2019 marks the 10th anniversary of EY’s Capital Confidence Barometer, and those 10 years underscore how much technology is changing the life sciences industry. Ten years ago, it cost nearly a million dollars to sequence a genome, blockchain-enabled patient data and nanosensors didn’t exist and it wasn’t possible to monitor vital signs on a smart watch.
Life sciences companies now face an environment where technology and consumer companies have the data analytics skills, connected devices, and customer relationships and information to influence health care.
Access to new technology, production capabilities and talent (24%) vies with access to new markets in adjacent sectors or via geographical expansion (25%) as the types of deals where executives expect to create more value in the next three years. More also see the impact of digital technology and transformation to their business model, the threat of digitally enabled competitors and the impact of sector blurring or convergence as the most prominent topic (31%) on their boardroom agenda in the next six months.
While life sciences companies are investing in technology, much of it is piecemeal, with rare exceptions such as Roche’s acquisition of Flatiron Health and Novartis’s investment in a range of data-centric capabilities. A greater emphasis on building digital capabilities to align with a company’s therapeutic focus can improve clinical testing and help speed the development of new treatments.
More frequent portfolio reviews bring the focus needed for innovation
As life sciences companies continue to ramp up their pursuit of acquisitions, they need to concentrate on creating therapeutically focused and data-centric businesses in order to maximize success. Life sciences businesses with more focused portfolios are more likely to outperform their less-focused counterparts. A total of 42% of life sciences respondents say they are now reviewing their portfolios quarterly, compared with only 2% a year ago. A majority said their most recent portfolio review led them to differentially invest capital in a particular business unit. By reviewing portfolios more often, executives are building agility and resilience into their strategy, allowing them to engage in the digital ecosystems that are beginning to emerge. Active portfolio management is essential to establish platforms of care that focus on specific outcomes in a constantly changing environment.