19
reprogramming immune cells to target and destroy
tumor cells.
Advances in technology will progress diagnostic and
monitoring capabilities, in turn enabling shifts in the Oncolytic viruses
oncology treatment paradigm. This combined with Potential applications have included tumor
the shift in mind-set towards cancer being a chronic lysing treatments, inducers of innate immunity,
disease, will force the paradigm towards more of anti-vascular agents and crucially, gene therapy
a survivorship or maintenance mentality, perhaps vectors,22 and are being investigated in a range of
representing an intermediate step in the push towards cancers.23
real cure of malignancies. Treatments will comprise Liquid biopsies
a complex cocktail of drugs, dynamically modified as A non-invasive technique permitting monitoring of
tumor characteristics change to ensure maximal real-time changes occurring within the tumor,
effectiveness. providing an ideal method to monitor treatment
response.24
Despite the rapid advancement in technology in the
3D printing
oncology space, there is the real possibility that by 2030
3D printing of cells to create physiological
we will not have achieved the potential offered by these
structures termed organoids, e.g. 3D printing of
advancements. Our inability to design and implement
kidney nephrons, mimicking real organ function,
solutions utilizing such technologies could act as a key
can help to better predict the effects of novel
limitation.
treatments in humans.25

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 8

Disruption can be mitigated
through targeted action now
For pharmaceutical CEOs, now is the time to consider where and how they want
to play in this future ecosystem.
While this full shift in the ecosystem will take a number of years to materialize, action now can facilitate this
transformation and position players well to both master the impending disruption and successfully continue to
deliver real value to cancer patients as the market evolves, and in doing so, continue to drive their own success in
the oncology field. Actions to be initiated or scaled up now, which will pay dividends as the market evolves to 2030,
will include:

Novel pricing strategies Patient-centricity

Experiment with value and outcomes- Develop a truly holistic viewpoint on care
based pricing models tying drug price to provision from the patient perspective.
value, and novel patient support programs Inclusion of patient-centric viewpoints and
reducing overall spend outcomes throughout the development
and commercialization process
Growth markets
Oncology therapies have historically Preventative therapies
experienced limited access in growth Developing products aimed at preventing
(emerging) markets, however as these disease will increasingly gain value in payer
markets mature, they increasingly and provider eyes as they seek to reduce
represent significant opportunities spend

Biosimilars Curative technologies

Build or acquire a portfolio of oncology Obtain a stake in the development of
biosimilars. Approximately 70% of novel technologies potentially supporting
oncologists believe payers will mandate curative therapies, to mitigate the risk of
the use of biosimilar supportive care being dramatically marginalized
instead of branded counterparts26
Combination therapies
Big data Gain experience with 'basket' and
Build capabilities targeted towards the 'umbrella' trial designs allowing testing
generation of real-world evidence, to of multiple therapy regimens across
support use of products in the treatment / indications and build portfolios containing
management of approved indications combination treatments

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 9

Business impacts for
current oncology players
Novel treatments will play a major role in oncology change. In the following pages we define three future
care within our 2030 horizon. Their potential will be business archetypes that are well positioned to deliver
highly valued by stakeholders, as a result of a lower revenue in this future ecosystem. Alignment towards
level of occurrence (due to better prevention), a higher one such model today could direct key decisions
cure rate, and reduced risk of expensive follow-up and towards establishing a future-proofed position.
relapse treatment. However the question of who will
be asked to pay for these treatments i.e. prevention,
and at what price, is an important one. Many such Cancers display highly
developments will either be proactive or chronic, heterogeneous and complex
requiring current oncology players to reassess how they mutational profiles. Knowing what
define and demonstrate treatment value in this space. and where in the tumor genome to
target is the elusive key to curing
Additionally this future shift in the treatment paradigm
the disease. Our knowledge base
will directly impact industry top-lines. With this move
is growing and research into gene
towards highly targeted, personalized treatments across
the cancer landscape, the oncology blockbuster model editing is accelerating. Significant
which has historically delivered such significant revenue hurdles still exist, however gene
streams will cease to exist; individual treatments therapy techniques are now
indicated for highly specific patient sub-sets will deliver entering clinical trials and hold huge
significantly smaller volume sales and thus revenues promise for the future of cancer
than seen in the current landscape by products such as
therapy.
Avastin or Herceptin.

