Life sciences outlook 2019


2019 US and Global Life Sciences Outlook

Exploring life sciences industry trends

Strategic transformation is at the core of life science companies as they build new business models for the future. To accelerate change, focus will be on developing innovative and relationship-driven partnerships and creating real value for patients. Data is now the currency of life sciences, and mobilizing data throughout the enterprise, transforming work, and using technology symbiotically will be fundamental to advancing digital transformation.

Focus and transform

What are the trends affecting life sciences? In 2019, the life sciences sector will see a strategic rise of the digital mindset and further adoption of transformative technologies. While traditional investment vehicles, like mergers & acquisitions, can expect a sharper focus, external innovation can become a meaningful culture change-agent through innovative and creative partnerships with new entrants and non-traditional players.

The digital age requires more transparency and disclosure and a need for real relationship-driven partnerships will extend to all sector stakeholders—patients, advocacy groups, and regulators—and also to outsourcing vendors critical to the supply chain. Data will be the force behind new revenue models and crucial to understanding and delivering an exceptional patient experience.

Continued pricing pressures, increasing access to drugs, growth of gene and cell therapies, and uncertain trade policies will further change the dynamics of the market. The 2019 Global Life Sciences Outlook gives insights into the global life sciences economy and reviews the trends impacting businesses as they look to accelerate change and elevate the patient experience. The outlook provides suggestions for stakeholders to deal with the changing global economy and discusses examples from the market. The report also provides leaders with key questions and actions to consider in the year ahead.

A US perspective on life sciences trends

Stepping into 2019, the pace of change in life sciences feels like it’s moving faster than ever. And while trends in the industry generally occur over decades rather than years, many foundational elements—such as the shift from treatment to wellness—are beginning to take shape.

Several trends will likely to continue to shape US biopharmaceutical and medical device manufacturers in the year head. Here are a few developments industry players should watch in 2019:

  • Scrutiny over drug pricing
  • Increased interest in contracts that demonstrate value
  • The declining return on investment for research and development
  • Evolving regulatory frameworks and collaboration between industry regulators

Hear more about these trends from Deloitte’s US and Global Life Sciences leader, Greg Reh.

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 research and development (R&D) returns make external deals a key innovation source for companies. It’s 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 $60-70 billion range defined 2018. This year, we’ll see an increase in appetite for mid-sized, strategic transactions that complement a company’s core. Transactions this year are also likely to be more complex with innovative structuring, as opposed to the conventional framework.

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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.

New entrants provide an opportunity for companies to drive innovation, but they also pose an undeniable threat. Unable to cope with the new age capacities and diversities, the old school of thought of pharma may find itself outside the value chain.

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Focus on expanding a richly networked ecosystem

There’s no doubt that digitization 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.

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Focus on outsourcing

Pharmaceutical giants are moving to adopt strategic, relationship-based outsourcing models as opposed to 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. Strategic, long-term partnerships allow pharma companies to streamline supply chain, better manage the capacity gap arising from the shift to biologics and personalized medicine, and ultimately improve time-to-market. Sustaining close relationships with vendors will be critical for maintaining compliant operations because an oversight may cost pharma companies their reputation.

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Collaborating with new partners for transformation

Digitization of health care has transformed the way patients, providers, and innovators interact. In this highly digitized and connected world where patients have complete visibility into the experience they will be provided, it’s imperative for companies to double the focus on customer experience. Companies should prioritize interpreting the burden of a disease on specific groups by building a culture where patients are partners, not just consumers. Advanced technologies like AI can play a critical role here, to not only help in producing highly personalized solutions, but at competitive prices within shorter durations.

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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 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.

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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. 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. And R&D executives are placing greater emphasis on the role of real-word evidence (RWE).

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Creating value with new business and operating models

Digitally maturing biopharma companies are exploring ways of applying an enterprise-wide approach to digital transformation. And leaders throughout the life sciences industry are looking to leverage advanced digital technologies to identify new revenue sources.

One key source of revenue will likely come from the shift from product to service. Companies should have a vision for their role in the patient journey and the value they provide to both the patient experience and health system.

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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. To advance digital transformation in 2019, life sciences companies should start with determining and articulating their ambition. This means prioritizing initiatives, anchoring decisions, and focusing on the future. Leaders can then be poised for adapting new operating models, transforming work culture, implementing technology, and scaling solutions.

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Transforming work

A greater percentage of digitally-maturing biopharma companies are exploiting new ways of doing business as opposed to exploiting organizational competencies.

To maximize the potential value of advanced technologies today and minimize the potential adverse impacts on the workforce tomorrow, organizations should put humans in the loop—reconstructing work, retraining people, and rearranging the organization. Companies can create incubator spaces in innovation clusters around the globe, specifically designed to support early-stage companies that need facilities, mentoring, and networking to progress.

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Visit our 2019 US and Global Health Care Outlook to learn more about the trends and issues impacting the health care sector.

Check out the 2019 Life Sciences Regulatory Outlook for in-depth information about how life sciences companies can navigate regulatory trends.

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