2013 Outlook on Life Sciences
Interview with Terry Hisey
To achieve sustainable growth, life sciences companies need to stay on top of the shifting industry landscape. Terry Hisey, vice chairman and principal, Deloitte LLP, and U.S. Life Sciences Sector leader, shares his insights on health care transformation, as well as tips that can help position your company for success.
What is the key issue facing the life sciences sector in 2013?
The biggest issue facing the life sciences industry is the increasingly rapid movement to competing on the basis of a value proposition that is being defined and continuously redefined by the market. This health care transformation is quite different than the way the industry has traditionally operated as it relates to introducing and marketing products. There is a new focus on a broad transformation that includes health reform as well as transparency, comparative effectiveness (CE) and changing stakeholder values. If a life sciences company is going to introduce new products it needs to have an impeccable safety profile and demonstrably better effectiveness, and be at the right price point relative to existing offerings, or they may be approved for commercialization but not really adopted in the market.
What are some steps companies can take to manage through the current climate of economic uncertainty?
“It is imperative that life sciences companies gain a clear understanding of the changing ecosystem and shifting influence patterns that affect product utilization and adoption.”
It is imperative that life sciences companies gain a clear understanding of the changing ecosystem and shifting influence patterns that affect product utilization and adoption. To strengthen their ability to compete in this “new normal” they should consider a broad CE strategy and a program that supports current commercial activities, informs late-stage clinical development and provides forward visibility of the strategic needs to grow the business.
To address pricing pressures, companies should compete on the basis of value, not unit cost. This means understanding the broad impacts that their offerings have and engaging in a comprehensive outcomes conversation with the individuals who have shared clinical and financial responsibility.
In addition, life sciences companies should leverage CE insights to help inform their decisions regarding the value of their current products and to make more effective capital development and allocation decisions around research and development (R&D). If something is going to be a scientific accomplishment, but the company doesn’t have a line of sight that it will be a commercially viable product, terminate that program now.
What are high-performing companies doing to foster innovation and growth?
There is a significant focus on innovation across the life sciences industry via new R&D and commercial operating models; mergers and acquisitions (M&A) and alliances; and new sales models that recognize there are shifting influence patterns, such as the impact of patient advocacy groups and the increasing role of clinical departments in hospital purchasing decisions. In addition, companies are innovating through the increased use of analytics – “big data” provides opportunities to make more informed decisions more quickly and to develop insights that facilitate more efficient use of resources.
Market forces such as bundled payments and accountable care organizations (ACOs) also are driving transformative innovation and shared clinical and financial responsibility among life science companies, health care providers and health plans.
Finally, high-performing life sciences companies adhere to a focused growth strategy that addresses questions such as: How do we drive sustainable growth, not just episodic growth? What is the required combination of revenues, profits or market share needed to achieve our growth goals? What do we need to have in terms of products and services to compete? How do we need to respond to new models of care delivery? New models of market engagement?