7 minute read 6 May 2021
test tubes

How a focused life sciences digital strategy can drive long-term value

Arda Ural, PhD

EY Americas Industry Markets Leader, Health Sciences and Wellness

Co-author of numerous whitepapers and a frequent speaker about biopharmaceutical strategy at industry conferences. Married father of two.

Michael Botos

EY-Parthenon Americas Public Health Strategy, Innovation and Transformation Leader

Business strategist. Entrepreneurial and transformational leader. Innovator, collaborator, connector. Helping others see new opportunities and have the courage to pursue them.

7 minute read 6 May 2021

Life sciences executives are accelerating their digital strategy due to the pandemic.

In brief
  • AI, cloud and IoT became table stakes as life sciences digital strategy and investment accelerates due to COVID-19.
  • However, most life sciences companies are  yet to realize the full benefits of their digital strategy.
  • Life sciences executives still grapple to scale digital initiatives due to lack of funding, talent and adherence to traditional operating models through older platforms.

Life sciences companies have focused on their digital strategy and investments in recent years to help discover and develop new treatments and improve patient outcomes. But operating model issues, insufficient digital budgets and a lack of digital skills are preventing companies from leveraging their digital investments to support cohesive platforms of care.

In fact, in the recent EY Digital Investment Index, 55% of the 69-life sciences C-suite executives polled said their company lacked a clearly defined digital strategy and goals, which led to only 23% saying they measured their return on digital investment (RODI). The life sciences executives were part of a group of more than 1,000 surveyed by Oxford Economics.

The COVID-19 pandemic helped accelerate the use of digital technology in areas such as telehealth and remote clinical drug trials. New breakthroughs in technology have helped companies move from a more conventional product focus to a broader view that includes the associated processes and patient journeys. Capabilities like artificial intelligence (AI), machine learning, Internet of Things (IoT), virtual and augmented reality (VR and AR), 3D printing, and telemedicine, among many others, can form the basis for enhanced growth, reduced risk, cost efficiency and process optimization across the value chain.

But while most life sciences companies have invested in several digital areas, only a small number say they have started realizing full benefits in, for example, cloud computing and IoT. None have realized the full benefit of AI, even though 98% have at least embarked in some way in that category.

Figure 1: What best describes the progress in your company’s technology investments?
Progress in tech investments, per Life sciences Digital Investment Index (DII) survey

Barriers to successful digital strategy investments

Digital initiatives for life sciences companies most often stall because of budget, talent and operating model issues, per the Digital Investment Index (DII) survey.

Figure 2: What are the top reasons why your company’s digital programs are stalling?
Top reason digital programs are stalling, per Life Sciences Digital Investment Index (DII) survey

Data can also be a key area of concern. While life sciences companies, by their nature, have a host of data about treatments, clinical trials and other metrics, there are some common hurdles to leveraging that trove of data, including incomplete or poor data, lack of a data analytics function — which could prevent companies from seeing a holistic view of the patient — and lack of a data monetization strategy. This could be a sign that the lack of success in implementing artificial intelligence capabilities is stopping life sciences companies from leveraging their data to form a holistic patient journey for better health outcomes.

Figure 3: What are the top three data-related challenges your company faces in realizing the full value from digital initiatives?
Top three data-related challenges in realizing full value of digital initiatives, per Life Sciences Digital Investment Index (DII) survey

Lack of a clear digital strategy and focus on improving data capabilities can slow the long-term growth of a life sciences company. But when these issues are solved, digital capabilities help life sciences companies:

  • Assist patients with adhering to their prescribed treatment plans and provider-caregiver requirements
  • Connect through digital channels with stakeholders to improve outcomes
  • Empower patients to monitor, record, research and share health-related information
  • Support physicians in providing customized therapy solutions to patients
  • Moderating costs for payers while improving quality of patient care
  • Reduce cost of operations such as research and development (R&D), manufacturing, supply chain and marketing

Leading life sciences companies use digital capabilities in a number of ways

To be sure, there are examples of life sciences companies using digital capabilities in the following ways.

Develop drugs faster through digitalized trials

AstraZeneca plans to use AI to design better clinical studies, finding the correct patients to include in trials by combing through electronic health records and by analyzing data from successful trials to build the best control groups. Within those trials, AstraZeneca is using AI to analyze data from wearable devices to more quickly gauge the effectiveness of treatments.

Protecting product

Merck, along with American drug wholesale company AmerisourceBergen, is working with SAP to develop a blockchain-based solution that curbs counterfeiting. They plan to tag drug shipments with identifiers using SAP’s ATTP (Advanced Track and Trace for Pharmaceuticals). A mobile app will make it possible for SAP to track the package and know whenever it changes hands, and the package’s barcode will allow the manufacturer to verify its authenticity if or when returned.

Enhancing R&D productivity

GE Healthcare has revealed it is working with biotechnology company Amgen to test the performance of a 3D-printed chromatography column. This column has been custom-designed and is undergoing tests to see whether it can be used in Amgen’s research to aid in the development of improved processes for the purification stage of biopharmaceutical production.

