Are Life Science Companies Falling Behind Tech Companies?
Tech companies, such as Google, Apple, Facebook, Amazon and others, have been making significant forays into the life sciences. Although many have praised the ambitions, innovation and deep pockets these companies bring to the industry, a new report by EY, a global consulting and advisory company, suggests that life science companies are in danger of falling behind their tech brethren.
The report, titled Progressions 2018, asks the provocative question, “When the human body is the biggest data platform, who will capture value?” The report’s subtitle is “Life Sciences 4.0: Securing value through data-driven platforms.” It looks at how health is being changed by technology, as well as by rising customer expectations, and what it means for life science companies and their business models.
The authors of the report interviewed more than 25 global life science leaders, analyzed patent filings and evaluated more than 150 digitally-focused partnerships announced since 2014. For example, the report cites that since 2014, life sciences companies signed almost 90 digitally–focused deals, and that half of companies with a clear therapeutic focus had digital platform capabilities in diabetes or respiratory care.
“In this fluid environment, every company developing health care products and services is a data company, and therefore a technology company,” the report states. “Likewise, every technology company that has access to health-related, consumer-generated information or other health data is a health care organization.”
Among the conclusions of the report are that more than 75 percent of life science companies in the Fortune 500 may drop out of the ranking by 2023 if “they don’t look beyond novel drugs and devices and create news business models to also provide data-driven health services.”
The report looks at “Platforms of Care,” which is describes as “interfaces that seamlessly collect, combine and share a variety of health data in real-time with different stakeholders with the shared goal of improved health outcomes” and “Redefining Innovation,” which emphasizes that life sciences companies may be falling behind on innovation, particularly when it comes to associating outcomes to customer engagement, personalization and data literacy.
The report suggests that life science company executives should ask themselves three questions:
- “How will your organization transform its business model to create shared value focused on personalized outcomes and fueled by unlocking the power of data?
- “How will your organization build new capabilities organically, by acquisition or by flexible partnerships?
- “How will your organization ultimately secure value through platform-based businesses?”
“The rapid emergence of technology companies in the life sciences space, coupled with changing expectations by consumers is creating a disruptive shift toward a more participatory health system, where consumers are defining value in terms of the ability to deliver affordable, personalized health outcomes that advance lifelong health goals,” said Pamela Spence, EY Global Life Sciences Industry Leader, in a statement. “To seize the upside of disruption in this transformative age, life sciences companies must look beyond novel drugs and devices and invest, participate in or build platforms of care. Harnessing platforms of care will help life sciences companies to collect and structure real-world data and create new—or enhancing existing—products and services.”