With deal premiums still rich, companies must think beyond M&A to how they can use partnerships and other models of external innovation to more affordably build capabilities and avoid disruption. That’s especially true in the digital domain, where most companies are not investing sufficiently in the data-driven and digital technologies that could drive future value.
The current lack of emphasis on digital deals means many companies are under resourcing the capabilities that will help demonstrate real-world utility precisely when patient outcomes, clinical efficiency and cost measurements become even more central to the value proposition. As such, life sciences companies should prioritize partnerships with new or existing stakeholders across the health ecosystem.
Says Stefan Oelrich, Member of the Board of Management and Head of the Pharmaceuticals Division, Bayer AG, “Unless there are deep internal research capabilities already, the targets developed outside our organizations are generally more differentiated – and therefore more valuable – than the ones developed internally.”
The collaborations should move away from conventional ownership models to structures that apportion risk and reward based on how resources, including analytic skills and data, are shared between different parties.
Creating these partnerships requires a change in mindset. Companies will succeed not only by owning intellectual property, but because they have access to critical data that improve the health care experience, clinical decisions and/or outcomes.