Six business technology trends impacting the Life Sciences industry
As software “eats the world”, every company is becoming a technology company. Life Science companies are increasingly leveraging technology in all facets of their business. With AI, big data, robotics and other futuristic technologies evolving quite regularly, the following are six business trends with core technology underpinnings that will impact Life Science businesses over the next five years or so.
1. Overwhelming glut of data:
Over the last two years alone, 90% of the data in the world was generated. Data volume is growing exponentially and in addition to humans, sensors and devices are expected to create a lot more data, constantly (2.5 quintillion bytes of data, each day).
According to a Guardian report, less than 1% of the world’s data is analyzed. And almost 25% of the data, when tagged and analyzed, could yield useful insights.
Most product discovery, organizational and work culture, operational improvement, recruitment and a lot of business insights will be a result of mining such big data by leveraging machine and deep learning algorithms.
A large number of new jobs in the data science and analytics space will come from the capabilities required to make business sense out of such data.
It is estimated that value of up to $15 trillion can be unlocked by advanced analytics.
Building analytics capabilities and an analytical culture should be a high priority for companies.
Pharmaceutical supply chains will be impacted as much by these evolving technologies as by regulations such as serialization.
Other regulations such as GDPR will bring about changes into how we manage data and information relating to customers.
2. Greater penetration of AI in daily operations:
Many pharma companies are using AI for drug development.
Other components of AI such as machine learning, big data, predictive analytics, blockchain, IoT, natural language processing, robotics, etc. are permeating life science businesses in various forms.
Already we are seeing AI in use with customer assistance (chatbots), robots in manufacturing and process automation, speech-driven services including voice assistants and several machine-learning and deep-learning algorithms in resume matching, cash applications, pattern-recognition and product recommendations. AI is gradually becoming an indispensable part of routine operations in enterprises.
Academia is also getting into the game by partnering with technology companies. NYU is partnering with Google AI to identify lung cancer and Columbia is partnering with IBM for offering blockchain pilots.
MIT is setting up a billion dollar AI university
3. Continuing pricing pressures:
Pricing will continue to be an area where regulations will increasingly tighten and bring margin pressures to pharmaceutical and medical device companies.
A wonder treatment is the CAR-T therapy which promises cure for critical illnesses such as cancer. While the research still takes several years and investments to the tune of hundreds of millions of dollars have to be made, recouping the investment once the drug is approved is not so straightforward. How can a one-time treatment be optimally priced? A leading biologics company is presenting a case for a $4 million price point for a dose of treatment that has a 100% survival rate in the case of life-threatening spinal muscular atrophy.
As rising healthcare costs gain more and more attention, regulations are increasingly tightening. In the 340B pricing process, US Department of Health and Human Services (HHS) is bringing new rules for the 340B drug discount program forward to January 1, 2019 from July 1, 2019.
In most other industries we are already seeing dynamic pricing at work (i.e. the same product sold at a different price in different transactions). However, tightness of regulations and increased attention to cost of healthcare make it difficult to deploy dynamic pricing in Life Sciences.
Pricing new products and services will be a huge area of challenge for life science companies, both from a regulatory and business perspective.
4. Continued focus on cyber security:
There have been a significant number of cyber-attacks on enterprise systems. Private companies and government systems have been intruded into. Worse than the interruptions to operations and the compromise of data, these somehow become public and damage company reputation.
In some cases, the damage continues to be done for years, until it is discovered. And the increase in M&A transactions adds to the risk of such proliferation.
Attention is also being drawn to security in medical devices, especially when embedded in humans. The FDA and DHS (US Department of Homeland Security) are partnering to better co-ordinate responses to medical device cyber security threats.
If systems/devices and data get compromised, not only will companies’ businesses and operations get impacted, but in Life Sciences, the patients who need life-saving therapies urgently can even lose their lives.
5. Varied product and service offerings:
Pharmaceutical, medical device and healthcare companies are increasingly facing competition from non-traditional players. Amazon is distributing generic pharmaceuticals with exclusivity contracts; Apple’s iWatch is increasingly becoming a medical device and the Amazon-Berkshire-JP Morgan collaboration is taking a shot at providing lower cost healthcare.
The trend is for technology companies, and for unique alliances to get into healthcare, especially in the Analytics space.
According to some reports, healthcare analytics is the third largest area of VC funding, just below internet and telephony applications. Additionally, a PwC report states that healthcare will outspend all other industries in R&D by 2020. This is helping to increase competition from non-traditional players such as academia and technology practitioners into the healthcare space.
6. Customer experience will drive it all:
SAP’s acquisition of experience management platform Qualtrics validates the power of experience data when combined with operational data. Customer experience can be leveraged to fine-tune product or service, help with discovery of new products or acquisition targets to enhance product/service offering to existing clients and even partnership to bundle their offering with your products.
There are stories of products such as Rogaine and Listerine which became successful because customers’ experience showed a better use for the products. These products, arguably, would not have been as successful had they been used in ways the manufacturers had intended originally.
Now with the trend moving towards deliberately seeking out customer experiences, likelihood of product success can be built into the product discovery itself.
What are other areas that companies cannot afford to ignore?