medical examiner

Perspectives

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.

Explore content

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."

Is it time for life sciences organizations to pivot?

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

For decades, the drug discovery process has remained static. But screening and development is undergoing a revolution thanks to artificial intelligence (AI) and machine learning (ML). In silico drug development (the process of discovering new targets via bioinformatic tools) is gaining traction, and as it continues to gain steam, we anticipate a greater role for tech companies, given their expertise in AI and ML models.

In late 2019, the first-ever AI-discovered drug was moved into clinical development, with preclinical development shortened from four years to just 18 months. New challengers proficient in ML and statistical analysis are entering the market, funded by venture capital and able to acquire resources for product approval.

Digital therapeutics are challenging the historical disease- and symptom-management paradigm. Early returns from behavior-altering therapeutics are promising, with life sciences innovations such as insomnia treatment through gamification of digitally administered cognitive behavioral therapy. Other digital therapeutics complement existing treatments, making existing therapeutic area leaders the partners of choice for many challengers. Clinical applications are abundant, and preventative digital therapeutics will have a long runway and support from cost-minded payers.

With COVID-19, we see increases in mental health issues, opioid addictions, and insomnia. Digital therapeutics for these conditions could be attractive for physicians with limited patient access—driving adoption.

Drug efficacy—or lack thereof—for given individuals is nothing new. Many pharmaceutical and medical-device therapies are based on safety and efficacy in a large patient cohort. Going forward, genetic sequencing, coupled with empowered and educated patients, will lead to many new, personalized therapies, such as genetic profile archetypes. As more effective therapies emerge, incumbents and their products may face shrinking demand, and skilled genomic sequencing and sample processing is likely to surge.

The number and quality of decision support tools is projected to grow materially in the next decade. While there are numerous tools to help inform clinical decision-making today, including pulse oximetry and certain biomarkers, advanced tools have surfaced within oncology, with products able to predict the responsiveness of certain tumors to chemotherapy based on genomic mapping, reducing both economic and quality-of-life costs for thousands of patients. Additionally, ML is adept at deciphering trends from imaging. Promising early evidence suggests that AI can detect certain types of cancer and determine whether expensive immunotherapies are working on patients.

COVID-19 immediately put these tools at the forefront for both physicians and businesses. Many challengers are exploring potential use cases in adjacent or new markets to rapidly gain entry into decision support. Recently, a wearable device company that had created a smart ring to measure physiological attributes such as sleep, respiratory rates, and temperature customized the device to preemptively identify potential COVID-19 infections in at-risk athletes.

Much of the world’s patient-physician interactions remain in-person, occasionally augmented by calls, texts, or emails. But COVID-19 has created demand for care delivered from home, forcing health care systems to establish virtual coverage.

Patients have become comfortable with telehealth, which should lead to increased receipt of care and potentially better disease monitoring. Additionally, remote monitoring and diagnostics could enable earlier detection of both acute and chronic issues. From an industry perspective, existing regimens and product utilization could grow or decline, and new targets may be accessible. Life sciences organizations can look to partner with telemedicine providers to develop remote diagnostics to capitalize on this trend.

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.

Explore content

Did you find this useful?
Medical technology trends toward six winning roles

Medical technology advances lead to evolution and innovation