Capturing the $100 Billion Opportunity for Life Sciences: Are You a Digital Transformer or Follower?

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Capturing the $100 Billion Opportunity for Life Sciences: Are You a Digital Transformer or Follower?

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Executive Summary

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Sources of Commercial Digital Value in Life Sciences Digital can unlock $100 B in commercial value in the US for life science companies in three ways: digitizing the customer experience, digitizing operations, and digitalizing business models. Source: Accenture Research, 2014. See Research Methodology

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Many of our life science clients are digitizing the customer experience and operations to both increase revenue and decrease operational costs. Life Sciences Digital Value Tree for Commercial Source: Accenture Research, 2014. See Research Methodology

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Disrupting the game: shift or control? Two broad categories of disruptions that have occurred in other industries are poised to impact life sciences: 1. Shift value within or across industries. Digital has both removed intermediaries within an industry’s value chain, such as book stores and recruiters, and added intermediaries, such as stores for digital music and mobile apps. 2. Change the nature of control points. The critical control points for influencing decisions or actions within healthcare value chains have also changed. Physical presence and scale and scope have ceased to be the sole influencer as digital technology has promoted the emergence of new control points—including customer data, subscriptions and personal, smart devices.

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Digitalized life science business models

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The treatment of type 2 diabetes alone has the potential to shift more than $100B in value from traditional to emerging business models in the US over a 5-year period. An analysis of how digital disruptions would shift value this value demonstrates the potential for disruption by incumbents and new entrants: Example: Diabetes Sources: National Diabetes Statistics Report, 2014http://www.cdc.gov/diabetes/pdfs/data/2014-report-estimates-of-diabetes-and-its-burden-in-the-united-states.pdf; General Diabetes Facts, http://jdrf.org/about-jdrf/fact-sheets/general-diabetes-facts; and Statistics About Diabetes, http://www.diabetes.org/diabetes-basics/statistics., Diabetes Prevention Program Outcomes Study (DPPOS) Highlights, http://www.endocrineweb.com/professional/meetings/diabetes-prevention-program-outcomes-study-dppos-highlights, Diabetes Care, Volume 36, April 2013, Supplementary Data,http://care.diabetesjournals.org/content/suppl/2013/03/05/dc12-2625.DC1/DC122625SupplementaryData.pdf. , The Sharing Economy Holds Promise for More Goods to Be Offered at Near Zero Marginal Cost, http://www.entrepreneur.com/article/234541; and Web Black Market in Diabetic Supplies Costs Government $200m, http://www.thedailybeast.com/articles/2012/03/11/web-black-market-in-diabetic-supplies-costs-government-200m.html, Sokol MC, McGuigan KA, Verbrugge RR, Epstein RS. Impact of medication adherence on hospitalization risk and healthcare cost. Med Care. 2005;43(6):521–530.

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Diabetes patient journey: potential digital disruption

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Capturing the full value of a digital business Life sciences companies need to begin taking two major steps today: 1) understand and extract the value from digitized customer experiences and operations and 2) prepare to capitalize on—and/or defend against—the shift in value that digital disruptions will create. 5 key actions to capture the big money by considering each type of digital disruption 1. Assess opportunities and risks pertaining to digital substitutes 2. Conduct robust ongoing patient value analysis based on real-world examples 3. Define “rep of the future” to convey value proposition of therapies to new intermediaries unbounded by geography 4. Build capabilities to facilitate and engage with customer communities 5. Develop an ecosystem for digital currency

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The big question: Will your company be a transformer or a follower? Accenture’s research shows: digital transformers focus 2X as much of their digital investments on growth (40%) as digital followers (23%). Source: Digital Double-Down: How Far Will Leaders Leap Ahead?, http://www.accenture.com/us-en/Pages/insight-doubling-down-drive-digital-transformation.aspx

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Research Methodology Our analysis of digital benefits is based on 5-year revenue projections for the entire branded US pharmaceutical market1, Accenture estimates on marketing and sales spend in proportion to revenue, and Accenture client experience with potential revenue generation and cost savings from digital initiatives. The analysis is a directional estimate of a blended digital benefit for the industry; taking into account the varying levels of direct sales support and marketing promotion for pharmaceutical brands based on life-cycle stage (e.g., new vs. mature). A formal benchmarking study was not undertaken as part of this analysis. Our estimates for the impact of digital services on diabetes are based on the 2014 CDC diabetes prevalence figures on the number of diabetics and the cost for treating diabetes in the US. For each disruption, the impact was calculated based on the change to the number of patients, visits, or expenses as described in each section. 1 Source: IMS Health Market Prognosis, June 2013. Total Unaudited and Audited Global Pharmaceutical Market By Region/2012 - 2017, http://www.imshealth.com/deployedfiles/imshealth/Global/Content/Corporate/Press%20Room/Total_World_Pharma_Market_Topline_metrics_2012-17_regions.pdf

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Contacts and Links James Crowley Managing Director, Accenture Strategy, Global Life Sciences Industry Lead james.c.crowley@accenture.com Kenneth Munie Managing Director. Accenture Strategy, Life Sciences Digital Lead kenneth.r.munie@accenture.com Benjamin Rhee Senior Manager, Accenture Strategy, Life Sciences benjamin.w.rhee@accenture.com Associated Material Capturing the $100 Billion Opportunity for Life Sciences: Are You a Digital Transformer or Follower? Digital Double-Down: How Far Will Leaders Leap Ahead?