To mitigate this future downturn in top-line, players

seeking to remain in the oncology market will have
to drive deep change in their business and operating
models. To maintain market position, oncology
companies may be required to broaden their offering
along the care pathway, addressing the needs of the
patient through a more holistic lens, or to focus their
portfolios towards priority malignancies rather than
targeting the market as a whole. Any of the potential
mitigating actions will be associated with significant
complexity in terms of design and implementation of

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 10

The future
paradigm requires
fundamental change
There is already evidence of oncology companies
seeking and driving change in their business and
operating models, taking the first steps towards
aligning with a future oncology treatment paradigm.
These shifts mirror principles underlying three future business archetypes
hypothesized by KPMG:

Active portfolio company

Virtual value chain orchestrator

Niche specialist

While the requirement for enterprise-wide transformation may not yet be

evident, a robust understanding of these underlying principles will allow the
oncology players of today to lead the change, helping to shape the market,
rather than having to respond to change driven by others.

In a changing world, where innovation enables patients

to access information and insights more readily than
ever before, they will fast become the most relevant
stakeholder in the healthcare ecosystem, thus
conferring the need for a change in emphasis from other
players in the system – including pharma companies.

Over the following pages we examine how these three business archetypes
can be applied specifically within the field of oncology. They do not
necessarily represent three distinct models which all players must seek
to mirror in their entirety; rather they embody key underlying principles that
oncology players will have to recognize and align with in order to be
successful as the paradigm shifts.

Note: Three business archetypes detailed in our previous publication, Pharma Outlook 2030: From Evolution
to Revolution .27

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of
the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

The future of oncology 11

 Active portfolio company (APC)
Strengths: In the future 2030 oncology landscape, the increase in
– Facilitates agility and flexibility in a changing landscape this approach to novel R&D by APCs will lead to a highly
– Risk is distributed across a portfolio of subsidiaries active deals/licencing environment. These players will
compete to keep a stake in the latest, revolutionary
Critical success factors: therapy or cure, without leveraging their own resources
– Intelligent decision-making and product lifecycle and shouldering the significant risk associated with
management pursuing these opportunities in-house.
– Sharp focus on value for shareholders
Portfolio lifecycle management
APCs rely on being flexible and agile. They move In much the same fashion as an APC would approach
quickly to take advantage of opportunities, development of new treatments within an oncology
constantly optimizing the effectiveness of, and space, the same strategy would be applicable to the
leveraging synergies within, their current portfolio commercialized portfolio as a whole. Indeed, this
across all stages of the product lifecycle. approach would most likely be applied at a franchise
level, rather than a product-specific level, although in
Development trading complete franchises between APCs, anti-trust
Oncology is a rapidly evolving therapy area, with a vast legislation may force some divestments of specific
array of novel technologies in the developmental phase products.
which have the potential to alter the treatment paradigm
drastically. Such therapies represent a significant This portfolio-transfer strategy will form the foundation
potential threat to an incumbent heavily invested in the of product lifecycle management for APCs, allowing
same therapy area. However, contrary to the historical them to strengthen and divest as goals for different
model employed within pharma, whereby major players franchises change. This will be driven in part through
seek to drive a significant proportion of early stage the changing impact of the oncology landscape on
development in-house, in the 2030 oncology landscape, their currently commercialized assets, in addition to
APCs may seek to outsource the vast majority, if not all the results from individual development programs. In
of early-stage development activities. effect, the adoption of this model opens up the ability to
react extremely quickly to dynamic internal and external
This will be achieved primarily through the pressures, reducing the risk of being burdened by non-
establishment of partnerships/licencing arrangements, priority asset groups.
such as milestone-based agreements, with niche
specialist players driving novel developments with One method by which they can do this is asset swaps.
potential synergies to the APC’s current portfolio. While asset swaps in pharmaceuticals are not new at
The primary advantage conferred by this strategy the franchise level, as business models migrate towards
is the sharing of risk between the owner of the this future state, the trend is likely to accelerate,
novel technology (i.e. the niche specialist) and the supplementing traditional M&A, and moving the deal
APC. Should the early-stage development become environment to a more active state.
commercially viable, the APC gains rights to
commercialization, maintaining its leading position Asset swaps are highly complex to negotiate and
within the oncology indication. Should the development execute successfully. As such, this will require the
fail, the APC is only liable for the magnitude of its development of capabilities that many pharmaceutical
current milestone investments to date. An additional companies do not possess. Not least, the
benefit is the potential to share the cost of R&D with implementation of a truly modular organization, allowing
the owner of the development, depending on the nature franchises to be incorporated and divested with minimal
of the arrangement agreed. disruption and in the shortest time period possible.

