The COVID-19 pandemic has revealed strengths and weaknesses across the spectrum of life sciences. Lessons learned from the crisis are accelerating a transformation process that was already under way.
Pre-crisis, the life sciences ecosystem was already in a state of flux, with new alliances emerging as industry outsiders and established multinationals alike recognized the potential of collaboration. The changes were driven by various megatrends: demographic shifts, increasing regulatory pressure, rising costs for healthcare and negative returns for R&D.
Against this background, life sciences players have a unique chance to revise their business models and approaches. They need to consider key questions. What’s wellbeing worth? How can life sciences collaborate, not compete, with new market entrants? And how will predictability, prevention, precision and personalization transform the life sciences ecosystem?
The value of health
Around the world, government and private spending on healthcare is increasing steadily, with annual healthcare spending per capita averaging USD 3,994 in 20181. Aging populations in the developed world are associated with higher healthcare costs, while emerging economies are building more sophisticated systems. But shifting attitudes could also play a role in this development, as an increased awareness of health, coupled with higher expectations as to the standard of care, mean that people seek healthcare services more frequently. In Switzerland, for example, the percentage of people visiting a doctor 5 to 9 times over the course of the year jumped from 10.7% in 2002 to 17.4% in 20172.
These trends will push up the cost of health – but will willingness to spend on it grow too? Depending on how the world’s economies bounce back post-COVID-19, cost could become a sticking point for both private and public payers. This is especially true given that we may be close to natural limits on public funding. The WHO’s 2019 monitoring report on universal healthcare shows a steady improvement in investment globally from 2000 to 2017; but progress has slowed since 2010. To maintain the trajectory, especially in light of evolving needs, governments will need to invest heavily in broader and better targeted health system capacities. Disruptive new market entrants could play a key role in tackling these challenges – especially if established players team up with innovative newcomers to deliver new value propositions.
Embracing disruption and competition
A great deal of the disruption we’re seeing comes from tech, and the various life sciences have much to gain from advances in technology and data usage. But they’re not alone. New market entrants are shaking up health services. From in-store testing services at supermarkets, health apps and telemedicine to online pharmacies and cloud-compatible wearables, a host of new business models have emerged rapidly.
As we move into the age of personalized medicine, pharmaceutical companies need to embrace collaboration as part of the picture for participative care. Case in point: non-invasive wearables for diabetics. The latest innovations measure blood glucose levels continuously and painlessly, alerting patients to the need to take medication and informing them of the precise dosage. Data can also be sent directly to the patient’s physician to allow long-term monitoring. Another example is the collaboration between Zurich University Hospital and Roche: innovative molecular tumor profiling uses a minimum of tissue for maximum insights. These examples underline why it’s so important for all industry players to work together to secure the best possible outcomes.
Amid the euphoria at the opportunities of digitalization, patients must be placed at the center of any company’s data strategy. It will be interesting to see how public attitudes to privacy develop in the potential post-pandemic world. While health data is traditionally protected with the highest level of security, public acceptance of contact tracing apps during the COVID-19 crisis point to a greater willingness to share data where the perceived benefits outweigh privacy concerns.
Predictability, prevention, precision and personalization
Digital transformation changes not only how life sciences companies operate, but also what they aim to achieve. Better data access and use unlocks hidden insights and sets a new pace in research and development. During the pandemic, the University of Basel was involved in a global “Virtual Pharmacy” project to screen almost a billion substances as potential treatments for COVID-19.
Armed with the right data, physicians and pharmaceutical companies can target their offering to get the best possible outcomes for patients. And it’s increasingly outcomes that count. In an environment of intense cost pressure, payers are embracing outcome-based remuneration models (pay-for-performance). If companies are prepared to share data or collaborate in other ways, product pipelines will be much quicker.
The overall burden on healthcare resources could be massively reduced in a system focusing on predictability, prevention, precision and personalization. Investment will still be necessary, but we’ll see a shift in spending towards predictive analytics, personalized treatments and preventative approaches. Combined with the trend towards greater individual responsibility for health, today’s healthcare landscape could become unrecognizable.
Pharmacies, doctors’ offices and hospitals would also be transformed by an approach that proactively predicts, manages and treats conditions. Direct cloud delivery of healthcare data from wearables could also cut the need for in-person visits. Use of telemedicine spiked during the COVID-19 crisis, when non-essential medical interventions were postponed. If this trend continues, the need for patients to report in person at a hospital or other facility will decrease even further. A more participatory care approach could also accelerate trends toward treatment at home as providers embrace new cost-efficient settings for medical services.
A new normal – the next phase for life sciences
The COVID-19 crisis has brought home the value of health for many people. Besides ensuring basic healthcare provision, pharma companies and healthcare providers should invest in solutions that add value for patients and consumers. If the first half of 2020 has taught us anything, it’s that innovation, communication and collaboration are vital in safeguarding resilience. This is true not only in the pandemic context, but also for the future of the life sciences healthcare ecosystem.
This blog article is an adapted version of a piece first published in Clarity on Healthcare.
1 OECD average
2 Federal Statistical Office, 2016 (most recently available data)