Stan Bernard
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Apple's approach to the digital music marketplace is a textbook example of game-changing, the process of re-defining an industry
sector and/or product category to provide an unfair competitive advantage. Apple's combination of the iPod digital music player
and the iTunes digital download service has totally transformed the music industry landscape, propelling Apple to the dominant
position in both the digital music and audio player categories. In less than five years, Apple has become the number one music
retailer in America with over 5 billion music downloads; it commands over 70 percent share of the digital media player market
by selling over 40 million iPod units annually. In June 2009, Eli Harari, the CEO of rival SanDisk, effectively conceded that
Apple's iPod has won the digital player competition, stating "You can't out-iPod the iPod."
Game-changing has tremendous implications for pharmaceutical companies and its professionals. As the US and European pharmaceutical
industry continues to transition through the mature or competitive stage of its life cycle, it is more important than ever
for companies to play the game at which they excel. Pharmaceutical professionals at every level of the company need to understand
the types and techniques of game-changers in order to identify and execute their own game-changing strategies and tactics.
Game-Changing Innovations
What is a "game-changer"? Game-changers like Apple are rule-breakers: they disrupt the industry's status quo and conduct a
market makeover in order to play the game on a field where they can win decisively. The best game-changers actually evolve
to become "game-makers." Game-makers dictate how business is done in their sector: they make the rules for other industry
competitors to follow. Procter & Gamble, Coke, and Microsoft were all once game-changers that evolved to dominate their respective
industries. Apple is seeking to become a game-maker in digital music by controlling the digital music format, ensuring its
iPod is the only portable music player compatible with songs purchased from the company's iTunes music store, and by tightly
managing its selected set of suppliers. Most game-changing companies transform a market by using one of three types of innovations: product, technology, or business
model innovations.
Apple was able to change the music industry by combining two different types of innovations: product (iPod) and technology
(digital music downloads).
Products and Technology
Pharmaceutical companies have traditionally focused on product and technology innovations. For example, GSK created the world's
best-selling asthma agent and combination product Advair (fluticasone/salmeterol) by developing the diskus, a novel inhalation
delivery device. Allergan has become a specialty pharmaceuticals market leader by adapting two therapeutic products into first-in-class
cosmetic products: wrinkle-reducing agent Botox was initially used for the treatment of strabismus or crossed eyes; eyelash
enhancer Latisse was originally approved to manage glaucoma. Light Sciences Oncology is seeking to change the cancer treatment
paradigm by using a drug that is activated by a special light targeted within a solid tumor. Its photo-therapy device Litx
is currently undergoing Phase III trials for the treatment of metastatic colorectal cancer and hepatocellular carcinoma.
Genentech and Amgen have been leaders in the industry-changing biotechnologies of monoclonal antibodies and recombinant proteins,
respectively. Roche was quick to invest in and ultimately acquire Genentech for its expertise, which has resulted in the development
of several blockbuster oncology products, including Avastin and Herceptin. By leveraging this acquisition and other capabilities,
Roche is now poised to become an industry game-changer; it is the dominant player in the global oncology market—the largest
market in the world. According to Decision Resources, Roche will be the only top 10 pharmaceutical company with overall US
growth rates exceeding 3 percent during the next five years.
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