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 12

 Virtual value chain orchestrator (VVC)
Strengths: Due to the significant tech-capability requirements here,
– Lowered financial risks and costs this archetype could invite the entry of non-traditional
– Easy to adapt strategy players into the oncology space. A number of large
– Simple scale-up multinational technology corporations have already
made inroads into the health space, and this market
Critical success factors: could represent a key business goal for such companies
– Intelligent technology systems to drive effective in the future.
decision-making
– Flat operating model to streamline information 03 Support services
flow
Virtual value chain orchestrators (VVC) represent 02 Treatment
the most novel of the three business models,
relative to the current breadth of oncology players.
01 Diagnosis
It will likely include players beyond the traditional VVC
pharma and biotech scope, and could potentially
bring significant growth into the market. However, Providers disintermediated
by an aggregator, who owns
this archetype represents the most significant the direct relationship with APC
disruptor to the landscape and will take a significant the consumer
share of the 2030 oncology market. NS

The drivers for entrants representing this archetype VVC players will be essential partners in R&D
derive in part from the growing ‘consumerist mind-set’ This group will represent key partners to pharmaceutical
towards healthcare, and in part from the increased need and biotech companies (both APC and NS) throughout
to demonstrate the value of novel oncology treatments the development process, ensuring treatments are
to payers. Both of these factors are supported by a developed in line with patient and payer expectations,
significant requirement for patient and disease data, maximizing the potential for success. The value they
potentially beyond the capabilities of current healthcare hold will be derived from:
systems and players.
1. Ownership of data around the consumer journey,
VVC players will drive the introduction of ‘digital allowing stakeholders to understand the issues
solutions’ into the oncology landscape, across all states more closely, and to aid them in embedding ‘patient-
of consumer health and throughout the R&D process. centricity’ into their values

2. Ownership of data around patient subsets, outcomes

VVC players could 'own' the consumer relationship
and specific tumor characteristics (both rare tumors
The ambition of VVC players may be to own the
and all relevant sub-categories of common tumors).
customer relationship, providing a primary point of
This will help provide a robust demonstration of
contact for oncology patients through potentially novel
value to payers, maximizing the potential of obtaining
digital monitoring and communication platforms.
favorable reimbursement status in a healthcare
In doing so they could seek to represent ‘one-stop’
system where contracts all conform to new
platforms for oncology patients. In this sense, VVC
outcomes-based pricing models
players would function in the role of service aggregator,
bringing APC and niche specialist (NS) services and 3. Ownership of data around treatment decisions
products to relevant consumers, directed through and resulting outcomes, aiding the development of
live data collection and predictive analysis, in a timely treatment guidelines and ensuring quality of care is
fashion. delivered effectively

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 13

 Niche specialist (NS)
Strengths: the disease, viewing the patient through a truly holistic
– Sharply focused strategy highlights commitment lens and providing an end-to-end service. Additionally
and strengthens brand companies would seek to leverage new technologies
– Facilitates a lean and agile model to expand the currently defined patient pathway, and in
doing so extend their business proposition to prospective
Critical success factors: patients (e.g. upstream extension of the patient pathway
– Strong specialist expertise through novel awareness campaigns, such as app-based
– Internal alignment on growth strategy interaction, or novel screening techniques, such as
genetic screening, to bring more patients into care at an
The niche specialist category comprises
earlier stage). The holistic viewpoint would extend
predominantly smaller entities, focused on a specific
beyond the initial treatment of the symptoms, instead
therapy area or disease, often with the realistic
considering all aspects from disease prevention, to
possibility of being funded through partnership, or
patient support and curative therapy. Companies will aim
being acquired by an active portfolio player.
to meet the complete needs of consumers within the
Due to advances in technology and the rapid expansion in therapy area, in essence, seeking to represent a 'one-
our knowledge of the pathology of cancers, the research stop-shop' within that specific malignancy.
and discovery process has experienced significant
These companies are, by definition, highly patient-centric
acceleration in recent years. The characteristics which
developing a deep understanding of patient needs.
define the niche specialist archetype expose it, more
than the other two, to the increased threat of new Horizontal niche specialist
entrants. This is likely to act as a major contributor to the All cancers represent disease states with a significant
expected further fragmentation of the oncology market. degree of genetic linkage. As a consequence of this,
The niche specialist group can be divided into two sub- biotechs with a focus on the development of specific,
categories, a vertical or horizontal niche specialist. novel technologies may initially target a specific cancer
subtype, but will usually have broader ambitions for
Vertical niche specialist
their platform, extending across a wider oncology
Players in this category are focused on a single therapy
scope or even beyond. Due to the focus on one specific
area or disease. Within oncology this would probably
technology, e.g. oncolytic viruses, these players would
represent a specific category of tumors, or a subtype of a
still fall into the niche specialist category, and share many
common tumor.
of the same business and operating model features of
Companies would seek to gain a deep understanding of the vertical niche specialist.

