The $100 billion technology opportunity

Is pharma going to lead the digital disruption across the industry or just follow? Accenture’s James Crowley explores the options.

In the US branded pharmaceutical market, customer experience could drive $4.6 billion in incremental revenue while digitizing commercial operations could yield $5.2 billion in cost efficiencies industry-wide over five years, according to analysis by Accenture. But there’s an even bigger opportunity…

“These opportunities are real and have benefits beyond the numbers including speed and simplification,” the global technology consultancy contends in its report Capturing the $100 billion opportunity for Life Sciences: are you a digital transformer or follower? “However, improvements to discrete business processes in life sciences, whether externally or internally focused, represent only a relatively small portion of digital's potential full value in the US healthcare market.”

Disruption sits at the heart of this new opportunity, which goes way beyond simple efficiency and cost-saving measures. Instead, the emphasis is on driving growth and inventing entirely new markets, with the focus on the customer and patient journey.

New business models

“To capture the bigger prize offered by digital, companies from within and outside the traditional life sciences industry are embracing digital to design and build entirely new business models that are dramatically changing the healthcare industry. Creating these breakthrough models involves a “both-and” proposition: it is about both growth and efficiency and creating new combinations of information, business resources and digital technologies to produce innovative outcomes. It is also about going beyond the confines of traditional industry, product and customer boundaries to find entirely new ways to meet customer needs.”

James Crowley, Managing Director and Life Sciences Lead for Accenture Strategy, explains that they are seeing a shift “from volume to value” whereby companies are “seeking to enhance the value of products and improve clinical and economic outcomes.

“In the context of that shift we also see the emergence of leading digital technology that drives convergence across the healthcare ecosystem and that creates of itself new ways to enhance value.”


The industry continues on a path to have record level mergers and acquisition activity.  2014 was a particular high point for M&A action in life sciences, with some $390 billion in transactions.  As M&A activity continues at an unprecedented pace, we also see companies beginning to acquire and partner in the digital health space, according to Crowley. “We’re finding companies breaking away from the pack using what we would call technology enabled M&A – seeking acquisitions in the digital space to enhance their products or business, and to address the technology and healthcare convergence. Moving forward, we believe medicines will be marketed with a technology-enabled healthcare ecosystem behind them.”

At the same time, funds are being poured into new technology initiatives, especially those that improve or demonstrate an outcome – such programs can only accelerate the shift in emphasis from volume to value. “We believe that’s happening; it’s real. One of the ways we see that is because at Accenture, we track venture capital funding into the technology start-up phase.”

A lot of organizations are piloting and testing, with companies such as Merck very active in this space. “I think we would see a trend for more of that.”

Significant examples

Crowley also cites the January 2015 announcement of the collaboration between Qualcomm and Novartis as part of the Trials of The Future program as a significant event. “Qualcomm is playing pretty heavily in the healthcare space now and would you have said five years ago that Qualcomm and a life sciences company would end up in a major partnership?”

Qualcomm Life’s 2net™ Platform will serve as a global connectivity platform for collecting and aggregating medical device data during clinical trials to improve the convenience and speed of capturing study participant data and test results to ultimately gain more trial efficiencies and connected experiences for participants.

He also pointed to the recent (3 August 2015) announcement by Aprecia of the first FDA-approved 3D printed pill. Spritam could be used by the more than three million adults and children in America who suffer from certain types of seizures caused by epilepsy.

Technology companies

Asked about the role of technology companies, Crowley said: “My view is that technology companies see healthcare as a major opportunity, and life sciences companies need to recognize that as a real growth opportunity and, in some cases, a threat. In some cases, these technology companies want to be in the healthcare space and they are active in providing solutions for healthcare. They’re being aggressive. It speaks to the convergence of industries, if you will, and some of that is being driven directly by technology.”

However, it’s important to note that the trend is for convergence rather than a takeover from either the technology or the pharma industry side. Disruption can of course come from either side and there are plenty of opportunities for life sciences companies to move into technology and digital health. “In our point of view we absolutely see that happening – Merck with its venture fund is focused on digital health technology as one example.”

He added: “Technology convergence is happening both around the system (you see things like remote monitoring, adherence plays, etc.) but also integrated with the therapeutic assets – and that’s when you get into sensors and pills and FDA-approved apps, etc.”

Big opportunities

Where in the value chain does he see the biggest opportunities? Crowley highlights two areas: “We absolutely see opportunity in the patient engagement/patient pathway side – technology as a way of either enhancing how you engage with patients or improving a patient experience to drive towards a better clinical outcome. We also see significant opportunity to use health information and data in support of the science (R&D). That’s a real opportunity and it’s harder work to deliver against, but we believe it needs to be a big focus.”    

He continued: “the disruptive opportunity is when you get into re-thinking the value chain, how can you use digital to change your product value proposition, and how do you really shift value in the healthcare ecosystem.  Those opportunities are where you can unlock the bigger value.”

“We believe that the technology convergence is happening and happening at speed: and it’s both happening around the healthcare system and integrated with the therapeutic assets. It’s an exciting time to be in the industry too,” he concludes.

The strategy paper “Capturing the $100 billion opportunity for Life Sciences: are you a digital transformer or follower?” by James Crowley, Kenneth Munie and Benjamin Rhee is published by Accenture.

Key digital takeaways

There’s useful opportunity – both in terms of driving revenue (through how you engage with customers) and reducing costs (through structural savings and engagement efficiencies).

The greater opportunity is to look more aggressively at how you can potentially disrupt the value chain. The therapeutic-with-technology solution is very much the future world for this industry.

There are big opportunities in analytics and the big data space, consumer engagement, digitization of medical devices.

“We think the technologies are advancing and they’re scalable and they’re here to stay. There’s lots of ways to go on a path to start to embed that into your model as it exists today and then there’s some longer-term ways to start to think how you embed that in R&D and in the therapeutic areas – and that’s where the tech M&A perspective comes in.”

This approach requires an ecosystem view of the world. “You have to get outside of that product view; you have to really think about how healthcare gets delivered and the healthcare value chain and how a patient flows through that value chain, and when you start applying that mindset you start to unlock where some of this disruption plays into.”

The industry mindset and speed at which it operates needs to go up a notch. “The mindset around external innovation or the mindset around more collaboration versus developing here – I feel that the industry has made a lot of progress in changing that mindset and they need to do the same thing in the concept of speed and their ability to act in this technology space, because it’s fast moving.”

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