Life sciences executives hungry for growth see drug discovery, patient centricity and improved health outcomes as paramount to their future — and they know digital is needed to get there. In our recent study, the majority of business leaders (64%) recognize the importance of digital transformation.
Indeed, data is beginning to supercharge innovation and opportunity across the industry, as smart medical devices, intelligent pill bottles, wearable bio-sensors, digestible microchips and other digitally enabled treatments create a trail of data that can be analyzed for meaning and value. Mastery of these digital approaches and use of data will result in incredible opportunities for companies to redefine their value proposition, co-create with partners and patients, and forge deeper ties of collaboration and engagement across the industry value chain.
To unlock digital’s business value, however, new interplays are needed among the life sciences ecosystem to more effectively mine and apply meaning from the new data flows to optimize processes long overdue for a digital refresh.
To understand the changing nature of work, commerce and the characteristics of success in this new digital world, Cognizant’s Center for the Future of Work, in conjunction with the renowned economist Nouriel Roubini, surveyed 2,000 business leaders from around the world, including 154 executives at leading life science companies.
Five key themes illuminate the work ahead for life sciences organizations:
Executives sense a growth opportunity as pharma digitizes.
Respondents estimate that digital will drive over 8% of revenues by 2018, up from 5.5% today, as sensors, smart processes, the Internet of Things (IoT) and even smart digestibles impact how pharmas and medical device makers co-create value. This revenue projection represents a whopping $877 billion in value for the surveyed companies.
Executives’ digital expectations also include cost reduction. By 2018, respondents expect digital to reduce costs by just under 3%. When averaged across the surveyed companies, this comes to $974 million in savings per company.
Being slower than your peer group to embrace digital comes with a high economic price.
We found companies that are behind the digital curve are paying an annual “laggard penalty” — the difference in both cost and revenue performance due to technology acceleration. In our study, a slim margin of just 1% differentiates digital leaders from laggards in life sciences in terms of total costs and revenue impacted by digital. However, the gap grows like a weed over time, potentially derailing company performance and future sustainability. By 2018, that “laggard penalty” will add up to a massive $650 million in value.
Data mastery will unlock future value.
The executives we surveyed “get” the importance of data implicitly, rating big data/analytics, sensors and IoT technologies as key forces driving innovation in life sciences (see figure below). Further, over half of executives surveyed (53%) recognize that data mastery is critical to their digital success. Data generated by processes that stretch across drug R&D and manufacturing, supply chain and patient aftercare needs to be collected, stored, sifted and mined for meaning. Sensors and IoT data will unleash even more process data that can be mined for meaning.
For many companies, this calls for strengthening master data management architectures and strategies. Indeed, what will move the needle on innovation and efficiency is the ability to marshal data through a value chain. New approaches to drive, guide and sustain digital innovation are needed.
Platforms will catalyze digital innovation.
The data feeds from wearables, sensors, apps and a whole range of other data sources will supercharge the growth of platforms and provide a catalyst for collaboration and innovation inside and between companies. These software layers gather data that will grow around a specific pharmaceutical process, a clinician need or a patient requirement. The platform then becomes an open data exchange, where scientists, regulators, doctors, patients and other life sciences stakeholders can index, experiment and collaborate to improve drugs, treatments and outcomes.
As platforms proliferate, business analytics and the science of meaning-making will herald a profound set of changes across the research, manufacturing and distribution of medicines and drugs. Look at the recent partnership between Novartis and Google, in which Novartis will license Google’s smart contact lens to measure a wearer’s blood sugar levels (and gain a data feed) and begin to build a platform for innovation, co-creating via the data. Within R&D, digital platforms are reducing the cost of clinical trials and treatment development, speeding time to market and ensuring the efficacy of therapies.
Strategic and analytic talent will take center stage.
The deluge of data foreshadows the capabilities needed to survive. The top talent capability for 2020, cited by 84% of respondents, is big data/analytics. Satisfying the demand for analytical skills is an executive imperative – data modeling technologies, visualization techniques and statistical capabilities are critical as low-cost diagnostics, disease management processes and clinical decision-making start pivoting around data.
Three-quarters of respondents said they need to strengthen their strategy skills to navigate the work ahead. This includes finding the financial engineers that can architect a joint venture with a tech titan or pull together a commercial consortium. Locating and retaining industry strategists who instinctively understand where to focus the organizational firepower on a digital initiative will make or break continued business viability.
Digital momentum is already building. Many of the companies surveyed already use new digital tools to free up resources and innovate with key constructs of data science across the business. A majority are marshaling resources around a compelling vision for what digital will mean for their mandates and reputations.
The work ahead — your prescription for the new digital economy — is to harness and reshape the value chain to reengineer and revitalize how your organization drives, guides and sustains innovation.