Niche specialists will drive therapeutic innovation

While funding may be driven through venture streams or active portfolio companies, often early-
stage, paradigm shifting developments will be driven by niche specialists. DIAGNOSIS Nanotech-
nology
Active portfolio groups may aim to hedge risk through licencing / milestone deals with niche
specialists, often looking to acquire the asset in late stage development or even just before
commercialization. Oncolytic
vaccines
Within oncology, niche specialists already exist and are developing a number of new PREVENTION &
TREATMENT
technologies across the patient journey, which have the potential to revolutionize the oncology
Oncolytic
treatment landscape. viruses
Niche specialists will drive the development of holistic solutions within oncology
Such developments will address the needs of patients and their families 'beyond-the-pill' and are Genetic
increasingly perceived as having significant value to the treatment paradigm. Examples include: PARADIGM- therapy
Prostmate: developer of a personalized support system for those dealing with prostate cancer, SHIFTING
CURATIVE
allowing progress tracking before and after treatment.28 THERAPY Cellular pro-
gramming
Litebook®: developer of a light therapy device aimed at reducing fatigue and increasing quality
of life for patients undergoing chemotherapy.29

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 14

Comparison of the
three future archetypes
Virtual Value
Active Portfolio
Chain Niche Specialist
Company
Orchestrator
Consumer identity Hospital payers Active portfolio companies, Hospital payers, patients /
niche specialists, hospital consumers
payers, consumers, and
regulators

Portfolio size/nature Large, modular portfolio, highly Portfolio is data-based, Portfolio focused on one therapy
dynamic in nature potentially across multiple area / indication, but providing
indications, driven through value throughout the entire
direct stakeholder engagement patient journey (holistic focus)
(patients, regulators etc.)

Clinical Focused on late-stage clinical Provides data capabilities and Focused on driving the
development role development. May fund resources throughout the clinical discovery and early stage
early-stage development development process, and aids clinical development processes,
through partnership / licencing design and implementation often looking to partner
agreements with niche of complicated late-stage with APCs to fund/drive
specialists development plans late stage development and
commercialization

Patient journey Focused on the treatment Owning the consumer Focus is truly holistic in nature,
focus stage of the patient journey, relationship and aggregating seeking to address needs
with limited presence in patient services from suppliers throughout the full patient
support activities pre- / post- throughout the patient journey journey
treatment

Digital capability &

data ownership

Risk appetite

Speed/Agility

Partnering capability

Asset stage/type

Major challenges Regulatory hurdles, anti-trust Funding, development of holistic Unclear regulatory
law30, implementation of understanding of patient needs, environment, data sharing
modular organization to ensure building reputation as a partner restrictions32, design and
seamless integration/divestment in patient care throughout their implementation of consumer
processes healthcare journey31 interface and uptake of this
novel platform

Asset stage:

Late stage development / in-market Early-mid stage development Data-based assets High Low

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 15

Oncology 2030 ecosystem
The implementation of these models will create a dynamic and differentiated
ecosystem, where the different players and stakeholders will join together to
combat cancer effectively and provide end-to-end support for patients.

