As the saying goes, the more things change, the more they stay the same. This is particularly true for the life sciences industry. From cloud to mergers and acquisitions to the supply chain, life sciences priorities for 2023 will largely remain the same as in 2022—but with new applications or challenges to be addressed.
Here are five trends that will continue to impact the industry in 2023.
The importance of cloud-first transformation
Over the past year, many life sciences companies have made great strides toward adopting a cloud-first technology transformation. However, others still lack a clear understanding of the true value proposition of the cloud, let alone how to extract that value from it.
Many antiquated, disparate systems remain in use, causing siloed information, inefficiencies and security problems. These systems are simply not up to the demands of anytime, anywhere access to information and collaboration. To ensure that the value of the cloud is maximized, additional components of a cloud-first strategy will need to be adopted. These include cloud automation that can scale to support business-essential needs, with integrated information management hosted on an agile information platform so that valuable insights from pipeline to patient can be extracted.
Continued mergers and acquisitions
Mergers and acquisitions (M&As) will remain a top priority for life sciences companies in 2023, but with more emphasis on smaller and more complex deals. If taking a chaotic approach to technology can potentially drain value from an acquisition or divestiture, the reverse is also true: A company with a well-managed IT department and transformative technology can use information as a powerful tool in pursuing more lucrative deals. That is why the focus will be on deals related to personalized medicine with an emphasis on cell/gene therapies. According to In Vivo, in 2022 “three major pharmas each had inked between 16 and 20 deals. Meanwhile, Pfizer has been less busy with 12 deals, but those include M&A totaling $18.2bn.” Furthermore, biotech companies are starting to opt for an out-licensing revenue model, “letting go of their ambitions to become full-fledge biopharmas,” according to Pharma Manufacturing.
A majority of biopharma pipeline innovations are powered by smaller biotech companies, which ContractPharma defines as “companies with revenues of less than $250 million or listed companies with a market cap lower than $2.5 billion.” Of approximately 5,500 companies, it is estimated that by 2026 these companies will contribute more than 60% of biopharma’s growth. But here is the glitch — little or no scale-up capabilities exists in-house for these biopharma companies.
The rise of contract organizations
The contract development and manufacturing organization (CDMO) and contract research organization (CRO) markets both grew revenue by more than 8% per year over the last 5 years, according to McKinsey & Company, and now deliver about $200 billion in revenue annually. With an explosion in biologics, 61 new healthtech and 23 biotech companies were created in 2021. However, many of these new biotechs simply lack the infrastructure or in-house capabilities to develop their own discoveries and are looking to partner with CDMOs through a “virtual pharmaceutical” business model, which calls for accountability and deeper, more transparent relationships. This model gives companies access to flexible capabilities and allows them to simplify and accelerate their development, hit milestones and retain ownership without having to invest significant capital into manufacturing infrastructure. Pharma is also realizing that its core competencies are in R&D rather than building and maintaining manufacturing facilities, which is leading them to consider outsourcing to CDMOs and leverage information management technologies that enrich their mutual trust.
Supply chain shock waves continue
The COVID-19 vaccine supply chain set amazing new standards during and post pandemic. In 2022, the life sciences supply chains were expected to see movement towards a localization policy, despite large investments in day-to-day operations. However, their enthusiasm was curtailed with costs, logistics and regional supply mandates, including changes to trade, regulatory and tax policies. Apart from the recent pandemic, we’ll continue to see less predictable shock-wave events in the future. From ongoing cyber attacks to environmental climate change, we can expect these events will only aggravate geopolitical tensions and will keep life sciences organizations chasing self-reliance with the localization of their supply chain in the coming years. It is therefore imperative that life sciences organizations continue to leverage agile information management technologies that will allow supply chain services to streamline and coordinate business processes.
Cybersecurity remains front and center
I would be remiss if I did not mention that cybersecurity will remain a key challenge in 2023. The potential damage from lawsuits, regulatory fines and industrial espionage continues to be massive. To better protect their organizations, the industry is being pushed to adopt an increasingly zero trust mindset regarding privacy and security.
As a bonus, here are three emerging trends to lookout for in 2023.
The growth of real-world data and evidence
Big data just got bigger as the global real-world evidence (RWE) solutions market size is projected to grow at a CAGR of 15.2% to reach $2.9 billion by 2027, due to an increase in the number of clinical trials and the shift from volume-based to value-based care. Life sciences companies are recognizing that by leveraging RWE and real-world data (RWD) they can inform improved protocol designs, reduce the volume of costly protocol amendments and enable the creation of synthetic control arms to accelerate trial execution and decrease overall costs. RWE can also accelerate label expansion and decrease the cost of evidence needed in filing. Because of these advantages, the use of RWE solutions in R&D activities in drug and medical devices will increase in 2023. The need to obtain access to this real-world data and evidence treasure trove will depend on the industry’s continued adoption of transformative information management technologies.
Environmental, social and governance under the microscope
In 2022, environmental, social and governance (ESG) factors in life sciences organizations came under more scrutiny. In 2023, ESG is putting a magnifying glass on employment hiring practices, manufacturing standards and supply chain due diligence. Two examples of this scrutiny are the non-profit Sustainable Medicines Partnership (SMP) and the Supply Chain Due Diligence Act (SCDDA) in Germany. The industry produces 4.5 trillion medicines annually—many of which are never used—and SMP seeks to reduce waste in medicines. The recently approved SCDDA in Germany introduced new obligations for German companies to protect human rights in supply chains globally. The entire supply chain, from the extraction of raw materials to the delivery to customers, is covered by this new act that applies to companies with at least 3,000 employees in Germany in 2023, and those with at least 1,000 employees in 2024.
Here comes value-based pricing
Finally, an emerging trend I expect to develop in 2023 and beyond is value-based pricing, which impacts health inequity and access disparities in every country around the globe. The emergence of high-cost advanced personalized medicine like cell/gene therapies is posing questions around access and affordability. The Association of the British Pharmaceutical Industry’s Chief Executive Richard Torbett predicted that we are only “at the foothills” of value-based pricing, and that only now are sufficient technology and data-capture procedures coming online to facilitate value-based agreements.
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