Companies in the life science sector are under threat from its technology competitors, according to a new report released by accounting firm EY.
Life Sciences 4.0: Securing value through data-driven platforms details that more than 75% of life science organisations currently included in the Fortune 500 could be pushed out of this ranking by 2023.
Describing technology companies as direct competitors to the life science industry, the report examines the technological evolution and the increasing spread of companies investing in evolving consumer, physician and payer needs.
Pamela Spence, global life sciences industry leader at EY, said: “The rapid emergence of technology companies in the life science space, coupled with changing expectations by consumers is creating a disruptive shift toward a more participatory health system, where consumers are defining value in terms of the ability to deliver affordable, personalised health outcomes that advance lifelong health goals.”
The report warns that the sector needs to look beyond novel drugs and devices by creating new business models to provide data-driven health services, ones that are more ‘convenient’ and ‘customer-focused’.
Returns are looking just as bleak with global health systems facing cost restraints. To add another woe to the life science sector landscape, the number of drugs achieving at least 50% of analysts’ peak sales forecasts is falling but reimbursement pressures are on the up, according to the report.
Spence added: “To seize the upside of disruption in this transformative age, life sciences companies must invest, participate in or build platforms of care.”
These platforms are described in the report as interfaces that seamlessly collect, combine and share a variety of health data in real-time with different stakeholders.
It’s not all bad news, as the report confirms that life science companies are investing and making deals involving platforms. Since 2014 there has been nearly 90 digitally focused deals and of these, 50% of them involved platform capabilities in the diabetes or respiratory areas while 14% involved products or services to support cancer patients.
Spence concluded: “These investments are important but don’t go far enough to eradicate the risks.
“Success in this new market paradigm requires the adoption of flexible, platform-based business models that allow life science companies to deliver affordable, improved health outcomes and unlock the power of diverse data streams that reside outside the traditional health ecosystem.”
