5 minute read 26 Aug 2021
Scientist looks in microscope

How five driving forces are changing the life sciences landscape

Authors
James Dolan, PhD

Senior Director, EY-Parthenon

Strategy consultant with research microbiology background. Energetic father. Avid Chicago Cubs fan. Volunteers with multiple charitable organizations focused on education and health care issues.

Alex Jung

Principal, EY-Parthenon, Ernst & Young LLP

Frequent public speaker and author on the global health care and pharmacy value chain.

Daniel Mater

Senior Director, Strategy and Transactions, EY-Parthenon, Ernst & Young LLP

Strategy consultant to the life sciences industry. Based in Chicago. Avid Green Bay Packers fan. Volunteers with organizations focused on the space economy and entrepreneurship.

5 minute read 26 Aug 2021

The use of mRNA and the growth of digital technologies are among key trends that will likely shape life sciences strategies in coming years.

In brief

  • mRNA, decentralized clinical trials, digital enablement and evolving operating models are among the trends that will shape the life sciences industry.
  • Life sciences executives need to develop a long-term strategy for addressing these trends and delivering value to stakeholders in a post-pandemic world.

The success of newer technologies for developing vaccines, the expansion and acceptance of digital and remote options for treating patients and testing new medications, and a renewed focus on drug pricing are some of the trends that are likely to influence pharma companies over the next one to two years.

How life sciences executives address some or all of the following trends is likely to have a lasting impact on how well they deliver long-term value to shareholders, patients and other stakeholders.

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Chapter 1

Drug pricing

Drug pricing, including its impact on Medicare, as well as on consumers, is expected to be a focus in Washington.

In the US, drug prices are ~250% higher than in other Organisation for Economic Co-operation and Development (OECD) countries, according to a recent report from the RAND Corporation.1 As a result, there is a host of federal regulatory and legislative initiatives being proposed that range from allowing Medicare to negotiate the price of the highest-cost drugs to imposing inflationary rebates for prices rising over the inflation rate. A smaller set of proposals is aimed at tamping down “anti-competitive” practices like pay-for-delay deals and “gaming” of the patent system. A recent Kaiser Family Foundation poll found that 89% of respondents indicated they support allowing the government to negotiate lower drug prices.2 Additionally, many states have introduced legislation to improve drug price transparency, creating potential for a patchwork of various laws for which pharma companies will need to comply.

Planning for the price of a drug at launch now occurs earlier in the development process than ever before. Brand teams, market access, and health economics and outcomes research functions all need to work together to set a drug’s price at launch while also monitoring market conditions. Those market conditions are ever more likely to include shifting political priorities. These market uncertainties will continue to force manufacturers to engage in value-based contracting.

The pricing debate spans all drug types and diseases — from central nervous system drugs topping US$2m per patient to ever-rising insulin pricing for people with diabetes.

Key drug pricing takeaway

It is imperative that pharmaceutical companies invest early in conducting market research with payers, employers and patient advocacy groups to understand expectations regarding pricing and any value-based agreement expectations for high-priced therapeutics. Value-based agreements stipulate specific outcomes that must be achieved for a drug to be paid for by a payer. While many pharmaceutical companies have experience with value-based agreements in Europe, that experience does not fully translate to the US health care system.

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Chapter 2

Decentralized clinical trials

The interruption in clinical trials caused by COVID-19 has necessitated the acceleration of decentralization.

Decentralized trials (DCTs) are defined as clinical trials that allow patients to enroll and participate at locations such as retail pharmacies or reference laboratories closer to home — or even at home — rather than traveling to a centralized investigator site. This setup contrasts with conventional clinical trials conducted by collecting data from patients in a centralized location. Hybrid clinical trials deploy strategies from both centralized and decentralized methodologies to enroll, monitor and collect patient data.

