2019 Global life sciences outlook

Global life sciences sector issues in 2019

Strategic focus on deal-making and external innovation

In 2019, biopharma faces a compelling strategic imperative for external innovation. The simultaneous hunt for next gen medicines against declining R&D returns make external deals a key innovation source for companies. It is likely to be the dawn of a new age of deal-making, especially, for companies looking to take the lead in next-generation therapies. Large, transformative acquisitions in the US$60-70 billion range defined 2018 and the beginning of 2019. This year, we will see an increase in appetite for mid-sized strategic transactions that complement a company’s core and shedding of non-core assets.

Focus on new entrants

As digitization continues to shape the corners of pharma, a new generation of startups and tech giants have emerged, disrupting the status quo and threatening pharma’s legacy culture. While pharma giants are investing in gene-based therapeutic solutions, more than 250 startups are already developing these therapies and building them around the patient. These startups could merge and form a whole new breed of company with a very different culture around innovation and life sciences. In 2019, a lack of manufacturing capacity for next generation therapies still poses a challenge.

Tech giants diversifying into health care and investing in startups are masters of data. They know how to simplify the patient experience and are developing medical grade technology for both diagnostics and therapeutics. In 2018, the first tech giant received an FDA clearance demonstrating that regulatory is also poised for disruption from these new entrants. According to a recent survey, more than 80 percent of medtech R&D leaders plan to partner with organizations outside of medtech─like technology and health care companies.

Focus on expanding a richly networked ecosystem

Digitization, no doubt, is helping establish a richly networked and collaborative ecosystem. While such a system provides an excellent scope for value creation, it also poses risks from unmonitored third-party activities. Data partners, the Internet of Things (IoT), and the growing Internet of Medical Things (IoMT) have constantly been warning about the surfacing cyber risks in pharma. Therefore, leaders are expected to develop management frameworks and partner with those having compatible risk profiles. Digitization of health care processes has also given way to mounting patient expectations. This essentially means that life sciences leaders should try to gain a deeper understanding of patient experiences and expectations when designing value chains.

Focus on outsourcing

Pharmaceutical giants are moving to adopt strategic and relationship-based outsourcing models as opposed to the traditional transactional engagements. This will likely stimulate biologics and data-driven clinical innovation, and bolster manufacturing capacity. The upcoming year could see more outsourcing of expertise, especially, cognitive automation, AI, and cloud computing. Sector growth driven by biopharmaceutical outsourcing is also a possibility. Strategic partnerships with academia and contract research organizations (CROs) indicate that companies are focusing on strengthening R&D capabilities.

Collaborating with new partners for transformation

Digitization of health care has transformed the way patients, providers, and innovators interact. A highly patient-centric future is already surfacing and organized patient advocacy groups are playing an increasingly important role. In 2019, collaborative approaches will be key for working with patients and regulators, advancing drug development and the Internet of Medical Things. Large and small companies will also need to work together to minimize cyber risks in the ecosystem.

Transformative technologies in life sciences

The physical, digital, and biological worlds converge in Industry 4.0. Forward-thinking pharma companies are moving beyond pilots and focusing on how new technologies can add value. These are some of the technologies driving digital transformation in life sciences.

Artificial Intelligence (AI): AI is just beginning to be applied in life sciences to help with intelligent use of data. It has the potential to revolutionize diagnoses, treatment planning, patient monitoring, and drug discovery.

Internet-of-Medical-Things (IoMT): The rising number of connected medical devices—together with advances in the systems and software that support medical grade data and connectivity—have created the IoMT. Connecting devices is currently a priority as sensors are transforming diagnosis and the way patients are treated and monitored.

Software-as-a-Medical-Device (SaMD): Software is changing how clinicians practice medicine, how consumers manage their own health, and how patients and providers interact. SaMD is a software that provides one or more medical functions and is usually embedded in hardware. The algorithms powering SaMD are already proving better than some clinicians’ diagnoses.

Blockchain: Blockchain has emerged as a potent solution to aggregate data with ease and share it securely in an automated and error-free way.

DIY diagnostics and virtual care: Tools that provide at-home convenience can also help with faster diagnoses and provide 24/7 access to health coaching and monitoring. DIY diagnostic tests can help low-income or rural consumers determine if a condition warrants a visit to a doctor or hospital.

Future of mobility: The emergence of connected, electric, and autonomous vehicles will bring another transformation in the pharma world by expanding mobility and thereby, access to care and democratization of clinical trials.

Mobilizing data, the currency of life sciences innovation

Forward-looking life sciences leaders who have adopted digital platforms and emerging technologies are measuring value and outcomes with greater efficacy. Big Data driven insights can dramatically transform patient care and enhance productivity of trials.

R&D seems to have embarked on a new journey with the digital wave where trials are less burdensome and more engaging. Patients are collaborators during clinical trials and not just passive participants. The emergence of virtual clinical trials has eliminated the need for travel, thereby, expanding the geographical reach and accessibility from a patient-care point of view. R&D executives are placing greater emphasis on the role of Real-World Evidence (RWE) and focusing on end-to-end, AI-driven, internally-developed solutions.

Creating value with new business and operating models

Digitally maturing biopharma companies are exploring ways of applying an enterprise-wide approach to digital transformation. All of these approaches require patient centricity.

B2C thinking: Organizations aligning with how consumers respond to or use products or services—like digital health apps, telemedicine, wearable monitoring devices, etc. can design top-notch engagement strategies.

Engagement tools: Patients who are informed about their condition and involved in their treatment decisions tend to have better health outcomes and typically incur lower costs.

Focus on prevention and digital therapeutics: Digital therapeutics can be a new source of revenue for life sciences, potentially providing reimbursement through insurance plans in the same way as drugs or medical technologies.

Opportunities to monetize data: The challenge for life sciences companies is building trust. 40 percent are willing to share their data for health care research or to improve a device. Fewer are willing to share information with device manufacturers.

Advancing digital transformation in life sciences

More than three-quarters of biopharma companies agree that their organizations need new leaders to succeed in the digital age. Many companies are recruiting outside of the life sciences sector for digital expertise. Currently, only 20 percent of companies feel they have matured in their journey to becoming a digital enterprise.

Transforming work

A greater percentage of digitally-maturing biopharma companies are exploiting new ways of doing business as opposed to exploiting organizational competencies. Collaboration is seen as a key differentiator. Leaders should not only encourage collaboration internally across functions, but also externally. They also need to provide a clear vision and purpose for their organization’s digital investments and empower people to think differently.

The future of work requires a fresh perspective and the sector is beginning to embrace new recruits, like chief digital officers (CDOs), coming from outside the life sciences sector. In addition to having a digital-first attitude, outsiders will increasingly be sources of expertise for advanced data analytics and machine learning. The increased use of advanced technologies does not mean human effort will be replaced, rather, it will be leveraged for high level tasks so that efficiencies can be optimized and adversaries are eliminated.