A few thoughts on new trends in the life sciences industry, by George Serafin, Principal, Life Sciences Advisory and Lisa Walkush, Principal, Life Sciences Advisory.
Life sciences companies are shifting their focus from offering products to providing solutions that deliver quality outcomes and increased value. The move stems from changing demands from individuals, businesses and governments. On the one hand, health consumers are better informed and have higher expectations for outcomes. On the other, governments and employers are concerned about rising health care expenses, wasteful spending and the effectiveness of costly treatments.
The push toward value is a reflection of the move toward personalized medicine as dictated by demanding health consumers who are impatient for a change in the value they receive, but also by the industry’s hope that a move that is good for patients will also be good for the industry — which has been facing a difficult growth environment lately.
Value is also heavily contextualized by the rapid advances in technology. As in other industries, digitalization and other technology trends are having an enormous impact, both in breaking down barriers into entry in new markets, as well as in upsetting traditional business models. For example, life sciences companies are teaming up with technology firms to take advantage of capabilities in data collection and analytics, as well as in patient-tracking mechanisms.
If value informs growth, the question that remains to be answered is how it will be defined in relation to the industry’s usual growth strategies, such as mergers and acquisitions, corporate consolidations and divestitures, as well as in light of the domestic challenges related to an uncertain — even though promising — regulatory future that includes compliance, but also the necessity to take and effectively manage risk. Finally, what are the parameters of value as life sciences companies explore the penetration of overseas markets to meet growth targets?
Ultimately, the longer-term success of the life sciences sector rests on this question: Can an industry that has based its success on products and volume change its focus to value and outcomes in the face of higher consumer expectations, more onerous payor demands and enormous technological change?
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