Forecasting what life sciences companies will face in the New Year given cost pressures, regulatory challenges, a new political environment, and emerging consumer behaviors is no easy task.
In recent years, life sciences organizations have wrestled with shrinking research and development (R&D) budgets and pipelines, while under pressure to maintain or reduce cost. I don’t see this trend changing in 2017. Companies will still need to look closely to manage costs and pricing – all while delivering clinical innovation.
Organizations will likely face pressures from the implementation of new legislation and regulations, including the Medicare Access and CHIP Reauthorization Act (MACRA) here in the US, which is expected to accelerate the shift to outcomes-based contracting and value-based care. On a global front, regulations like IDMP (Identification of Medicinal Products), and pending changes to the EU regulatory requirements for medical devices continue to put safety and transparency of life sciences products at the forefront.
Similar to what’s happening in the health care sectors, consumers continue to more directly influence how biopharma and medtech companies do business. Patient and Customer centered models have been gaining traction over the past two years, however they are still relatively new and can differ in scope and effectiveness from one disease area to the next. Organizations will should focus on their role in patient engagement and determine how elaborate and far-ranging patient centered models might be in the development of therapies, as well as how to incorporate the information generated from those initiatives back into broader portfolio decisions.
Despite these pressures and shifting market forces, there are still many opportunities for building relationships across the health care sectors, using value-based care models, and integrating real-world evidence into companies’ operating models.
First, collaboration between life sciences companies, health care providers, and health plans are critical, and will grow in the coming year. Pharma, biotech, and medtech companies are building new business models and developing operating strategies based on broad collaborations with other industry players, as well as regulators, academic centers, and emerging private laboratories where new ideas and potentially game-changing innovations are being developed.
Second, the transition from volume to value requires a longer view of a patient: from prevention to diagnosis to treatment to ongoing maintenance of optimal health. Life sciences companies will continue to navigate the shift from short-term treatments to longer-term solutions, offering new and valuable products, services, and technologies across the full life cycle of disease management.
Finally, more life sciences companies are looking at how to integrate real-world evidence (RWE) into their value chain. The recent passage of the 21st Century Cures legislation directs the Secretary to establish a program to evaluate the potential of using of RWE to support the approval of new uses for already approved drugs. The inclusion of RWE in this legislation signals that the traditional gold standard of randomized controlled trials for testing drugs and devices for safety may augmented for approvals as the industry and regulators innovate. End-to-end evidence management is crucial to optimizing R&D efforts, and in helping to measure the value of outcome-based models. Life sciences companies have an opportunity to reevaluate their portfolios, beyond conventional R&D strategies, through the lens of real-world evidence and closer connection to patient needs.
Key to all of these prospective efforts is improved data collection and analytics. As organizations put together strategies to align with these trends, a top priority will be gathering and effectively using data across R&D, commercial applications, and the supply chain.
Life sciences companies may feel strong pressure to become more efficient, outcomes-based, and cost conscious. That’s been the “new normal” across the industry for a few years. But as 2017 unfolds, these pressures can be de-risked by moving toward collaboration, longer-term solutions as a strategic driver, and adoption of strong end-to-end evidence management capabilities. While the forecast may be uncertain as we look to 2017, life sciences companies should seize opportunities and continue to adapt to the changing landscape.
Visit our complete set of 2017 Outlooks to learn about trends impacting the entire US and global life sciences and health care industry.