Are you prepared to capitalize on digital innovation in the life sciences value chain?
By Mario Piccinin and Karen Atkinson
Perhaps more than any other sector, the health care industry depends on technological innovation. Across the life sciences sector, and particularly in pharma, digital innovation is fueling transformation, new opportunities and new challenges.
In the new EY report Digital deals: spotlight on life sciences, we find that emerging digital solutions are creating new opportunities for other sectors that are quickly challenging pharma’s dominance. New and evolving technologies are allowing the life sciences sector to leverage data like never before, focus on patient outcomes and ultimately, move beyond pill solutions.
What types of digital innovation are impacting Canadian life sciences companies?
Life sciences companies are facing unprecedented change. Customers are changing, competitors are quick to pivot and adapt to changing technology, and budgetary pressures are impacting health care systems globally. EY’s detailed analysis below reveals some prevailing factors that are currently driving disruptive growth and fueling innovation and process improvements in the sector.
- Advances in R&D and patient experience
Digital technologies are helping companies investing in research and development (R&D) select the right therapeutic targets, the right compounds to develop and the right patients to test them on. Innovative solutions are improving patient and physician engagement in response to changing patient expectations. The life sciences sector is moving from an environment of mass generalization to mass customization. Technology, innovation and network-based R&D are producing patient-centric health care solutions that are focused less around drugs and more around a holistic range of support services.
- Improved analytics and artificial intelligence
Data is an integral part of the health care industry. Emerging technologies, digital solutions and cloud computing now provide the capability to provide an understanding of the real-world impact of disease, individual patient profiles and treatment effectiveness, and provide evidence for the true value of a medicine. Advanced analytics, combined with the rise of artificial intelligence is offering new insights into human genetics and the causes of human diseases. Obtaining patient-level data helps leading companies predict the efficacy of medicines and warn of adverse drug reactions.
- Adopting new or yet to be validated digital technologies
Across the life sciences spectrum, rates of digital technology uptake vary by sector. EY’s research finds biotechnology companies are the most advanced and the earliest adopters of artificial intelligence and personalized medicine. Medical technology firms and contract research organizations (CROs) are quickly adopting digital technologies, including robotic surgery, precision diagnostics and enabling software solutions.
Pharma has been slower to adopt to changing digital technologies. We’re now seeing a paradigm shift in pharma where the fast pace of change means organic strategies alone are no longer sufficient to build digital capabilities.
How are market-leading life sciences companies capitalizing on digital deals?
While digital innovation is disrupting the life sciences value chain, leading companies are undergoing a paradigm shift as technology impacts all facets of their businesses. EY’s research finds that 70% of life sciences companies plan to use mergers and acquisitions to build digital capabilities over the next two to three years. The pursuit of innovation and the creation of products and services are at the heart of these deals. The study also found that 19% of respondents aim to add an innovative aspect to their existing products or services, and 32% of deals are being established to gain access to health care datasets or real-world data.*
For pharma companies in particular, building partnerships or joint ventures with technology companies is an important tool for gaining access to their health care management platforms and complex datasets, and for supporting their infrastructure. The majority of pharma companies are actively investing capital and providing support through accelerators or incubators to small and startup digital health companies. This can provide a cost-effective and nimble route to digital innovation.
We’ve entered an era of profound disruption in life sciences. Understanding your digital ecosystem, selecting the right partners and structuring deals to protect intellectual property and extract maximum value are the keys to success in navigating the digital economy. The environment is rapidly changing and what is true today may be different or nonexistent tomorrow. What will you do today to capitalize on the digital innovation?
*Digital deals: spotlight on life sciences, EY 2017 report on inorganic strategies driving the digital agenda
Mario Piccinin and Karen Atkinson are partners with EY. Visit them at ey.com/ca/private.