Biopharma companies: Fueling agility and growth
July 16, 2019
RESEARCH REPORT
In brief
In brief
- While surface indicators in the biopharmaceutical industry are good, most companies are unknowingly starting to experience compressive disruption.
- Compressive disruption slowly erodes profits and revenue. But, companies that can move to the New—New Science and more—can combat it.
- Freeing investment capacity to fuel new growth, focusing on technology, talent, operating model, can help companies navigate to a profitable future.
The effects of compressive disruption
The biopharmaceutical industry looks good, on the surface. But that calm surface obscures some underlying issues inherent in many biopharmaceutical companies’ operations and strategy. A quiet force is making its entrance: compressive disruption.
Companies experience compressive disruption when they become overly mired in their core business, even as consumer preferences, customer bases, industry trends and technology change around them. It squeezes operating margins over time, slowly eroding profits and revenue. Because compressive disruption happens slowly, most biopharmaceutical companies do not detect the financial pressure until the balance sheet shows real damage. But, companies that can identify the symptoms of compressive disruption early are best placed to overcome it by moving into the New—finding new sources of growth to combat decline in their traditional core business.
9 out of 10
companies we surveyed are planning to tackle more than 10 growth initiatives in the next year.
6 – 7x
Leaders in New Science are investing six to seven times as much as their peers in digital, data and genomics.
60%
of executives surveyed said their company’s largest skill gaps are in data, analytics and growth mindset.
The antidote to disruption: New growth
Biopharmaceutical companies that can pursue new growth while maintaining their core business (until the New becomes their now) have the best chance of beating compressive disruption.
The “New” in the biopharmaceutical industry is New Science, which will drive 54 percent of industry growth through 2022. New Science is an evolving, unique combination of the best in science and health technology, from genomics and biomarkers, to companion technologies and delivery methods.
Our survey of 35 biopharmaceutical executives from the world’s largest companies revealed three critical areas where companies can act immediately to fuel the competitive agility and new growth they need to compete in the era of New Science:
Investment strategy
Companies with higher investment capacity and velocity have an advantage, but few can demonstrate both. Digital, data and genomics are key areas.
Technology convergence
Biopharma companies wrap services around products to deliver better outcomes and many of these services require emerging technologies.
Talent
To compete effectively, biopharma companies need a workforce with skills that support new growth—from digital to New Science.
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Nearly 90 percent of Accenture's survey respondents believe their workforce lacks the skills to drive growth and agility. And the gap does not stop at middle management - 80 percent believe there is a skill gap within leadership as well.
How to get started toward being competitively agile
Biopharmaceutical leaders who act now have the luxury of more time to plan their strategy and pivot to the New. Competitors who wait will be in reaction mode.
Taking steps toward competitive agility and new growth now just makes sense for biopharmas who want to lead the industry into an exciting future.
Understand your investment mobility
Do you have the capacity to invest? Are you investing the right direction? Is your pace enough to support your desired strategy?
Evaluate future sources of innovation
The key is to decide what can be “homegrown” versus contributed by a partner.
Reconfigure the operating model to sustain growth
Refocus the organization on specific outcomes and harness emerging technologies to create intelligent functions that support end-to-end processes.
Address your talent gap
Determine what work needs to be done, and what new skillsets are needed. Then train and upskill employees at all levels.
Align actions and spend to support the strategy
Act with the mindset to simplify spending and channel cost savings to new capabilities.
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Most companies in the biopharmaceutical industry are still in an advantaged position. Because of this, leaders have the luxury of planning, developing and implementing growth in a measured manner versus reacting to rapid disruption thrust upon them.
Despite that fact, most companies need to act now to address compressive disruption. They must increase their agility. Those that do will put themselves light years ahead in the search for new growth.
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