When markets are superfluid, how can life sciences companies channel the opportunity into new revenue flows?
Companies first emerged 400 years ago as a means to enable and regulate trade between colonizing nations and their new territories. Over the centuries, companies have continued as a key component of the framework for global trade, providing models for trade between different organizations, as well as between an employer and an employee. Because it has encouraged the exchange of goods and services, this framework has helped lay the foundation for our modern world.
Now the modern world is moving on. Companies still exist but their importance as an organizing entity has altered to where they are now sitting at the center of more fluid and responsive networks of relationships. This evolution toward a less rigid market is by no means over. Instead, the change is accelerating, and the market is becoming not just fluid but “superfluid.”
That’s the term physicists use for substances that flow without friction. Normally, liquids encounter resistance as they move; they are viscous and slow. Superfluids, engineered in more extreme conditions such as when helium is cooled to near absolute zero temperatures, behave very differently than regular fluids. Not only do they move without resistance, they can also flow through constricted channels inaccessible to standard fluids.
As such, they make a good metaphor for the changes that are beginning to overtake markets worldwide. The process is explored in this video from EYQ, which asks how companies create value when markets reach this superfluid state.
These changes are already beginning to occur and are directly affecting life sciences companies. Historically, life sciences companies have focused on product-centric innovations delivered by physicians to patients in a traditional, vertically integrated business model. Companies have begun to move away from being vertically integrated structures responsible for end-to-end manufacturing, marketing, sales and distribution, to become ecosystem partners linking up with increasingly dispersed global networks of suppliers.
But this is only the beginning of the change: the foundations of this familiar world are now shifting rapidly, as the rise of digital technologies offers new ways to sweep away existing barriers. These changes will transform patients into super-consumers who are empowered by new tools and just-in-time information to better manage their individual health.
No single change is driving this shift in life sciences markets. A convergence of technologies — for instance, artificial intelligence (AI), robotics, and 3D printing — create opportunities to turn health data into actionable information, especially when linked together via emerging blockchain-enabled infrastructure platforms. In the future, as wearables grow more powerful and shrink to become invisible, passive sensors will help nudge consumers to make better health and lifestyle decisions that ultimately result in improved outcomes.
This data-rich future, fusing the digital with the biological and the physical, is only years away. As the ability to use interconnected data grows, the ways life sciences companies realize value in this hyper connected world, what EY terms the Life Sciences 4.0 environment, will alter. Life sciences companies will need to walk the patient-centricity talk and actively partner with multiple different stakeholders in today’s diverse and rapidly changing health care ecosystem. Absent changes in the commercial model, life sciences companies could find themselves sidelined — developers of commodity products with little influence, and even less ability to capture value for their innovations.
For companies in the life sciences space, this move toward a superfluid health care market thus represents both a tremendous threat to their established way of doing business, and a tremendous promise of future growth potential. Realizing this promise means pro-actively responding to the dynamic changes taking place in the market, and seizing the opportunity to create the business models that will accommodate these changes.
This in turn will mean grappling with key questions that, for now, remain unanswered. These include:
- Which functions that companies currently perform will still matter when the nature of health care delivery changes?
- How will companies best position themselves to access, use, and own the flood of new data that will be ever more integral to the life sciences market?
- Which partners will be critical to creating the new health care platforms that can capture value in this rapidly changing landscape?