The future of life sciences will be convergence has been saved
The future of life sciences will be convergence
Exploring lessons learned from the technology sector
What will health look like in 2040? And how might technology-driven convergence help accelerate innovation in the life sciences? Discover how life sciences organizations can leverage insights from other industries who have converged to capitalize and power innovation, thrive amid uncertainty, and leapfrog the standard of care available to most patients.
- Reimagining life sciences business models by 2040
- Drivers and headwinds of convergence
- Convergence in action
- How to handle convergence
- Get in touch
Reimagining life sciences business models by 2040
Health in 2040 will be a world apart from what we have now. Our future of biopharma and future of medtech predictions project accelerated change across multiple industry use cases and the potential for completely disrupted business models. In our report, we outline ways for life sciences (LS) organizations to thrive, inspired by industries that have undergone similar change. We specifically focus on industry convergence—the process of two or more industries coming together.
Convergence isn’t a novel concept. Numerous industries have converged over the past two decades. It’s exogenous shocks like COVID-19 or the 2008 financial crisis, combined with technological advancements, that accelerate it. Given other industries' rapid, technology-driven convergence, the combination of COVID-19 and a challenging economic backdrop should drive the same, long-overdue shift for life sciences organizations. Luckily, although it’s disruptive, convergence has delivered significant benefits for industries and their customers—the "best of both worlds."
Drivers and headwinds of convergence
Life sciences companies must acknowledge and prepare for potential headwinds against industry expansion. Two of the most salient in life sciences and health care (HC) are delays in technology adoption and regulatory complexities.
Technology adoption: Disruptors have found HC institutions hesitant to be first adopters of new procedures and technologies, possibly due to institution-specific factors or the type of technology being introduced. Exogenous events, such as COVID-19–related travel restrictions, are often the greatest catalyst of adoption of new technologies.
Regulatory complexities of product development: The need to meet high standards of efficacy and safety in the regulatory approval process creates unique hurdles for LS product commercialization. Industry incumbents typically have rigorous processes and experienced teams dedicated to navigating regulatory approval pathways in a structured manner, but disruptive companies without similar resources and expertise may require third-party support or incumbent partnership.
Convergence in action
How to handle convergence
Given the visible impact of convergence in life sciences, executives will experience increasing pressure to act. As such, we’ve identified four response strategies inspired by other industries that have experienced convergence in the form of e-commerce, fintech, and advertising.
- Become even better at what you do best. In order to stave off competition from challengers, incumbents often benefit by investing in what they do best, viewing technology as a complementary asset rather than reinventing their core businesses. Large wholesale clubs have grown their brick-and-mortar footprints, while e-commerce has disrupted most others. Wholesale clubs, based on their size, negotiating power, and membership income, continue to provide customers with products that are often sold at prices that are simply not economically feasible for e-commerce merchants.
- Be the leader by acquiring the leader. In addition to investing in strengths, incumbents have successfully acquired the capabilities of convergence firms to defend their market leadership. Continuously “sensing” the disruptor landscape, identifying the right companies, and integrating strategically has proven a successful approach to capitalize on convergence and preserve the disruptor’s unique assets.
- New uses for existing assets. Acquiring leading capabilities and investing in strengths can help incumbents mitigate competitive pressures, but it can be costly. Incumbents have also changed their monetization strategies and the way they see their assets, a strategy that allowed a leading media outlet to leverage its strong brand and reputation to pivot from advertising-based revenue to an online subscription model and survive convergence.
- Open for business. Another viable way of mitigating pressure from new challengers is to partner with them or join an ecosystem. This can involve granting competitors or challengers to access your assets or data in a way that may previously have been considered a competitive differentiator.
Implications for life sciences executives
There’s no one-size-fits-all solution for life sciences organizations. But as a leader, you should consider the following questions:
- Have I given my organization the right guidance and vision to capitalize on convergence?
- Am I making the right investments to move my organization to the future paradigm?
- Am I allowing my teams to “fail fast” and learn from the rapidly advancing technology landscape?
Looking boldly toward the future of life sciences
By investing in strengths, acquiring leading capabilities, changing the way incumbents view their assets, and opening up their business, several organizations outside the LS industry have successfully defended their market position. These strategies may provide pathways to reimagine LS business models, thrive, and survive convergence.
If you’d like to talk more about life sciences innovation, trends, and how your organization can succeed in 2021, let’s set up a conversation.
Medical technology advances lead to evolution and innovation
Innovation is blurring traditional health care boundaries