The Pharmaceutical Industry Has Reached a Tipping Point

March 22, 2011
Shaping the future of pharmaceutical R&D

The research and development (R&D) process in the pharmaceutical industry has reached a tipping point. Over the next three to five years -- due to a number of irreversible change drivers - the pharmaceutical industry's current R&D model will continue to undergo a dramatic transformation. To remain competitive, organizations will be forced to evolve significantly or abandon traditional approaches in favor of new R&D models.

Primary drivers forcing the pharmaceutical industry to undergo such transformation include:

  • Pressures for R&D cost reduction.
  • Higher barrier to market based on payor needs for product differentiation
  • Patent expirations that are changing the value proposition for future differentiated products.
  • Need to balance requirements for larger trials with the need for personalized medicine.
  • Growing availability of product and patient data.

Together, these and other change drivers are giving rise to a number of business attributes that must be considered when reshaping the R&D model. Based on current Accenture research findings and ongoing discussions with R&D chief information officers and informatics leads from a number of the world's leading pharmaceutical companies, Accenture asserts that to move forward, leading R&D organizations in the pharmaceutical industry will need to forsake existing organizational barriers in favor of a networked, virtual and flexible approach to reshaping the R&D model. They will also need to expand their focus from generating products and information alone to delivering bundles of health care services focused on improving patient outcomes.

Further, Accenture emphasizes that to realize the full potential of this new networked, virtual and flexible R&D model, R&D organizations will need to cope with ever-expanding volumes of relevant data crucial to the business. This imperative will require R&D and R&D informatics organizations to continue changing or evolve radically their focus and approach.

Cost, Value, Data
While change in the R&D model is inevitable, success in deploying the new model is not certain. In order for the R&D organization to address these business imperatives successfully, the R&D informatics organization must play a key enabling role. For R&D organizations to work effectively using the new networked approach, R&D informatics organizations need to:

  • Strengthen their capabilities to support enhanced collaboration and integration, encompassing both internal and external stakeholders.
  • Develop a flexible infrastructure -- one that is highly secure, yet also elastic, globally present and cost-effective.
  • Facilitate the incorporation of new sources of data - from partners, providers, clinical research organizations, patients and third party sources - into an improved decision making mode.
  • Enhance their capabilities to assimilate and interpret a wide array of inputs, ranging from sentiment monitoring and social networks to fully digital operational data that is integrated and accessible.

In addition to the evolutionary steps highlighted above, a set of revolutionary approaches are destined to emerge as companies face the reality that the historic methodology of focusing holistically on drug discovery through development, supported by internal processes, networks, platforms and infrastructures will no longer be sustainable.

Realizing the Potential of Data into Insights
The capacity to deal effectively with massive amounts of data is central to realizing the promise of the new R&D model. Enter the argument for data into insights, or D2i: the ability to convert data into decision-making, product shaping, market/customer influencing insights.

In the area of R&D, pharmaceutical companies face an accelerating need to compete on the basis of analytic excellence. There is a competitive advantage for companies that can rapidly harness analytical capabilities to collaborate in new ways, e.g., to generate new insights on disease progression in order to find novel therapies, or to connect disparate patient information in order to refine existing studies through adaptive trial design.

In enabling this kind of insight, D2i approaches provide pharmaceutical R&D functional groups with unprecedented power to cope with today's torrent of information. Such power, until now, has been sorely lacking.

For example, over the course of a product's lifecycle pharmaceutical companies generate terabytes of discovery and clinical data. The industry as a whole, including pharmaceutical and medical device companies, spends $3 billion to $4 billion annually on external health care data for decision support around discovery, product development, clinical trial design, safety, product launch, and sales and marketing. Yet the value generated by this expenditure has not been maximized. Accenture emphasizes that companies in the industry currently lack true business driven, extensible analytics capabilities that bring value to data.

By capitalizing on new data sources and sophisticated analytics tools, pharmaceutical companies will
gain an unprecedented ability to optimize their pipelines, while focusing on their ultimate goal-the improvement of patient outcomes.

Why the Gap?
Despite the clear value to be gained from D2i, very few of the industry's players are aggressively exploring D2i capabilities. Accenture finds there are multiple reasons for this disparity in companies' investment strategies. The business case for making this investment, and the value to be realized, are not yet well understood. Cost pressures also pose challenges to expand beyond the current capability base, particularly if the new capabilities required are considered speculative in nature. Meanwhile, current capabilities will continue to require real work and focus, as well as real continued funding. In some cases, such as the integration of two organizations after a merger, this traditional work will take on real urgency-and potential precedence as area for investment. While these barriers are understandable, they must be overcome.

Over the next three to five years, a clear set of industry leaders will emerge. Leading pharmaceutical companies will be the ones that have acquired the D2i capabilities necessary to execute successfully the strategy of the transformed R&D model. Today, only a few large players are investing at a level commensurate with the potential value. Those who continue to lag behind - as most of the industry does today - will struggle to keep up with the fast pace of the future and with the requirements necessary to be successful.

Click here for additional discussion on shaping the future of pharmaceutical R&D.

Arjun Bedi is the global managing director for Accenture's Health & Life Sciences R&D practice, where he specializes in leading major strategic business transformation initiatives for large pharmaceutical companies. His areas of expertise range from defining R&D strategies, to developing and implementing solutions that achieve enhanced business results in Life Sciences R&D. Bedi has led major transformation programs for some of Accenture's largest Life Sciences R&D clients.

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