Life sciences companies must manage a multitude of market-changing dynamics that put pressure on the industry across the board. These range from integrating sophisticated technologies like artificial intelligence (AI) into established processes and digitizing on a broader level to stay competitive. Launching more complex therapies and navigating an ever-changing pricing landscape are other factors, as well as maintaining a strong business vision, a culture enhanced by collaboration and personnel with the right skill set. Many from within the sector are confident their companies will succeed in making transformative changes in technology, digital process and organizational structures to address evolving trends and challenges and thrive.
Those were the findings of a survey Grant Thornton did in November 2018 with PharmaVoice, a website that offers a magazine and services to life-science executives and other health care-service professionals. The survey gathered data around business transformation in the industry. Respondents were in management roles, from corporate and marketing management to clinical trial management, investigative site management and more.
The majority of respondents work in the life sciences industry for manufacturers, including pharmaceutical, biotechnology and generic companies. Others support the life sciences industry through a service organization, such as consulting, analyst or law firm, or work in the clinical arena, at government agencies, associations or universities, or they work in IT.
Fifty-six percent of respondents said their companies might undergo a large-scale transformation in the next three years, and 25% indicated they definitely will. About a fifth, or 19%, indicated a broad revamping is unlikely. Of those who believe major transformation could happen, 78% said they are considering transformation as a means to adapt to challenges companies face in the pharmaceutical market.
Driving forces behind transformation (top four answers):
- Increased efficiency: 70%
- Increased profitability: 66%
- Better collaboration: 55%
- Competition: 46%
“With a possible economic recession looming, making efforts to transform now may be more of a requirement than ever before,” said Joy Taylor, Grant Thornton LLP principal and Growth Solution leader. “Organizations must improve their operating effectiveness and enable entity-wide data transparency to remain competitive.”
John Cassimatis, Grant Thornton managing director, Operations Transformation and Business Consulting Life Science Sector lead, agreed. “With increasing pressures on pricing and the ever-changing competitive landscape, life sciences companies must continue to make significant changes in their processes and operating models,” he said. “They must do this not only to become more efficient but to find new ways to leverage technology and data to focus on the patient and drive top-line growth. Just driving efficiencies to reduce cost is not enough.”
Change and the reasons behind it
Respondents were asked to classify the scale of transformation likely for their company. The most common responses indicated moderate or incremental transformation. Only 5% indicated their company would undergo a full change.
Of those undergoing transformation, 59% said their strategies have changed in the past year. The most frequent reasons for a strategy shift were a greater focus on patients, an increased investment in digitization and a change in data needs or requirements.
These commitments were reflected in a sampling of comments from respondents on how strategy has changed in the past year.
- “We’ve rebranded and changed our identity to be more patient focused.”
- “[We’re] paying more attention to consumer groups and governments stating that the prices are too high.”
- “We’re adopting new technologies: Robotic process automation and AI."
- “We’ve evolved with the changing technology of DNA sequencing, resulting in changing medical devices and pharmaceutical therapies.”
Also mentioned as important was a move to more value-based outcomes to capture real world data and address patient challenges with treatment. Others planned a change to dedicate more resources to research or put more focus on data collection, machine learning and real-world patient engagement data.
Finding new and deeper ways to engage with patients is crucial as the life sciences sector evolves.
“Advancements in technology and the use of digital engagement devices, like patient apps and digestible medical tracers, will require life science organizations to transform how they attract and retain patients on a more personal level,” said Taylor. “Being patient-focused alone simply won’t be enough by the year 2022.”
Cassimatis thinks the next five years could be decisive for some companies. “The life science industry and health care ecosystem are changing at increasing rates. Those companies that learn over the next five years how to adapt their operating models to become more patient centric, build collaborative partnerships, and leverage digital capabilities and data to drive change will survive.”
Yet challenges to transformation abound, from difficulty obtaining buy-in to obtaining funding to actual implementation.
Pressures play a part
The most common industry pressures that have had an impact on transformational strategy were:
- Customer factors: 25%
- Regulations: 21%
- Competition: 17%
- Productivity: 14%
Nearly 62% of those surveyed indicated transformation initiatives are managed centrally, while others said they are managed by departments, functions or a third party.
Where tech fits & an even split on AI
Overwhelmingly, at 87%, respondents said they were incorporating technology as part of the transformation strategy, and they cited the incorporation of AI as an addition since last year. Data, cloud, digital and CRM tools were also noted. When asked whether AI and/or machine learning were currently employed in their companies, 50% said yes and another 50% said they weren’t.
Said one respondent: “We are implementing AI in a very large scale and have left a lot of scope for AI adaptation.”
Respondents also indicated they use digital technologies to change their organization’s processes and disrupt value chains. Key reasons:
A collaborative culture
- Respond to competition ̶ 30%
- Advance science ̶ 28%
- Empower patients ̶ 22%
- Address health care reforms ̶ 7%
Culture also played a part in change among survey respondents, specifically the importance of collaboration as part of a company’s corporate culture. Forty-one percent cited collaboration as very important and 41% said it was important. Only 7% said it was not important.
Said Cassimatis: “Life science companies that build a culture embracing change and innovation will survive and those that don’t will not.” Transformation will come in many forms, he said, “but given the rise of new digital capabilities, focus on patient centricity and adherence, and pricing pressures, ongoing transformation will be the new norm. Failure is not an option.”
The types of collaborations cited by survey respondents included those among academic, government and commercial entities; among multiple project teams in decision-making; and among data aggregators, operational process implementers and small businesses. One respondent noted a company’s over-reliance on a silo approach.
Confidence seems to be mixed when it comes to a company’s chances of completing a transformation process, with 24% saying they are very confident it will happen. Sixty percent total indicated they are somewhat confident, and only 6% said they are not confident.
Some see the need for a revamp without being hopeful it will happen. Said one respondent: “Pharma is like a ‘wing walker’ from the biplane era. A wing walker does not let go of what they are holding onto until they have a firm grasp on something stable.” The respondent went on to state a belief that pharma is ill-prepared to compete against the “technology giants” entering its space.
Taylor offered a more positive view. “Pharma is the single best industry at buying what it needs when it can’t build something itself,” she said. “I foresee the major players in the industry identifying technology partners across the supply chain and investing in or acquiring them to build their new future.” She cited as an example Cornerstone4Care®, Powered by Glooko, a diabetes management app launched through a Novo Nordisk-Glooko collaboration. Concluded Taylor: “I believe pharma is in the front-row seat for transforming faster than most.”
Grant Thornton Principal
Growth Solution Leader
+1 215 561 4200
Grant Thornton Managing Director
Operations Transformation and Business Consulting Life Science Sector Lead
+1 215 561 4200