2017
Oncology consumers Primary/Government
are currently required to Govt / Reg Academia
interact with all providers Primary healthcare
directly to aggregate
services supporting their Secondary healthcare Oncology players develop
oncology journey treatments supported by
internal data, generated in
response to conversations
Pharmacy sector Biopharmaceutical
with regulatory agencies,
industry
payers and increasingly
Payers / insurers patient bodies

Patient advocate groups

2030
VVC derives value from data
ownership, disseminating Virtual value chain
to stakeholder groups orchestrator
throughout the ecosystem
Govt / Reg Academia

Primary/Government

Primary healthcare Active portfolio

company
Secondary healthcare

Providers of oncology
services and products would Pharmacy sector
be disintermediated from
consumers by the VVC,
Niche
acting as an aggregator of
Payers / insurers specialist
services in real time

Patient advocate groups

Consumer access route
Key:
Data gathering / sharing

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 16

Where to go from here?
Winning providers should look to the three archetypes for guidance and tailor their
own business and operating models accordingly.

Fully adopting one of these three models will require upon, change will need to be initiated in an iterative
enterprise-wide transformation. This will involve manner to ensure that the model implemented is
prioritizing business model opportunities in light of capable of delivering the 2030 vision and desired role
operating model capabilities and business readiness within the future oncology ecosystem.
to change. Once a model has been tested and agreed

Confirm vision, ambition and longer term strategic priorities for 2030 in
Confirm 2030 vision
1 light of the changing industry dynamics and evolving consumer needs

Understand
Consider and prioritize business Based on business model
business model
opportunities and
high-level
2 model opportunities, e.g.: priorities, consider high-level
operating model implications on:
- Experiment with novel pricing
operating model - Processes
- Consider new growth markets
implications - Organizational structure
- Understand future patient
outcomes - Governance
- Build understanding of patient - Technology
journeys to better communicate - People
value - Measures and incentives

Look to archetypes Active

for operating model
guidance
3 portfolio
company
Virtual value
chain orchestrator
Niche
specialist

Test options to
- Consider more detailed operating model implications of chosen archetype
confirm capabilities
and readiness 4 - Challenge business readiness to change

Refine
5 Iterate •
Conduct an iterative process of refinement through a series of
targeted 'sprints' to confirm models are meeting requirements

Develop roadmap - Develop a 2030 roadmap

and implement 6 - Move into implementation to a model suitable for the 2030 oncology landscape

Now is the time to determine which of the three future

archetypes your financial ambitions and current capabilities
most closely align with, and thus understand how you want
to play in the 2030 oncology landscape.

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The future of oncology 17

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The future of oncology 18

Sourcing
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Biotechnology News website, accessed on 22 May 2017

& notes
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http://www.macmillan.org.uk accessed March 2016

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for Healthcare Informatics, November 2015

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Pathology Conference (C. Womack), June 2013

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forward, PharmTech website, accessed on 19 July 2017

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International, 2016

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Oncology (U. E. Martinez-Outschoorn et al.), February 2017

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2017

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Reports (M. Young), October 2016

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melanoma, Nature (Ott. PA et al), 547(7662), July 2017

© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of
the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

The future of oncology 19

19. Anticancer effects of the microbiome and its products, Nature Reviews
Microbiology (L. Zitvogel), May 2017

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website, accessed 3 August 2017

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(C. J. Breitbach et al), July 2016

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Gastrointestinal Cancers Symposium poster (K. Suzuki et al), 2016

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your life, TechRadar website, accessed 30 May 2017

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2016

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© 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of
the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.

The future of oncology 20

Authors
Dr. Nicholas Sen Professor Hilary Thomas
Assistant Manager Partner
Life Sciences, Global Strategy Global Life Sciences Sector Team
Group Chief Medical Advisor
KPMG in the UK KPMG in the UK
E: [email protected] E: [email protected]
T: +44 (0)20 7311 3696 T: +44 (0)20 7311 4154

Roger van den Heuvel

Chris Stirling
Partner
Partner
Head of Life Sciences, Global
Global Chair, Life Sciences
Strategy Group
KPMG in the UK KPMG in the U.S.
E: [email protected] E: [email protected]
T: +44 (0)20 7311 8512 T: +1 (212) 997 0500

Contacts
Li Fern Woo Dr. Christoph A. Zinke
Partner Partner
Head of China Strategy,Global
Head of Life Sciences
Strategy Group
KPMG China
KPMG China
E: [email protected]
E: [email protected]
T: +86 (21) 2212 2603
T: +852 2140 2808

kpmg.com/cn/socialmedia

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