Facing core challenges, biopharma leaders discern paths to opportunity

Biopharmaceutical executives agree: Now is a pivotal moment of change for their industry. But with change comes opportunity and a chance for transformation.

That’s what ZS learned earlier this year when we spoke with industry leaders in the U.S. and globally to understand their priorities and concerns. In our conversations with executives, corporate strategy leads, general managers, SVPs and VPs representing large and small companies, we heard the need for action. These leaders are guiding their businesses within a healthcare system amid rapid change, and they recognize that biopharma must evolve. By acting now, the industry has an opportunity to define what’s next and shape healthcare for everyone. Based on the themes we heard in these conversations, we urge biopharma leaders to prepare for these shifts by focusing on a few key areas.

What’s on the minds of biopharma executives now

ZS heard several recurring themes in our conversations:

• Expectations for pharma innovation and delivery are higher now. During the pandemic, biopharma responded with efficiency and speed. Now, there’s no going back to business as usual. This conclusion points to implications across the enterprise, from R&D to operations and customer engagement. With both providers and patients looking for more connected and engaged healthcare experiences, speed of innovation and personalized care, it’s time to meet these expectations with new ways of working.
• Rapidly changing markets and new technologies with differing margin profile will compel biopharma leaders to engage more at an ecosystem level than ever before. As a result, they’re rethinking their business models (that is, what they make), how they make it (in collaboration and partnerships) along with their operating models (how they work). And they’re considering how to redesign their long-standing and embedded core competencies accordingly.
• The move to an outcomes-focused healthcare system is creating new roles for biopharma. Traditionally, biopharma has focused on providing medicines and treatments, but now the industry has an opportunity to build on that role and play within a bigger space in the healthcare arena. As the value of pharmacologic innovation is challenged globally, this is an important avenue to engage and redefine value as an ecosystem player in addition to a medicines manufacturer.
• It’s time to differentiate—fast and often. “The window of relevance and differentiation is smaller than it ever was” for biopharma right now, one executive told us. Whether speaking of medicines, innovation, analytics or AI approaches or even services and solutions, executives see a mindset change ahead to keep their business.

We know from our conversations across the current biopharma landscape that these issues will eventually affect the entire industry. What can biopharma do to prepare? We’ve identified four areas where companies should focus now to bring sustained value for the future.

Biopharma at a crossroads: First the strategy, then the portfolio

Planning for the future means being clear about strategy. One company might choose to double down on manufacturing medicines; another might focus more on finding solutions to help people stay well or challenge a disease state. Some might choose components of both. The executives we talked with recognize that the first step is for individual companies to determine their strategies and ensure their portfolios are aligned. “Acquiring innovation won’t be enough; [we must] shift the view to outcomes and portfolio and build around patients,” said Ulrich Otte, senior vice president, finance and operations at Novo Nordisk.

With the old “blockbuster model” no longer reliable and a continuing press for innovation coming from emerging companies, this calls for a multi-pronged approach to portfolio strategy. Once this strategy is in place, innovation can follow. Some next steps are:

Continue to invest in clinical operations. There are a number of opportunities with potential for high return. For example, ZS analyzed historic studies and developed predictive models for one client to enable better future resource modeling, identifying $70 million in avoidable amendments. ZS has also helped clients reduce time on feasibility by 70% through an end-to-end analytics application and improve study enrollment by leveraging new patient analytics and insights.

Upgrade your business development strategy and capability. For example, AI and machine learning can help assess market intelligence and enhance understanding of the competitive environment and provide data-driven assessments of probability of technical and regulatory success. This helps companies manage risk and make better bets on innovation.

Plan for new revenue models. In 2021, we saw a rise in the use of technology platforms that could potentially inspire many different products, such as gene therapy, mRNAs and digital therapeutics. There are additional areas of opportunity such as clinical decision support and other solutions and services worth exploring.

Think expansively about partnerships. Biopharma companies tend to “go it alone,” but in developing new revenue models, partnerships will be critical to fill in gaps and build competitive advantages in both development and commercial areas.

