Is Life Science industry healthy?

3 min read

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Shoemaker’s son always goes barefoot

Anyone reading the news about Life Science companies would believe that everything is OK for them, with billions of dollars in revenue and cash on hand.

The reality is that industry fundamentals are shifting, and their future may look different than it does today.

While the life sciences business has steadily integrated technologies over the years, the pandemic has increased the innovation demand to unprecedented levels.

Top-tier pharmaceutical companies have expedited collaborations and acquisitions, although they could not avoid new brave entrants rattling the industry ranking:

A first for a sector shielded from outside investment for decades.

Until COVID-19, Pharma leading companies have focused on cell and gene therapies, with RNA therapeutics still in early development and yielding little money.

The introduction of mRNA COVID-19 vaccines transformed the industry, demonstrating those treatments were manufacturable, deliverable, and safe on a previously unheard-of scale.

As a result, RNA native firms (Moderna and BioNTech) have amassed billions of dollars to fund the development of this technology projects in domains other than vaccines.

The balance of power has already shifted in their direction, and their future strategy will influence the whole industry.

It can happen again with other technologies and, lower industry barriers will award organizations with sharp value creation M&A strategies.

life science revenue news pharma model patients
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Where is the patient?

The pharma business model is simple and has worked well for decades:

Design a treatment, gather enough proof about it to be licensed, and then convince insurers, doctors, and healthcare providers to prescribe it as widely as possible before the patent expires.

Who is missing in this model? The patient.

Social Media and new technologies have changed “patients”.

They today expect to be heard and understood. Patients want to know what alternatives they have. They want help in making a decision that is essential to them.

As they are more empowered than ever before, they conduct more research and ultimately take extra responsibility for their health than in the past. Trust is lacking and, they want to be active rather than passive in their hunt for new treatments.

Including patients in the model requires a reach of flexibility that many monolithic organizations don’t have.

It is difficult to change a business model that has been successful for a long time. Commercial health platforms will not suffice to fill the gap.

Without a different mindset, big pharma organizations will not succeed in including digital therapeutics as a source of knowledge, and partnership and acquisition will continue to happen as provisioning of new revenue streams.

Big data, advanced analytics, and medical device engineering will customize biometric patient data and relieve pressure on centralized healthcare systems, allowing them to focus their energy more effectively.

New challenges and opportunities for the whole sector!

The greater the size, the slower the pace. The problem with financial-driven companies across sectors is that they downgrade the importance of content knowledge, ending up chasing the latest trends in their field, falling behind the newest one.

One example in Life Science is the research around tissue chips.

This technology has piqued the interest of researchers in recent years due to its ability to provide information at numerous phases of the drug discovery and development process. These novel devices promise to shed light on normal human organ function and more effectively forecast the safety and efficacy of experimental medications in patients.

As a result, it could speed up preclinical studies in the short term and might help revise and improve the overall clinical trials process in the long haul.

Who is investing in that?

life science revenue news pharma model patients

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The escalating battle to control drug prices

Another seismic shift unbalancing the industrial status quo will come from governments and insurers. They are pressuring pharmaceutical companies to lower prices and demonstrate better value from their medications.

Frustrated by the high cost of prescription drugs, they are considering the production of generic versions of popular drugs in the hopes of driving down the healthcare budget through competition.

This push creates a significant problem for large life science organizations already dealing with rising operational expenses, the complexity of regulatory requirements, and diminishing profits when blockbuster treatments lose patent protection.

In conclusion

The pharmaceutical sector, as a whole, is fast evolving, and large pharma companies must cautiously invest if they are to survive the difficult times ahead.

They require a fresh approach and a new mindset.

Not all leaders are visionaries able to see into the future and guide the organizations to where that vision may become a reality. Objectives, strategic plans are regularly altered and destroyed by new forming realities.

The drug discovery and development phase, exchanges among healthcare professionals and patients, complementary or standalone therapeutic software treatments, and medical devices will create unique chances and a new balance for big pharma organizations, digital native firms, and tech giants to solidify their influence.

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Thanks for reading. Tweet me @flavalib and let me know you read this!

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Disclaimer: Views or opinions represented in this article are personal and belong solely to the article writer and do not represent those of people, institutions or organizations that the writer may or may not be associated with in professional or personal capacity, unless explicitly stated.

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Flavio Aliberti Flavio Aliberti brings with him a 20-year track record in consulting around business intelligence, change management, strategy, M&A transformation, IT and SOX auditing for high regulated domains, like Insurance, Airlines, Trade Associations, Automotive, and Pharma. He holds an MSc in Space Aeronautic Engineering from the University of Naples and an MSc in Advanced Information Technology and Business Management from the University of Wales.

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