In 1969, biologist Cyrus Levinthal posed that if a protein explored all its possible conformations, it would take longer than the age of the universe to fold correctly. This implied that predicting the structure of a protein knowing only its chemical formula was an incalculably complex task.

But fast-forward 50 years, and an AI platform has recently achieved it, and to a high degree of accuracy. The point? Technology can dramatically accelerate progress in life sciences.

In this first of two blog posts we will explore how technology, unlocked through partnerships1, is a source of competitive advantage. In the next post, we will focus on common partnership pitfalls and three key imperatives for success.

We surveyed executives (Senior VP to C-Suite, n=34) from pharma/biopharma (76%) and medical devices (24%) companies, about strategic partnerships between pharmaceutical and technology or digital health firms.

Note: When we refer to a technology company, we mean either a digital health company, or a big tech player. Where required, we will explicitly say either “digital health” or “big tech”.

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New technologies (software and hardware) can expedite drug discovery, optimise pharmaceutical functions and improve interactions with stakeholders. Pharmaceutical companies enabled by these technologies will outperform their competitors through increased speed to market, better margins and stronger HCP, patient and key opinion leader (KOL) relationships. The ability to harness technology and accelerate innovation will become increasingly critical, as macro-economic and industry trends reshape the healthcare marketplace, creating new demands and pressures, as well as intensifying competition (see figure 1 below).

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Figure 1

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COVID-19 has also emphasised the need to both rapidly adapt portfolios to market changes (shown in Figure 1) and develop new capabilities at pace across the value chain:

  • R&D: address pipeline gaps through tech-enabled accelerated discovery
  • Supply chain: monitor stringent storage measures (e.g. vaccines) with IoT devices
  • Manufacturing: enable continued social distancing measures with smart facilities
  • Commercialisation: facilitate hybrid virtual-physical interactions with HCPs
  • Patient Support: alleviate patient backlog through remote monitoring and reporting

As a result, 86% of pharmaceutical companies are now investing in advanced ‘post-digital’ technologies, such as distributed ledger, AI, extended reality and quantum computing (DARQ)6 to fulfil key stakeholder (KOLs, HCPs, patients) needs.

Digital health and big tech markets are booming

With the digital health market set to grow at 28.5% CAGR through 2026 – reaching nearly $640 billion6– large tech companies have been increasingly active in this space. In 18 months since January 2020, the top five tech firms invested close to $7 billion in healthcare7, and are focusing on several key areas including:

  • data collection, disease detection and management, and digital tools
  • collaborating with existing legacy health systems
  • improved patient experience through a customer-centered mindset
  • applications of AI for drug discovery.

Pharmaceutical businesses have an opportunity to tap into the potential of productive partnerships with tech businesses, to harness the mutual strengths of both sectors. And we have already seen these partnerships taking shape. In Accenture’s research8, pharma executives report that they are working with technology firms to accelerate access to new technology (90%), reduce operational costs (83%) and meet new patient demands (83%). Two recent examples include Boehringer Ingelheim and Google’s quantum partnership for R&D, and Novartis and Microsoft’s multi-year AI alliance for drug discovery, development and commercialisation.

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61% of the executives we surveyed reported profit increases of 5% or more because of their partnerships with tech companies, with sales and R&D showing the greatest benefits.

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The different approaches to access these tech capabilities are broadly categorised as “build, buy, or partner”. Partnerships are clearly the preferred option for pharma executives, 86% of whom say they would rather partner or acquire technology capabilities than build their own from scratch (see figure 2 below).

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Figure 2

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Different parties bring a unique set of capabilities to tech-enabled partnerships (see figure 3 below), with clear benefits for each side. Additionally, through the life of the partnership, each company will continue to benefit from the other's investments in its core capabilities.

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Figure 3

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Sixty-one percent of the executives we surveyed reported profit increases of 5% or more because of their partnerships with tech companies, with sales and R&D showing the greatest benefits. Far fewer saw this level of profit increases from other types of partnerships. Only 27% reported comparable profit increases through a contract development and manufacturing (CDMO) partnership, and 24% through partnering with academic institutions.

But not all partnerships will generate their potential benefits. A structured approach is vital for success, and we have identified three imperatives for a partnership to deliver on its promise:

  1. Make sure that the organisation is prepared internally. Eighty-three percent of executives stressed the importance of a clearly articulated partnership strategy as a key success factor.
  2. Identify the right partner to complement and build on existing strengths. To that end, 83% of executives cite complementary ways of working as a success factor, and 79% the importance of carrying out sufficient due diligence.
  3. Partner effectively, with a clearly defined governance structure. This is seen as a critical success factor by 76% of pharma executives.

We will explore each of these imperatives, and the many common challenges to partnerships, in the next blog post. We will explain the role that each imperative plays in securing the productive partnerships with technology companies that can enable exponential growth.

 

Sources:

1 A partnership is a business relationship between two or more parties to achieve a shared goal while remaining separate and independent. These partnerships are maintained by pooling resources (e.g. IP, knowledge, talent) governed by formal (e.g. JV, alliance) or informal agreements (e.g. a Gentleman’s Agreement)

2 New Science: A new economic reality for growth

3 Innovation in the pharmaceutical industry: New estimates of R&D costs

4 Forecast of new brand and brand loss of exclusivity (LOE) impact in developed pharmaceutical markets from 2019 to 2025*

5 New Science: Biopharma’s new growth machine

6 Venture Funding in Digital Health Sector Up 66% with a Record $14.8 Billion Raised in 2020

7 The next Big Tech battle: Amazon’s bet on healthcare begins to take shape

8 2021 Accenture research of executives (Senior VP to C- Suite, n=34) from pharma/biopharma (76%) and medical devices (24%) companies, about strategic partnerships between pharmaceutical and technology or digital health firms.

9 How much data is generated each day?

Pervaise Khan

Managing Director – Life Sciences UKI Industry Lead


Jeffrey Berry

Managing Director – Corporate Strategy and Mergers & Acquisitions, Communications and Media

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