Digital Transformation of the Pharmaceutical Value Chain
The pharmaceutical industry has gone through two decades of rapid technological innovations. These include combinatorial chemistry, recombinant DNA technology, high throughput screening and finally the genome area.
In contrast to the innovations from the last decade which mostly only partially affected the value chain the digital transformation could enable an end-to-end change and potentially apply to the pharmaceutical value chain as a whole. Companies that adapt their product development and market access models more quickly will have the chance to gain a competitive advantage while others failing to adapt will face challenges.
Several forces can be identified in driving this process. The strongest is the rise of value-based medicines, enforced by the pushback from payers regarding mass market and blockbuster drugs. Most healthcare systems with large pharma markets have been trying to cap increasing health care spending in recent years. At the same time, industry costs for R&D have been increasing with a declining ROI across the industry. One factor is the increasing number of late -stage (phase III) failures where already large investments have been made. This is driven by improved standard-of-care and challenges of finding promising new targets. Additionally, the industry is experiencing an increasingly competitive landscape. In many of the large chronic diseases such as cardiovascular and inflammatory diseases, diabetes, the standard of care is already advanced with generic drugs broadly available. Healthcare systems are not willing to pay high prices for only modest benefit. Moreover, new competitors are entering the healthcare market from various ends e.g. Google, Amazon, Apple.
An agile digital end-to-end strategy for the transformation of the entire value chain will help pharmaceutical companies overcome those challenges. Most pharma companies focus most of their R&D budget on internal resources today. Due to the rise of digital technology and the availability of data this should be refocused to a more open innovation strategy. The coming age of open biomolecular platforms, including genome and patient data along with the availability of technology to easily perform genome editing, produce antibodies or even CAR-T cells, will lead to a democratization of preclinical research. There is an increasing landscape of academic groups and start-ups that perform research based on these technologies to develop unique insights into the disease biology for either a single disease or disease area. It is not physically and financially feasible to capture all this knowledge within a single company. Therefore, drug discovery organizations should be partnering in exploring targets coming out of these networks providing technologies such as artificial intelligence for the analysis of data, as well as for the design and optimization of new molecular entities.
Our customers’ world has changed. Millennial physicians as digital natives are now increasing the amount of practicing doctors. Along with their patients, they expect companies to engage with them in personalized way in our digital world. Pharma marketing is no longer just about pure promotion, but also about personal digital services which engage physicians and patients to help solve problems in the moment and at their fingertips. Every other industry has gone through a digital transformation including regulated industries like financial services. Companies that have successfully navigated this transformation and emerged as the clear leaders have not only transformed their customer engagement, but also their core products, processes and company cultures. Successfully engaging with customers across channels, especially digital channels, requires building new skills, capabilities and platforms. Over the past 5+ years pharma marketing has responded to these changing demands by investing in and deploying these capabilities. Given that other industries have already gone through digital transformation, there is much pharma can and should copy from proven best practices while adapting them to the unique realities of the pharma sector.
Beside the provided examples, the most important issue in order to generate a digital end-to-end strategy is to have the right teams in place along the pharmaceutical value chain. Those teams need to have a portfolio of digital capabilities, such as expertise in data science, data processing and data storage as well as digital marketing and digital health in general. Equally important are team members with deep understanding of the biological and medical issues otherwise there is a risk that a digital solution will be developed that is precise and efficient but not useful.
It is important to note that it is not the technology that will enable the successful digital transformation of the value chain, but rather the mindset and capabilities of the team. The technology will become a commodity with the time. Like anyone living through a time of rapid change, it is hard to see where the digital revolution will take us, however it is already clear we will not be working the same way in 10 years as we are today.