2017 Global life sciences outlook
Thriving in today’s uncertain market
Life sciences sector growth is expected to be fueled by increasing demand from an aging population and the prevalence of chronic and communicable diseases.
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- Managing cost & pricing
- Driving clinical innovation
- Connecting with customers & consumers
- Transforming business & operating models
- Meeting regulatory compliance
- Thriving amid uncertainty
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Life sciences companies have always operated in a world of uncertainty. Issues around cost and pricing, clinical and operational innovation, customer and consumer engagement, and regulatory compliance have existed for decades. In addition, new and evolving technology advancements – more sophisticated electronic medical records (EMRs), wearable health care devices, next-generation sequencing, breakthroughs in genomics, immunotherapy, and gene therapy, and use of real-world evidence (RWE) and data analytics – have primed the life sciences sector for disruption. Each year brings changes and challenges, and 2017 is likely to follow suit. Explore our look at the current global issues impacting the global life sciences sector and considerations for stakeholders as they prepare for 2017.
Managing cost & pricing
The pressure to reduce costs and prove value in life sciences is intense. Indeed, some assert that it will be the greatest challenge facing life sciences companies in 2017. Uneven regional economic growth, reduced government health care spending, and increasing consumer out-of-pocket (OOP) costs for popular treatments are underpinning demands for lower-cost drugs and devices; greater use of generic medicines; value- and outcome-based payment models; and more stringent regulatory processes. Increasingly, life sciences companies are expected to justify the cost of their products using improved targeting, comparative effectiveness (CE) measures, and real-world evidence (RWE) in addition to hard clinical endpoints. Adding to the pressure, the costs of bringing a new medicine to market have never been higher – and they continue to rise while drug price cost-containment measures or value-based pricing and reimbursement models continue to rise.
Companies big and small are expending considerable time and effort to reduce the cost side of the equation by right-sizing their organizations; working more cross-functionally; increasing operational efficiency through initiatives like digital supply networks and other technology advancements; and using end-to-end evidence management strategies to demonstrate the efficacy and cost-effectiveness of their products.
Driving clinical innovation
Driving and sustaining clinical innovation persists as stiff competition and patent cliffs continue to jeopardize revenue. Soaring R&D costs, increasing pricing pressures, growing market share for generic pharmaceuticals and biosimilars, and heightened scrutiny by regulators are having a dampening effect on clinical innovation. And even though health systems report substantial improvements in outcomes, the demand for new, innovative treatments is unrelenting, driven by the proliferation of age-related diseases such as cancer and dementia, and lifestyle-influenced or behavior-related chronic diseases, such as obesity and diabetes.
A number of vertical and horizontal clinical trends are expected to drive life sciences innovation; have significant, transformative impacts on the products and services offered to patients; and improve how companies operate in terms of the efficiency and security of their product supply.
Connecting with customers & consumers
Increasingly engaged and empowered health care consumers are demanding services and solutions that are coordinated, con¬venient, customized, and accessible. This trend is being driven by factors including patients’ ability to change their own outcomes based on behavior; financial scrutiny due to cost-sharing mod¬els that push more costs onto the patient; the industry’s shift towards evaluating outcomes to determine value delivered to the patient; and the availability of technology solutions providing patients with more information and ways to communicate (i.e. social media and networks); and the ability to play an active role in managing their well-being. The increase in data and information access, mobile applications, and personal health devices is accelerating the pace of consumer engagement in health care. Large pharmaceutical companies focused on traditional markets have lagged in responding to the industry’s changing focus towards holistic patient management.
Companies have a small window of time to frame their engagement strategies for operating in a new, customer-centered, digital ecosystem or risk being disintermediated by fast-moving entrants that are developing digitally enabled products, programs and social networks to cater to changing patient expectations. This is also putting pressure on life sciences companies to shift their focus from traditional product development and marketing models to more patient-centric ones. They can begin by leveraging their digital, analytic, and data management capabilities to gather data and monitor outcomes, improve treatment regimen compliance, increase product utilization and develop tools that help interact with patients across new channels.
Transforming business & operating models
Many life sciences companies are looking at how they can transform their current business and operating models to counter rising cost pressures and pursue excellence across their organizations. This includes streamlining business processes and improving policy compliance with a focus on reducing administration and operational costs. Companies are taking multiple paths to achieve their quality, cost, and efficiency goals such as collaborative product development; portfolio and operational restructuring; growth through M&A; and talent transformation.
Transforming customer needs and patient demands should compel pharma, biotech, and medtech companies to take a more holistic approach to manage operational complexities and business risk and drive greater integration and collaboration across their R&D, manufacturing, and commercial functions–especially if they with external partners. Life sciences companies should examine their supply chain strategies and seek to eliminate inefficiencies along the value chain. M&A is expected to continue but on a smaller scale.
Meeting regulatory compliance
The life sciences sector operates in one of the world’s most regulated environments. Companies face particular compliance challenges as they seek to push the boundaries of innovation, developing and launching new products which address unmet patient needs but for which there is often little or no regulation. In 2017, organizations of all sizes will need to deal with a highly complex, changing set of global, regional, country, and industry-specific laws and directives that span a drug or device’s developmental and commercial lifecycle. Primary regulatory focus areas include cybersecurity, drug and device safety, counterfeit drugs, intellectual property (IP) protection, and corruption.
Identifying, analysing, and mitigating compliance risks are essential in developing an effective compliance program. Companies should look well beyond addressing basic, functional-level compliance requirements with the goal of mitigating the most intrinsic industry risks. Take a proactive approach to tracking and monitoring the regulatory developments and understanding their independent and combined impacts to the business.
Thriving amid uncertainty
“Sustainable growth” has evolved from catchphrase to mantra for companies operating in today’s increasingly competitive, regulated, and cost-constrained life sciences sector. And changes are taking place, as seen by expanding cultures of:
- Partnering prowess–Functional networks of academic, industry, and regulatory partners with shared values and a collective commitment to improve population health are becoming key competitive assets.
- Shared accountability–Defining ownership of projects and processes instils a sense of personal and collective achievement and responsibility.
- Lifelong learning–Continuous learning and experimenting at all employee levels helps a company maintain the necessary plasticity and enthusiasm to drive innovation.
- Purposeful action–Fostering employee confidence to continually move forward and align actions to a common set of values and objectives creates a purposeful work environment.
- Nimble adaptability–Acknowledging the reality of “survival of the fittest” imparts a sense of urgency and willingness to embrace and adapt to dynamic market conditions.
Life sciences companies have always operated in a world of uncertainty, and they will continue to do so in 2017. Life sciences leaders who understand this reality, plan accordingly, and embrace change should be well- positioned to thrive amid uncertainty.
View previous years' outlooks:
2016 - Global life sciences outlook
2015 - Global life sciences outlook