Choose places to ‘de-industrialize’ biopharma operations

The executives we spoke to described how the speed of innovation is compelling their businesses to move away from a traditional development and delivery mindset.

To improve speed and reduce risk, one respondent described a shift to “de-industrialize the business model” and move toward a more flexible way of working that is informed by data, bolstered by feedback and facilitates parallel approaches with quick decisions. This applies across core competencies from R&D to commercial to supply chain.

“Today, speed of innovation has greatly increased and there is a growing expectation post-COVID-19 for that to be the norm,” said Tony Hooper, retired executive vice president of Amgen who is now an independent director on numerous biotechnology boards. “The old idea of drugs taking eight to 10 years to come to market is no longer the standard.” Speeding up the production pipeline with AI and machine learning, instead of a traditional linear process, and trusting in the leading indicators will help organizations make data-driven decisions faster, often in parallel with other processes. Leveraging analytics, companies can invest in technologies that can point them toward a data-informed course of action. AI can also be applied to downstream processes like go-to-market planning and sales.

Decisions about portfolio and market need to evolve, too. Instead of blockbuster launches, companies are often building their portfolios on more focused markets and innovations. This flip from the blockbuster mindset to a more agile approach will require significant change in processes and go-to-market approaches.

As core competencies and key processes change, it is not just about the infrastructure. Ways of working, talent and culture need to move toward the future, which is a key challenge and opportunity.

Solidify your enterprise data strategy to unlock data

In all our conversations with executives, ZS heard the repeated refrain that biopharma companies must find ways to unlock data. To do this, they must build a solid enterprise data strategy. Our customers recognize that the industry has not even scratched the surface of the data we have—and that it must design systems to empower the work of the future if it is to make progress toward a more digitally native culture and operations.

It’s time to build systems for the way we want to work in the future—not just the way we work today. In doing so, we not only unlock better decisions now for competitive advantage, we open up the potential for new revenue streams and long-term return.

Tightening biopharma’s focus on patient outcomes

The executives we spoke with see taking the industry’s patient-led mindset further into action as a promising goal and a long-deferred challenge. Jessica Nora, vice president, head of product and portfolio strategy at BioMarin, summed it up: "If patients win, we win … But all too often we think we’re doing it, we believe we are, but don’t want to question: Are we really? We think we know what patients want; we want to give them what they want, but we don’t go far enough into what their experience is directly.”

Autologous cell therapies have pushed manufacturers to be inherently more embedded with patients, providers and the course of care. With more personalized medicine on the horizon, transparency, consumer trust and equity of care are all on the line as we envision a new future. There’s work to be done: a ZS survey found that adults were half as likely to feel “cared for” after doctor visits than their doctors expected. How can biopharma help?

One answer is in thinking beyond therapeutic assets to therapy area solutions. It is at the therapy area level that biopharma has the best opportunity to directly affect health outcomes in a broader sense. This will require each company to reflect and reach a vision of how they can improve patients’ lives by supporting their disease journey and needs.

Doing so not only helps patients but, as ZS research shows, a focused approach to therapeutic categories and execution can also drive stronger returns.Doing so not only helps patients, but ZS research also shows that therapeutic category focus and execution can drive better returns. Focusing beyond the medicine opens doors for biopharma to become true stakeholders in social drivers of health initiatives. This perspective can deepen understanding of population health and barriers to treatment, strengthening product life cycle planning and market strategy. At the same time, efforts to advance health equity can position biopharma as stronger collaborators, improve clinical effectiveness, and build public perception and confidence.

Where does biopharma go from here?

To paraphrase computing pioneer Grace Hopper, biopharma has always been more interested in the future than in the past. That’s fortunate because the coming years may prove to be a defining moment. The executives we spoke with understand that the industry’s resilience is being tested and that big shifts are imminent. It will take sustained effort, leadership and focus to develop the speed, capabilities and talent that the biopharmaceutical industry needs to deliver on the future ahead. But if we act quickly, we can forge a new and more influential role in the healthcare ecosystem and produce meaningful change.