Other opportunities include:

  • Digitalized commercial models — finding the optimal mix between in-person and digital capability to communicate with the health providers to explain the benefits of their products. Providers are increasingly getting more comfortable in consuming medical content and product benefits through virtual ways, and this trend should inform pharma and medtech companies to experiment, optimizing the appropriate commercial mix for highest return on investment.
  • Digital interventions —providing services through digital remote means to help patients adhere to their treatment plan throughout the care continuum. Adherence and compliance are two of the biggest challenges for patients and pharma companies alike, and digital tools are underutilized given the inherit risk aversion of the regulated life sciences sector.

However, for any of these opportunities to reach maximum impact, life sciences companies will need to take a proactive approach to cyber security to protect sensitive data such as intellectual property, clinical data, formulas and employee and patient data.

Life sciences companies can buy, build or partner to boost their digital capabilities

There are several ways for life sciences companies to develop their digital capabilities, depending on what they want to own in-house and what they are comfortable with finding outside of the company. However, operating model issues, misaligned sources of value and an unclear strategy can get in the way of what are otherwise the most successful models for growing digital capabilities, partnering and M&A.

Life sciences companies have long looked to M&A and partnerships to add to their capabilities but have had less success in combining their various investments into new platforms of care that can help drive long-term growth. Operating model issues were cited as the topmost challenge in digital M&A (67%) and partnerships (79%). A focus on how an asset or partnership may fit into the long-term operating model may need to be more of a consideration when evaluating M&A and partnership issues.

Figure 4: Investment vehicles that performed above expectations in meeting digital transformation goals and the top challenges faced
Top challenges in digital M&A and partnerships, per Life Sciences Digital Investment Index (DII) survey

The four main ways for organizations to boost their digital capabilities are to partner; to acquire; to build in-house and to deploy corporate venture capital (CVC).

1: Partner

Partnerships allow organizations to focus on their core business while accelerating their digital transformation. They help companies build an ecosystem of expert knowledge and skills, improve their business processes or engage their customers better through the expertise of their digital partner, rather than trying to build in house. In fact, 45% of companies said that partnerships exceeded expectations. However, it is crucial that before entering such an alliance, any potential concerns or issues are addressed beforehand.

2: Acquire

Given the rampant growth in the number of digital start-ups within the life sciences industry, M&A serves as a readily available investment vehicle. Be it AI, ML, blockchain, analytics or AR/VR — there are start-ups catering to every step of the medtech and biopharmaceutical value chain. In the survey, 43% said digital M&A investments exceeded expectations. The advantages offered by acquisitions are many, including economies of scale, synergies across functions, competitive edge through niche skills and better control over the market. However, factors like friction due to internal competition, organizational culture differences, acquiring costs, people and process redundancies, and other issues must be addressed in a timely manner. Additionally, there is almost always an intrinsic risk associated with the financial forecasts for the new entity.

3: Build in-house

Companies looking for custom solutions to fit their business requirements can opt for in-house digital development, but only if they already have the required talent and capabilities. While this option gives better flexibility, visibility and cost effectiveness in the long run and offers better control and monitoring, it requires a certain level of skill and ongoing learning and development for the team to be at par with evolution of technology.

4: Deploy CVC

Over the past two decades, life sciences companies have deployed corporate venture capital arms in digital health as those vehicles can move faster, more flexibly, and more cheaply than traditional R&D. CVC can be an option for companies with a long-term focus to access capabilities for the future. At the same time, it can also widen the funnel for future acquisition. However, there are many factors for CVC success, including having a clear and aligned strategy; finding the right opportunities and right investment model; and finding the right operating model.

Figure 5: Partnerships and digital M&A exceed expectations over build and CVC
Investment vehicles, per Life Sciences Digital Investment Index (DII) survey


Building digital capabilities is an essential need for most life sciences organizations. Key steps executives can take to help maximize the return on digital investment include:

  • Defining a clear digital strategy, anticipating scale and funding requirements and focusing on return on digital investments.
  • Using AI, IoT and cloud to drive value from data, starting with solutions based on existing data as when building the data architecture.
  • Deciding on the right mix of build, buy or partner for the organization. Consider digital M&A to further accelerate digital post-COVID-19 and partnerships to close funding gaps.
  • Removing barriers to scale by defining talent, funding and operating model requirements to realize strategy.
  • Establishing a strong governance model and KPIs to manage digital initiatives, including measuring RODI.

Contributors to this article include Balaji Anna of EY-Parthenon, and Harish Kumar and Anil Sharma of EY Strategy and Transactions.


The EY Digital Investment Index report helps leaders understand how to improve their digital strategy and enhance their return on digital investment.

About this article

Arda Ural, PhD

EY Americas Industry Markets Leader, Health Sciences and Wellness

Co-author of numerous whitepapers and a frequent speaker about biopharmaceutical strategy at industry conferences. Married father of two.

Michael Botos

EY-Parthenon Americas Public Health Strategy, Innovation and Transformation Leader

Business strategist. Entrepreneurial and transformational leader. Innovator, collaborator, connector. Helping others see new opportunities and have the courage to pursue them.