As one of the largest pharmaceutical distributors in the world, $214 billion AmerisourceBergen is constantly hunting for technologies that can help it operate more efficiently — or enable it to support newly-developed treatments like gene therapy.
As part of our most recent research initiative on emerging technologies, we spoke to Senior Vice President of Strategy and Innovation Jason Dinger about how the Pennsylvania-based company prioritizes, pilots, and deploys emerging tech. One key is working closely with customers, Dinger says: “Sometimes, we identify hidden value where a customer sees a way to deploy a technology that we didn’t see.”
What does “emerging technology” mean to AmerisourceBergen?
AmerisourceBergen is one of the largest distributors of medications in the world, including to support clinical trials. We make sure that medicines get where they need to be. We therefore touch the healthcare ecosystem in many ways from healthcare delivery to pharmaceutical manufacturing and across many geographies.
So, when we think about emerging technology, we are interested in anything that will accelerate the development and distribution of medicine. That means technologies that will introduce new efficiencies to moving medicine around the globe. COVID made it clear that cold chain storage must evolve, for example. We are also interested in technologies that will support the development of cell and gene therapies. And also technologies transforming care delivery and extending it to the home, including for remote patient monitoring and for ensuring medication adherence as examples.
One of our guiding principles around innovation is that everybody gets to play.
There are a lot of emerging technologies in those focal areas. How do you prioritize them?
We always need to make sure that a technology will serve our strategic plan by addressing the true jobs to be done of our customers.
One of our guiding principles around innovation is that everybody gets to play. We don’t see innovation as a black box or something that only happens in nondescript locations or unmarked buildings. We have 40,000-plus associates, and we want to tap their talent. So, we’ve put in place structures and processes to ensure that anyone can “raise a hand” if they see a new customer need that we could address.
We then identify initially promising emerging technologies through scouting work, our commercial partner relationships and also through the investments we make in other companies. We’ll pilot a subset of emerging technologies to see if they do indeed have something unique to offer in solving an important Job.
During the pilot process, we need to make sure not only that the technology will address a customer need, but that there’s a business model that works at scale. And beyond price or cost, that means commercializing successfully in the context of things like different reimbursement structures, geographical distances and even harsh conditions. It’s one thing to match a technology to a customer need. It’s a whole different thing to make sure the technology can deliver for a large number of people under a wide set of conditions.
What does the development process look like?
We’ll stand up a team — one that includes a diverse set of people from across the business — for each promising technology. The team will guide the technology through our growth gate process and the team makeup and its resources will morph and change over time depending upon where they are in the process.
The first growth gate stage is six weeks, divided into three, two-week sprints. In that first stage, the team is trying to see if the solution can respond to customer needs. That’s concept risk. In the next stage, we figure out if we can execute with some predictability. We explore if we can deliver the solution to several customers at consistent cost and speed, for example. That’s execution risk and we might spend several more weeks on that. Then, if we proceed, the initiative will get additional funding and we’ll move into a period of months to lean into solving some of the scale risk issues. Finally, from there, the solution would move into full commercialization.
In the end, we try to work closely with customers throughout the entire process. Nothing beats deploying something in the real world to see how it behaves in the wild. We have very different mechanisms to do that: alpha customers, beta customers, and so on, with very distinct thresholds. And sometimes we identify hidden value, where a customer sees a way to deploy a technology that we didn’t see.
Nothing beats deploying something in the real world to see how it behaves in the wild.
How do you successfully navigate the “handover challenge”?
We actively encourage team members excited about a technology to join the team full time and to help lead it to market. We do everything we can to focus on addressing customer needs, so if that requires a change of our existing structure as well, we’ll do it. We are also comfortable creating new business units if a technology develops into a solution that should stand by itself. Our commitment is to invest in success, not in a plan.
