Deloitte's comprehensive look at the life sciences and biotech market in 2016 and beyond provides thorough insight into the ever-changing marketplace. Excerpts from the article entitled "2016 Global life sciences outlook - Moving forward with cautious optimism" are highlighted in this post and link to the original article.
In Vitro Diagnostics Rule
The article states that in vitro diagnostics (IVD) continue to be medtech’s largest segment and states that IVD will continue to rule “for the next several years, growing annually by 5.1 percent between 2014 and 2020, generating sales of $67.3 billion, or about 14 percent of the global market. Neurology is projected to be medtech’s fastest-growing segment, with 6.9 percent CAGR between 2014 and 2020, and achieving sales of $9.5 billion by the end of the period.31 The future of companion diagnostics — medical devices that provide information for the safe and effective use of a corresponding drug or biological product — also looks bright. These diagnostics will likely continue to rapidly increase in number and application to disease areas in the coming years.32 Companion diagnostics are also increasing in importance in emerging markets as a way for governments to try to manage costs and ensure value from prescribed drugs.”
Continued Demand for Personalized Care
As patients become more savvy and interactive with their care and hospitals, labs and pharma become more accessible to the patient, personalized care becomes a requirement. “An important clinical development that is driving business model transformation is personalized care," The article states. "Scientific advances can provide optimal value when targeted to particular consumers. Widespread adoption of ‘personalized/precision care’ will likely be made possible through investments in offerings that integrate drugs and devices with low-cost diagnostics, disease management programs, and clinical decision support.” The article also points out, “Ultimately, the goal is to get more targeted treatments for a variety of diseases to patients faster. Personalizing care based on genetics and individuals’ health information has the potential to generate new therapies that may radically improve outcomes.”
The Growing Market for Companion Diagnostics
The article predicts that the demand for companion diagnostics will continue to increase. “Companion diagnostics — medical devices that provide information that is essential to the safe and effective use of a corresponding drug or biological product75 in a specific therapeutic area — should continue to rapidly increase in number and application, especially in the United States and Europe.” The article points out that, “one of the greatest challenges to future growth in companion diagnostics is aligning stakeholder incentives. While pharma companies are most interested in companion diagnostics that are theranostics (an emerging diagnostic therapy to test individual patients for a possible reaction to new medication and to tailor a treatment regimen based on the test results77) and monitoring types of tests, payers appear to favor diagnostic tests that provide information on multiple potential treatment options in a TA. The current model of a single diagnostic test tied to a single pharmaceutical agent is unlikely to survive payer pressure for greater efficiency and cost-effectiveness.”
Digital Health Changes Everything
“Digital health technology is creating a paradigm shift in life sciences. Health data captured by wearable devices, mobile health apps (mHealth), and social media are being used to transform aspects of health care that earlier seemed beyond the purview of such technologies. Digital health is also becoming an important platform for life sciences companies to strengthen patient engagement programs and collaborate with other stakeholders in the health care system. The size of the global digital health market comprising wireless health, electronic health records (EHR), electronic medical records (EMR), mHealth, and telehealth, among others, was $60.8 billion in 2013 and expected to increase to $233.3 billion in 2020, growing at a CAGR of 21.2 percent. Moreover, these offerings are leading to developments in related markets such as wireless network tools, sensors, and devices.”
Predicted Operational Challenges
Among a list of operational issues, the article cites operational challenges with in-house manufacturing stating, “Despite measures to streamline their manufacturing footprint, companies may remain unable to reduce their asset base, due to excess capacity as well as exiting costs and disposal difficulties in a challenging commercial real estate marketplace.” The article stresses the importance of selecting outsourcing partners who demonstrate proven success in quality control and manufacturing execution system, and the benefits of strengthening these relationships by leveraging the expertise of provan partners. “Some life sciences companies have not optimized their outsourcing strategies. They also need to look for better ways to govern and measure performance in these relationships to gain the most operational benefits. Some continue to duplicate the efforts of 'strategic partners' such as Contract Research Organizations (CROs) or Functional Service Providers (FSPs) and thwart their own efforts to get more leverage and performance from these relationships.”
Another operational challenge cited supply chain risks. “Supply chain risks become more acute in an increasingly global marketplace. Companies will need to find ways to optimize their supply chain models. Compliance, safety, efficiency, and cost should be critical criteria.” Selecting an engineering and manufacturing partner with solid supply chain and quality assurance processes, and a thoroughly vetted global supply chain with proven success is paramount.
Privacy and Security
With the myriad ways that data and information can be accessed, shared and hacked in today’s digital world, protecting company data and patient privacy is critical. “Although the digitization of health care data and advancements in enabling technologies have improved life sciences R&D and operational efficiency, these improvements are being accompanied by pervasive, persistent cyber risks, which can leave companies vulnerable to debilitating business losses and brand image erosion." The article states that, "While medical devices are playing a transformative and beneficial role in health care, they also pose risks to patient safety and health information security. As innovation continues and the threat landscape evolves, securing medical devices becomes more crucial. The quantity and types of potential threats increase as awareness of cybersecurity vulnerabilities grows, potentially risking patient confidentiality and the integrity and availability of device and patient data. When a medical device itself, or the integrity and availability of its data, is compromised due to a security breach, the loss of integrity may lead to faulty data which, in turn, may cause the device to malfunction or result in incorrect care decisions by medical practitioners.”
“Increased access to company owned data helps life sciences companies better understand research and clinical trial results and more effectively target patient populations. Sensitive intellectual property, personally identifiable information (PII), and protected health information (PHI) will need to be safeguarded throughout the product life cycle, and companies will need to comply with privacy laws and norms across an array of jurisdictions.”
To move forward strategically in this rapidly evolving and competitive marketplace, the article states, “Health care’s continuing and expanding transformation into a global, patient-centric, and value-focused marketplace holds important considerations for life sciences sector stakeholders as they seek to adapt, innovate, and grow in 2016 and beyond… In addition to relying on traditional information sources, companies should consider participating in local projects and partnering with local firms, academic institutions, and government entities to gain ‘real’ insights into local needs and challenges… Life sciences companies should work to strengthen collaboration and information-sharing among internal functions and external partners to transform their global supply chain into an integrated, patient-focused strategic enabler.133 Companies should also pursue operational excellence in terms of finance, manufacturing, R&D, and safety.”
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