A quick glance at the pharmaceutical industry shows that it can be a very profitable one, but also one with a significant cost component in its income statement. An increase in life expectancy and the number of high-income households growing year-on-year on emerging markets contribute positively to the wealth of the industry.
Moreover, the market is well protected by entry barriers. A typical product lifecycle is lengthy from idea-to-market, it normally requires an extraordinary investment and, when successful, products tend to be secured through patents, regulations and intellectual property rights, making it difficult for others to copy them. For each blockbuster drug that generates a significant revenue stream, there are many others that fail. Coupled with concerns of information leakage, such as of research data, and any association to mistrust, that is to say ethics issues, contribute to make this industry very careful with their databases and, therefore, perceive IT trends as a potential security risk. As a result, organisations tend to be very resistant to IT adoption. On the other hand, healthcare and life science organisations are heavily dependent on innovation to develop new products and, ultimately, to provide better living conditions to the population of the world. This is tightly linked to IT and without it enterprises lose their competitive advantage and the ability to survive in the market. Therefore, if the industry is so sceptical about IT but it depends on technology to survive in the market, is the pharmaceutical industry ready to accept and adopt the latest IT trends? And, if so, what is the strategic impact of such trends on their operating model?
The purpose of this report is to assess the pharmaceutical industry’s readiness to adopt cloud computing, mobility and BD&A (i.e. Strategic Big Data and Analytics), and their impact on the enterprises’ Operating Model. In order to answer such questions, this report firstly reviews academic literature available about the industry, its operating models, and different IT adoption determinants and frameworks. Due to the complexity of adopting technology, one key conclusion from the literature review is that each organisation is distinctive and so there is not a unique model or framework that guarantees a successful IT adoption process and, consequently, multiple determinants ought to be considered along the journey. Furthermore, this report proposes a framework to be used by decision makers as a starting point for discussions that must happen in modern organisations.
One of the determinants considered here is the Operating Model. Research by the Massachusetts Institute of Technology (MIT) in 2004 identified that 63% of large organisations tend to choose Unification as their preferred model, mainly to enjoy the benefits of the highly integrated and highly standardised business processes. Nearly a decade later, pharmaceutical companies are creating Centres of Excellence (CoE) and Shared Service Centres (SSC) to treat, organise and distribute their data, demonstrating that MIT’s research holds true for this industry. To confirm this assertion, a survey, created as part of this report, corroborates that this is indeed the perceived operating model that best fits the industry’s needs.
This survey also concludes that IT trends are seen as a risk rather than a benefit, mainly due to lack of knowledge.
Other relevant conclusions are summarised below:
With the conclusions from the academic literature review and by analysing the survey data, this research proceeds to assess each trend individually.
Cloud computing, mobility and BD&A bring agility, speed and knowledge sharing into organisations, yet they are seen as threats rather than opportunities. Although cost savings often trigger the need for IT adoption, many organisations find post-implementation benefits not foreseen in the initial business case. For example, running businesses as a service enables companies to integrate their business processes more efficiently, while keeping a high level of standardisation. Furthermore, companies are just beginning to realise the full potential of combining these trends to identify and resolve problems that have not happened yet.
The main adoption challenges derive from data (location, ownership or security), and talent (mind-sets and skills). The latter is especially relevant for building analytical models and algorithms that enable Big Data to be processed and presented as strategic information. Currently the global workforce is short in knowledgeable resources capable of defining these models.
Mobility also brings in additional complexity to businesses in terms of technology management. Until recently, companies made an effort to standardise the technology used by their employees, however IT consumerisation has resulted in employees beginning to demand the same tools that they use at home. These tools are often better and more advanced than those found in their workplaces.
The industry is experiencing all these trends but there are still potential growth opportunities, especially when combining cloud computing, mobility and BD&A to create value.
The key conclusions from this research are listed below:
The lessons learned in the pharmaceutical industry can be applied to other regulated sectors, for example, the financial services industry. Other sectors, such as technology and telecommunications, are more dynamic in their nature and, therefore, more open to accept IT.
With this in mind, this report sets the following recommendations to successfully implement these trends: