Life sciences companies at risk of falling behind technology competitors in race to address evolving consumer demands
Published: Mar 13, 2018
LONDON, March 13, 2018 /PRNewswire/ -- Life sciences companies are at risk of being marginalized by technology companies and new entrants, warns the new EY report Progressions 2018 Life Sciences 4.0: Securing value through data-driven platforms. The report states that more than 75% of life sciences organizations currently included in the Fortune 500 are at risk of falling out of this ranking by 2023, if they don't look beyond novel drugs and devices and create new business models to also provide data-driven health services that are more convenient and consumer-focused.
The report examines the emergence of technology companies as direct competitors to the life sciences industry. As part of the analysis, EY spoke to more than 25 global life sciences leaders, analyzed patents filed by technology companies and assessed more than 150 digitally focused partnerships announced between life sciences companies and other stakeholders since 2014.
According to the report, life sciences companies can no longer rely exclusively on product-centric innovations, which face diminishing returns as health systems globally face cost constraints. The number of drugs achieving at least 50% of analysts' peak sales forecasts is falling as reimbursement pressures increase, according to the report.
Additionally, technology companies are increasingly investing in evolving consumer, physician and payer needs with their own offerings, moving from cloud-based data storage and fitness and sleep tracking into disease management services, a historic core life sciences offering. According to the report, of the US health patents filed by major technology players since 2013, three of the largest technology companies alone have filed more than 300 health care patents, representing a 38% increase in the number of health-related patents filed by these companies every two years.
Pamela Spence, EY Global Life Sciences Industry Leader, says:
"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. 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 enhance existing - products and services."
Platforms of care
The report describes platforms of care 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.
Life sciences companies are undeniably investing in and making deals involving platforms. For example, the report shows that life sciences companies signed nearly 90 digitally focused deals since 2014. Of those with a clear therapeutic area focus, 50% of them involved platform capabilities in the diabetes or respiratory areas, while 14% involved products or services to support cancer patients.
Spence says: "These investments are important but don't go far enough to eradicate the risks. Further investments need to make sure that connective technologies are placed at the heart of any offerings. Success in this new market paradigm requires the adoption of flexible, platform-based business models that allow life sciences companies to deliver affordable, improved health outcomes and unlock the power of diverse data streams that reside outside the traditional health ecosystem."
Life Sciences 4.0 also indicates that life sciences companies still need to do more to innovate, particularly in linking outcomes to customer engagement, personalization and data literacy, and addressing inefficiencies and budget constraints.
Spence says: "Consumers are at the center of this new market paradigm and they are demanding better data experiences from life sciences companies. If life sciences companies can leverage platforms to combine their deep scientific and clinical proprietary data with environmental, behavioral and financial insights, they can position themselves to capture maximum future value in the market."
For more on the EY Life Sciences 4.0 report, visit https://go.ey.com/2IiWNqO
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.