The ecosystem for executing clinical trials continues to evolve, including the entrance of new types of “sites” that will be participating and providing services like those found at major pharmacy chains. This will require new key enablers such as tools to educate patients about participating in clinical trials and obtain the consent, as well as collect patient data. These enablers will drive value and be required in this environment.

Key clinical trials takeaway

Pharmaceutical sponsors, as well as contract research organizations, need to leverage several enablers to address regulatory uncertainties, investment expectations and data/IT advancements related to DCTs.

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Chapter 3

mRNA and the future of vaccines

mRNA technology, new rapid manufacturing processes and diversified distribution have ushered in new business models.

The need for potential booster shots may cement these models and drive further investment in infrastructure and supply chains. In 2019, vaccines represented only 2%–3% of all pharmaceutical spending in the US; however, IQVIA (April 2021) predicts the vaccine market to skyrocket over the next five years, led by an incremental global spend of US$157b until 2025 from COVID vaccines alone.3

mRNA technology played a pivotal role in addressing the COVID-19 pandemic, and it will continue to be a game-changer for future pandemics. According to Dr. Anthony Fauci, “[mRNA technology] is good for flexibility with COVID-19, and it also will help us go back and look at the vaccines that have been very problematic in the past — HIV, tuberculosis, and even some of the cancer vaccines. ... I see the possibility of [mRNA cancer vaccines] as exciting possibilities.”4 As an example, one mRNA innovator has announced that it aims to start clinical trials for the first malaria vaccine using mRNA technology in late 2022.5

One of the lasting impacts of the pandemic is how vaccines are developed, manufactured and distributed.

When preparing for the next pandemic, pharma companies should continue to work closely with and align incentives with governments. As former FDA Commissioner Mark McClellan stated, “The main market for vaccines is going to be governments. … This is the kind of thing you’d want to subsidize industry into supporting.”6 In elaborating on how advancements in technologies forever changed the vaccine landscape, Dr. Fauci stated, “We showed the investment in vaccine platform technologies together with prototype pathogen studies … [led to] a vaccine that’s highly efficacious going into the arms of individuals in about 11 months. When we were at the NIH together, doing this would have been unimaginable.”7 The global vaccine market size is growing quickly, and pharma companies need to ensure that both R&D and financial de-risking keep in step.

Lastly, pharma companies should actively support R&D related to mRNA technology outside of vaccine applications. The highly editable nature of mRNA will allow it to target other disease categories. For example, Yale recently patented an mRNA technology to fight against malaria while multiple pharma companies are planning to use mRNA in seasonal flu vaccines. mRNA is also being applied in specialty categories such as oncology and immunology. Even though mRNA technology received its first-ever approval in the past year, it is likely here to stay.

Key mRNA and vaccines takeaway

Continuing to partner with governments can help countries and vaccine manufacturers overcome traditional economic barriers associated with vaccine development. At the same time, pharma companies should allocate resources to mRNA applications in their product pipelines, both within and outside of vaccines.

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Chapter 4

Evolving operating models and digital enablement

COVID-19 has accelerated the shift from traditional in-person promotion to targeted investments in digital tools.

Over the last decade, life sciences companies have evolved by developing new capabilities that enhance their business and operating models while organizations grapple with how to create a holistic, omnichannel customer experience.

The global pandemic upended the traditional go-to-market model, requiring a rapid shift to virtual engagement and rebalanced dynamic field teams. Traditionally, in-field sales representatives were the primary channel for engaging stakeholders. However, increasing restrictions to accessing physicians, compounded by the inability to meet in person due to COVID-19, has necessitated innovative approaches to engagement. These forced shifts to digital have created new provider preferences, with health care professionals (HCPs) now open to receive information through virtual channels. Digital tools will be critical not only for effectively engaging with providers on an ongoing basis but also for developing a deeper understanding of customer segments and priority accounts to optimize salesforce deployment.

