By Dr Mark Steedman, PhD, Manager, Centre for Health Solutions
Each January, Deloitte produces a report exploring the outlook for the life sciences sector. This year’s report, 2020 global life sciences outlook: Creating new value, building blocks for the future, explores how biopharma and medtech organisations can harness a future driven by evolving data-driven technologies and remain relevant in an ever-evolving business landscape. Organisations should look for ways to create new value, adopt new metrics to take advantage of the wealth of data available today and rethink what is being measured.
Creating new value
Advances in technology have the potential to drive more efficiency, but life sciences leaders should more deeply consider ways to increase value and meaning for workers, customers and partners. Many life sciences organisations could benefit from implementing a holistic strategy for all stakeholders (Figure 1).
Figure 1. Connections between stakeholder (human) experiences and business outcomes
Focusing on this type of strategy could result in new value creation in numerous ways, including:
- for patients, care partners and care teams – providing a holistic patient experience is about understanding the experience of a patient living with a specific disease or condition, which can reduce complexity for patients and caregivers, helping disease management and improving adherence and outcomes. For medtech companies, a better understanding of consumer needs could lead to the development of more user-friendly devices that could be sold directly to the consumer
- through more inclusive clinical trials – to understand better the drugs and procedures that will effectively treat disease, there is a growing mandate to increase participation in and improve access to clinical trials with members of demographic groups who will eventually receive treatments, including racial and ethnic minorities, women and the elderly
- through meaningful work – the next generation of talent wants to see businesses take meaningful action and not just talk about purpose, and life sciences organisations should use emerging technologies, meaningful work and flexible work models to lure this generation of talent
- tracking metrics that matter – portfolio decisions, technology, therapeutic focus and manufacturing excellence are the major areas of potential for discernible change within life sciences.
Opportunities and efficiencies
The demand for small-volume, personalised medicines is driving operations away from large-scale bulk production to multiproduct facilities that require meticulous tracking. Meanwhile, large tech companies are developing partnerships, bringing with them computing power, manufacturing analytics and advanced supply chain control towers to improve operational agility and better decision-making. Cloud computing could help leaders collaborate with other biopharma companies, smaller biotech companies, research laboratories and academic institutions around the globe. The primary areas of opportunity are around:
- accelerating R&D with technology – the AI market in biopharma is expected to grow considerably, from US$198.3 million in 2018 to US$3.88 billion in 2025, with the largest segment of this in drug discovery. Competition for AI talent will be fierce, and biopharma companies should not let traditional thinking and legacy cultures put them at a disadvantage. Emerging technologies could also drive positive change throughout each stage of the supply chain, leading to enhanced value to patients
- creating operational efficiencies – medtech companies have the potential to drive efficiencies and tackle challenges by applying solutions such as IoT, machine learning, additive manufacturing and augmented reality.
Building blocks for the future
Scrutiny around drug pricing is increasing from policymakers and the public. In 2020, this will continue, and overall health expenditures and market accessibility will also continue to be concerns across the industry.
Meanwhile, patient-centred platforms and consumer health apps are now collecting more data, but ownership of that data is a confusing to stakeholders. Widespread access to patient data is valuable but trust remains a significant challenge for life sciences companies. In 2020, medtech companies will continue to face competition from consumer technology companies and new care models. Biopharma companies’ environmental and social performance is also increasingly coming under scrutiny by stakeholders. Life sciences organisations can mitigate some of this risk by:
- innovating around patients and access – clinically-based value chains built around patients and novel pricing and access approaches are the two areas expected to impact life sciences organisations
- digital transformation – data-driven devices and tech partnerships have the potential to help life sciences organisations develop products and services, engage better with consumers, and execute operations more effectively
- building trust – organisations can grow trust and build better relationships with patients by sharing data transparently in clinical trials, addressing data ownership and keeping data private and secure
- corporate social responsibility – building trust and brand reputation may also require a shift in priorities, as having a corporate social responsibility strategy adds value to the corporate financial performance of biopharma companies.
Looking ahead, sales trajectories
Worldwide prescription drug sales are expected to grow from US$828 billion in 2018 to US$1.18 trillion in 2024 (a CAGR of 6.9 per cent), driven by accelerated drug approvals, increased potential for an additional US$109 billion from orphan drug sales and a growing proportion of sales from oncology therapies. However, challenges include:
- uncertainty around policy decisions in the United States in 2020
- US$198 billion sales at risk due to patent expiries between 2019 and 2024
- US$1 billion in clinical development spend for cardiovascular disease
- decline in anti-rheumatics as leaders face competition
- lower investments in R&D as a proportion of sales.
In worldwide sales there has been a rapid increase in biotech’s share of the top 100 products. In 2018, 53 percent were biotech products, compared with 34 percent in 2010. The forecast period to 2024 expects to see a 50/50 split.
In medtech, the global medical devices market was valued at US$425.5 billion in 2018 and is expected to reach US$612.7 billion by 2025 (a CAGR of 5.4 per cent). This market is growing faster in emerging markets, with medtech companies in emerging markets capturing an ever increasing share of overseas markets. The In-vitro diagnostic segment is the largest medtech segment globally, accounting for a market share of 12.9 per cent, and is expected to remain so for the foreseeable future. However, tech giants are becoming more of a direct competitor to medtech companies and medtech companies can no longer rely on previous business models to drive growth and will need to adapt. In addition, downstream pricing pressures, stringent regulations and operational inefficiencies are forcing many medtech companies to implement effective cost-reduction strategies to remain competitive. Future success will depend on being proactive and utilising recent advances in digital technologies.
Interested in learning more?
Join our webinar on the Future of biopharma: Predicting forces that will shape the Biopharma industry on 25th February 2020.