Commercial Models for the Changing Life Sciences Market

Over the last decade, life sciences companies have evolved by developing new digital capabilities needed to optimize business and operating models. This cycle of agility and resiliency appealed to customers and was on its way to becoming the normal, positioning the sector to find wins for both individual businesses and society as a whole.

In 2020, the landscape changed dramatically.

The global pandemic upended the traditional go‑to‑market model, requiring a rapid shift to still‑evolving practices such as virtual engagement and rebalanced, dynamic field teams. Something interesting happened along the way, however. These compulsory digital shifts created new provider preferences, with health care providers (HCPs) now preferring to receive information through digital and virtual channels. The benefits of receiving virtual presentations on new products and services began to outweigh the loss of face‑to‑face interaction.

Eduardo Schur

These sentiments are likely to have lasting effects and dramatically vary by specialty. While the proportion of physicians who will not physically see sales reps today is certainly exaggerated by circumstances, the preference for physical distancing in the coming post‑pandemic world indicates no full “return to normal.” Physicians, hospitals and other life sciences clients are eager to see how companies can build off of lessons learned over the past 18 months and continue to reimagine their approach to client service, as well as protect against future disruptions.

As we move further into 2021, there is an opportunity to harness recent turbulence through better allocation of resources and a more intensive focus on building trust with customers. Life sciences executives in the 23rd edition of the EY Global Capital Confidence Barometer say that they are increasing investments in areas such as digital transformation (67%) and customer engagement (65%) to help grow long‑term value.¹ And yet, there are some companies in the sector that would prefer to return to a pre‑COVID‑19 business model centered around those face‑to‑face meetings. The risk for these companies is that clients and stakeholders who have seen how technology can work in the sector may not want to revert to the old way of doing business.

Ashwin Singhania

The reticence of some life sciences executives to fully embrace change is understandable to some degree. While virtual technology has provided some wins for the sector, it still doesn’t compare in terms of effectiveness and revenue generation to in‑person sales pitches. Financials are rebounding, but seasoned executives will likely continue to be cautious as they consider making large‑scale changes. Life sciences sector leaders need to consider the benefits clients see in interacting virtually and other new behaviors inspired by the pandemic and build a model that is both attractive to the client and profitable.

Converting traditional models to a more agile approach

Several industries have undergone similar transformations, converting their traditional models to a more agile, analytics‑supported omnichannel approach.

Six health care macro trends have emerged that demonstrate the value of transforming care delivery, shifting market approaches and creating new opportunities for health care stakeholders, from physicians to nurses to practice managers, patients and payers:

Shannon Hartley

Customer experience focus — As customers continue to drive preferences and choice, technology platforms that can interface across stakeholders will be critical to improving personalized experiences and enhanced engagement. Building‑out capabilities in digital engagement is becoming even more critical as health care providers (HCPs) increasingly narrow access.

Personalized care — There has been a shift from “one-size-fits-all” care regimens to specific population‑based treatments. An enhanced patient experience is a building block to improved outcomes. Investment in hyper‑personalized and digitally connected patient services will drive adherence and reduce costs.

Consolidation, convergence and disruption — New entrants and market consolidation/ convergence have led to a disruption in power dynamics within the health care ecosystem. As the market evolves, nimble approaches within this area will be critical to serving the organization’s growth goals. For an organization that wants to become a leader in the therapeutic area, inorganic growth provides ad hoc and targeted support for commercial success. Many companies will need to bolster their portfolios, while others will look at capability builds via purchases or partnerships to increase their ability to compete.

Data-driven health care — Improved care delivery and the emergence of new business models, systems and processes have been driven by an explosion of data and new requirements. A robust data and analytics capability will support purposeful interconnectivity to drive more targeted go‑to‑market strategies, enhanced agility/mobility of resources and highly personalized customer interactions. Those that leverage data and analytics best will have advantages through advanced segmentation, dynamic forecasting, contracting analytics, sales force performance analytics and predictive pricing modeling.

Dynamic delivery models — The health care sector has seen a shift toward innovative modalities and new sites of care outside the traditional hospital model. Artificial intelligence has the capability to transform many core processes in the current commercial model, such as promotional material review and analytics. This will free up resources to focus on strategy and alignment, improve quality and consistency and decrease the cost basis for managing many of these initiatives.

Value and affordability — There is growing demand for value‑based care and a focus on affordability for patients, employers, payers, etc., with novel risk‑adjusted and outcome‑based models. Continued innovation in this area will support a more dynamic and sophisticated approach to value, affordability and outcomes. The ability to incorporate standardized data sharing and improved data systems to access relevant adherence data will be essential in delivering value to stretched health care systems. Fitting innovation into an increasingly cost‑constrained environment will require new ways to capture and attribute value and resources.=

Life sciences companies reframe their value proposition

In today’s fluid environment, every company developing health care products and services is a data company, and therefore a technology company. Likewise, every technology company that has access to health‑related consumer‑generated information is a health care organization.

What hasn’t changed is innovation, which will continue to be a central component of how life sciences companies create future value. But increasingly, these innovations will be valued based on their ability to satisfy the demands of life sciences companies’ diverse customers — payers, care providers, policymakers and consumers.

To do so, companies will need to frame innovation in terms of health outcomes, affordability and personalization. This broader definition of innovation means products are no longer the central driver of value. Instead, innovation will be powered by an increasingly diverse stream of data that resides outside the confines of the traditional health ecosystem and the electronic medical record. High‑performing companies are able to harness new ideas and craft an effective strategy to deliver value to the customer.

COVID‑19 accelerated the transition from legacy to evolved model capabilities that focus on providing a seamless, holistic customer experience informed by advanced analytics and this deeper understanding of customer segments. The result is that in‑person promotion is no longer an imperative and targeted investments in digital can lead to improved outcomes.

Now is the time to pilot programs that provide valuable data on what works and doesn’t work to inform your long‑term strategic decisions moving forward. Map out a plan to address these health care challenges.

Here are some key questions as you evaluate your next steps:

• How do I manage my spend to be effective, efficient and impactful?

• How do I invest in the right channels and content to reach customers?

• How can I empower my customers with the right tools and capabilities to execute their priorities?

• How do I upskill and equip my field force to reach out to customers?

• How do I leverage data and analytics to deploy effective and impactful strategies and data?

Those companies that resist change and insist on reverting back to old ways of doing business will likely struggle to meet the needs of their clients. It could also make it difficult to retain sales reps, reimbursement managers and payer field teams, who may not be willing to work in an environment that finds them competing against firms that have embraced the future.

Eduardo Schur is Principal, EY Americas Health Science and Wellness Commercial Strategy Leader; Ashwin Singhania is Principal, EY-Parthenon, Strategy, Life Sciences; Shannon Hartley is Managing Director, EY Health Sciences and Wellness Consulting.

Note

1. Life sciences executives taking longer‑view look at M&A strategy — ey.com/en_us/ccb/life‑sciences‑mergers‑acquisitions.