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Author's profile photo Joseph Miles

The Changing Face of Life Sciences

There are remarkable things happening in life sciences at the moment. Perhaps the most dramatic, though, is the erosion of operating margins. Branded pharmaceuticals continue to lose patent protection on key products. As a result, close to half a trillion dollars of branded revenue have gone over to the generic markets in the last ten years. It’s a dose of reality that has the biggest companies reeling. For them, strategic restructuring of their business models and tactical cost-cutting is a top priority as, hit on both the top line and the margin, they strive to redesign and reengineer themselves.

/wp-content/uploads/2014/01/lifescience_363441.jpgAs the knock-on effects spread across the industry, R&D has quickly become even more critical to business strategy than was the case in years past.   The reason is simple. Getting products to market, for example, six months early can be worth hundreds of millions, even billions of dollars.

Healthcare reform in the US and the rest of the world is reducing reimbursement levels for drug, products and services.   Regulatory initiatives continue to grow across global regions and countries that further add complexity and cost to the industry.  Much of the regulation is targeting serialized track-and-trace programs that are targeted at reducing counterfeit drugs and protecting the consumer–but it combines to further increase the pressure on the industry.

I’m very interested to see the emergence of large-scale population health-management programs, for example ones that try to effectively manage chronic diseases that eat up a lot of healthcare spend such as diabetes or cardiovascular disease.   These programs are helping improve therapeutic outcomes while simultaneously reducing the cost of care.  New approaches of population health management, whether improving lifestyle, tracking activity with a Fitbit or the gamification of fitness, are poised to have a major impact on all of our lives.   The big picture is simple to define: the healthier you are, the less you cost.

It’s hard to look further than the three-to five-year horizon because things change so quickly, but overall the main focus will be on improving outcomes while reducing costs. For many life sciences companies, who have historically struggled to directly engage patients due to market or regulatory reasons, it’s a time of huge change. Their challenge is to create new models, opportunities and interactions but to do so in a way that leverages the deep therapeutic knowledge of the life science companies in conjunction with new and emerging technologies that can dramatically change the nature of the healthcare delivery models.

To learn more about we can help you with your business challenges please have a look at SAP’s Solution Explorer for the Life Sciences Industry.

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