Life Sciences, Moving From Hypothetical Into A New Reality

Trends in the life sciences industry generally take place over decades rather than years, but many of the foundational elements that could signal a shift in how the life sciences sector might operate in 2019 and beyond are taking shape. As the sector continues to face pressure to drive prices down and demonstrate the value of their products, the use of outcomes-based payment models is expected to become more common. Several trends will likely continue to shape biopharmaceutical and medical device manufacturers in 2019. In response, health care stakeholders, including medical device manufacturers and biopharma companies, will likely need to accept more risk for the value that their products provide. At the same time, biopharma companies will likely continue to seek ways to reverse the declining return on research and development investments, and they should adapt to the new regulatory frameworks that are expected to emerge in the year ahead.

Take, for example, the shift from treatment to wellness, pricing pressures, growth in the use of digital technologies, and increased use of omics and real-world data (RWD). Ongoing breakthroughs in the fundamental science behind therapies and cures, the incorporation of the patient voice throughout the lifecycle of therapy development, and new types of partnerships and collaborations also are making their mark on the sector. Collectively, these trends may push life sciences companies to become more efficient, nimble, and customer-focused. In 2019, the industry might finally reach the tipping point that moves it beyond the hypothetical and into a new reality.

Greater scrutiny over drug pricing
2018 was undoubtedly one of the biggest years for policy efforts to reduce drug prices and out-of-pocket expenses for patients. As the sector continues to face pressure to drive prices down and demonstrate the value of their products, the use of outcomes-based payment models is expected to become more common.

Increased interest in contracts that demonstrate values
The launch of several gene and cell therapies has been a catalyst to advance the discussion of alternative payment models. As health plans embrace more value-based contracts, it is expected that life sciences companies will need to develop pricing strategies that demonstrate the long-term value of their products. Moreover, healthcare stakeholders, including medical device manufacturers and biopharma companies, may need to accept more risk for the value that their products provide.

Innovation being driven via collaboration from multiple industry stakeholders
The emergence and development of new tools like nano-sensors, bi-specific antibodies, and computational biology have highlighted the success that can be achieved from the collaboration between researchers and organizations across a range of disciplines. This trend is expected to further continue in 2019.

Technologies are being adopted to advance drug research
Budgets will continue to increase to allow for new technological advances, including the use of artificial intelligence in R&D decision making. R&D functions are already beginning to adopt large-scale use of cloud-based platforms, but this will accelerate this year. Mobile computing is poised to support the digitization of health in combination with drug therapy, as well as through stand-alone therapies.

New types of research are coming to the forefront
Research in precision medicine, immunotherapy, and the microbiome are opening up new discovery pathways. Alongside genomic research, these new approaches will provide a more refined understanding of diseases, better diagnoses, and improvements to treatment.

Evolving regulatory frameworks and collaboration between industry and regulators
The US Food and Drug Administration’s (FDA) pre-certification program is an example of how collaboration between industry and regulators can drive more self-regulation that is rooted in a culture of quality, organizational excellence, and performance monitoring. As software-based medical products become more mature, the feedback provided during the pilot phase of this program will help the FDA refine the proposed regulatory model and could influence new regulations, address outstanding issues, and ensure that new regulations and guidelines are fit for purpose. The FDA has also indicated that it intends to work more collaboratively with companies to bring innovations to market more quickly. In addition to its Software as a Medical Device pilot, the FDA has also supported increased use of RWD and has approved a large number of innovative therapies over the past year. Collaboration can allow stakeholders to deliver more proactive, cost-effective care and improved outcomes.
Embrace a digital-first mindset
Digital technology has the potential to change everything from the way R&D is conducted, to how clinical trials are designed, to how new products are commercialized. But, many companies are still in the experimental stage when it comes to digital and have been reluctant to make bold moves. For companies to address mounting pressures, a digital-first mindset likely will be required to make business operations more efficient and bring transformational therapies to the market. More adoption of technologies such as robotic-process automation, which can help improve the efficiency of R&D including clinical trials, is expected to be seen in 2019. Cognitive, artificial intelligence and RWD likely will continue to transform the way new innovations are developed. It is also expected that more companies will bring in digital talent from outside the industry. There appears to be an expectation that digitally savvy outsiders can offer a fresh perspective to typically conservative life sciences companies. Case in point: Merck hired its first Chief Digital and Information Officer, whose most recent experience was with consumer product companies, including Nike Inc. Novartis’ Chief Digital Officer was previously the CDO at one of the U.K.’s largest online retailers and also held senior positions at Amazon.com.

New forms of data to demonstrate value
The targeted nature of precision medicine could mean better patient outcomes in an increasing number of therapeutic areas – particularly if digital tools can be used to ensure patients comply with their treatment regimens, monitor the effectiveness of therapies, or report adverse events. And with outcomes-based and alternative payment models being piloted, life sciences companies will focus more attention on multiple external data sources, which have the potential to drive disruption across the entire value chain – from R&D, to the delivery of care, to regulatory review, and approvals. RWD will be the key to creating new business models by using patient outcomes to support value-based contracts for personalized medications or using information from wearable devices to understand and improve the patient journey. It can help confirm medical adherence, and also help better predict outcomes. With the business value now better understood, more life sciences companies will align with RWD strategies in 2019 as they prepare for the future.

Collaboration with new partners
2018 was a big year for nontraditional competitors and technology companies entering the market. One of the more significant market signals in the overall industry shift was Roche’s acquisition of Flatiron Health earlier this year, pointing to the focus of big data, analytics, and personalized medicine. Life sciences companies have historically teamed with providers and academia, but the industry may see more non-traditional acquisitions and partnerships in 2019 to drive innovation and patient-focused agendas. For example, the sector might see more partnerships between life sciences companies and patient advocacy organizations, informatics companies, or technology firms to improve the design and delivery of therapies. Stronger partnerships between life sciences firms and their physician and hospital customers may be formed around the patient. Further, the internet of medical things will lead to some interesting partnerships in 2019 as companies focus on more connected devices.

New ways to connect with consumers
Advancements in electronic health records are paving the way for consumers to take more active roles in their health and wellness. While some consumers still might be leery of this concept, there seems to be a willingness to embrace new tools and technologies. The challenge, however, will be how to create intrinsic value for consumers and ultimately win their trust. Technology could help bridge the gap and make clinical trials—and other connection points—more patient-friendly and accessible. It is also expected that more at-home diagnostics will enter the market in 2019, which could help put consumers at the center of their care. Data from these diagnostics, along with wearable devices, can drive more proactive healthcare and help companies understand their patient populations.

The future
No doubt, 2019 will be a year of change—and a year of continually evolving and advancing trends. It also could be a foundational year as companies continue to focus on wellness in addition to treatment, and on adding value to the overall health care system. The industry will be paving the way for a new future for life sciences and healthcare—even if it might seem incremental, these are monumental shifts to an industry focused on care driven by data and cross-collaboration across all health care (and nontraditional) stakeholders.