As interest in virtual channels increases, providers across specialties also have indicated significant interest in expanded scientific discussions. HCPs prefer to engage on a clinical and scientific level, and, as a result, there is increased demand for more significant and substantial engagement with medical affairs teams. These teams will need to prioritize real-world evidence generation and building valuable relationships at the account level to strengthen their communication of scientific evidence to the market. Commercial organizations will need to adapt by shifting from brand-centric outreach to a more holistic, clinical approach that requires greater reliance on medical science liaisons and the upskilling of sales reps to ensure they have deeper scientific knowledge.

Key operating models and digital enablement takeaway

Life sciences organizations can actively seek to embrace technology as they continue to evolve their customer model. This includes investments in people and tools to ensure they are meeting the needs of customers across physicians, office staff, payers and patients.

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Chapter 5

Public health innovation

Investments are needed to improve both normal and emergency public health services.

Driven by immense scientific achievement and effectiveness of vaccines and other public health interventions against circulating SARS-CoV2 strains, states and private enterprises have opportunities, as the United States emerges, to augment their tools and practices to improve the safety and well-being of their constituents.

The trends impacting public and private enterprises in the current phase of the pandemic relate to data, technology and decision-making. Funding put forward by the Biden administration could overcome initial startup costs, allowing states and enterprise to:

  • Initiate active monitoring (and expanded sequencing) of infectious diseases to understand unique pathogenesis characteristics to inform treatment decisions and public health response
  • Advance and incentivize the adoption of non-pharmaceutical interventions (NPIs) as part of routine seasonal practices, particularly for private enterprise such as essential workers
  • Leverage clinical and diagnostic tools currently used in the private sector to enhance the capabilities of the public enterprise by making up-front investments, training personnel and crafting a road map to facilitate the organizational transition to the future
  • Support continued equity efforts to enable engagement and access to health care and public health services, including routine vaccination (e.g., the CDC’s Vaccines for Children program)

Key public health takeaway

Global transportation networks create the potential that this “once in a generation” experience will not be limited to only a singular event. Significant opportunities exist to invest in people, infrastructure and new capabilities to influence future events and disrupt a potential pandemic before we have a redux of 2020.

Adam Berman, Max Dreeben and Melissa Maggart contributed to this article.

  • Footnotes#Hide Footnotes

    Thomas Sullivan, “RAND Publishes Brief on United States Drug Prices, Compared to Other Countries,” Policy & Medicine website, May 16, 2021.

    Caitlin Owens, “Prescription drug price fight gets a funding infusion,” Axios website, May 21, 2021.

    “Global Medicine Spending and Usage Trends: Outlook to 2025,” IQVIA website, April 28, 2021.

    4 “Q&A with Dr. Anthony Fauci, this year’s Luminary Award winner,” Providence Health & Services website, February 12, 2021.

    5 “BioNTech Provides Update on Plans to Develop Sustainable Solutions to Address Infectious Diseases on the African Continent,” BioNTech website, July 26, 2021.

    Caitlin Owens, “The hurdles to creating a universal coronavirus vaccine,” Axios website, June 1, 2021.

    7 “Q&A with Dr. Anthony Fauci, this year’s Luminary Award winner,” Providence Health & Services website, February 12, 2021.

Summary

Several trends, including new uses for mRNA in developing vaccines, decentralization of clinical trials and digital enablement for drug development and patient treatment, are likely to shape the life sciences industry over the next several years.

About this article

Authors
James Dolan, PhD

Senior Director, EY-Parthenon

Strategy consultant with research microbiology background. Energetic father. Avid Chicago Cubs fan. Volunteers with multiple charitable organizations focused on education and health care issues.

Alex Jung

Principal, EY-Parthenon, Ernst & Young LLP

Frequent public speaker and author on the global health care and pharmacy value chain.

Daniel Mater

Senior Director, Strategy and Transactions, EY-Parthenon, Ernst & Young LLP

Strategy consultant to the life sciences industry. Based in Chicago. Avid Green Bay Packers fan. Volunteers with organizations focused on the space economy and entrepreneurship.