Digital technology has been and is still transforming industries, opening prosperous new value pools. Yet, it is also posing a risk to longstanding business models. While some industries like retail, banking or media already went through significant digital transformation, the healthcare industry is on the brink of change with disruptive potential. Although executives in healthcare are aware of opportunities and risks posed by digital technology, they are uncertain about which initiatives to focus on and how to pursue them in the best possible way.
This series aims to illustrate major trends favoring digital transformation in healthcare companies, indicate common pitfalls in “going digital” and provide a three-phase model to fruitful and sustainable digital efforts.
1. Which digital trends are expected to transform the pharmaceutical industry?
As with all trends there is great uncertainty which of them will diminish over the course of time and which will sustain and grow in importance. However, what many experts do agree on is that digital technology as such will affect the pharmaceutical industry significantly in one way or the other. Below we have listed three trends with high transformational potential for the pharma industry:
Value-based care moving into the limelight
With the rise in chronic diseases and an overall increase of healthcare costs, payors and governments are managing costs while delivering improved patient outcomes. To justify market access and price point, pharmaceutical companies are even more compelled to demonstrate the value and efficacy of their products based on real world data – in addition to clinical trials. Ranging from early (self-)detection, increasing drug adherence to substitution of existing treatments, digitally enabled “around & beyond the pill” products are becoming crucial in this balancing act of costs and enhanced outcomes
Digital healthcare opening the door for new competitors
The enormous potential of digital healthcare is not going unnoticed: With capital investments of $13.7B in 2019, funding in digital health start-ups increased fivefold since 2013. However, only 5% of these investments are accounted for by the 10 biggest pharma companies (StartUp Health Insights, 2019). As capability requirements are diversifying, more and more tech-savvy companies and venture funds are moving into diverse opportunities around digital healthcare. Therefore, the healthcare industry is going to change significantly which will also affect market positions of long-established companies.
Increasing patient engagement shifting pharma focus
In a digital age, patients are no longer exclusively relying on the advice of healthcare professionals but are increasingly able and willing to conduct extensive research on their conditions and treatment options themselves. The current global pandemic situation might accelerate this trend even further. Broadening the focus from HCPs to patients, many pharma companies are starting to (actively) engage with “end users” to ensure a seamless and convenient experience. In exchange, these companies are gathering and learning from extensive data provided by patient’s smart devices. With a 15-fold increase in healthcare data generation from 2013 to 2020 (International Data Corporation (IDC)), this data offers companies an unprecedented entry point to identify global macro developments and trends in disease patterns and consumer behavior.