For life sciences executives, the focus on all stakeholders needs to deepen. In particular, suppliers — since long-term supply chain security concerns have become an essential priority. Three-fourths (75%) of respondents said suppliers are as important, or more important, than shareholders when formulating strategy.
2. Embrace the changing dynamics of the life sciences ecosystem
Working with partners is key to becoming a driver in the life sciences ecosystem. Partnerships are essential, either for larger companies to fill the new product pipeline or for startups to monetize and commercialize innovative treatments. Life sciences companies are more likely than other respondents to use joint ventures (48% vs. 43%).
As the ecosystem evolves, a spirit of “co-opetition” should be embedded in strategy formulation. While companies may compete in one area, there are opportunities for these competitors to become partners elsewhere. The pandemic specifically brought about an environment that emphasized getting a therapeutic or vaccine to patients ahead of commercial concerns. This can become a model in the future for bringing other innovations to market in a way that benefits all stakeholders.
To be sure, there are already examples of this happening in the sector. For example, Ernst & Young LLP has supported a global pharmaceutical company that entered a co-development agreement with a biotech firm to develop and commercialize a next-gen, personalized cancer therapy, helping to develop an operating model to support the worldwide delivery and management of this product.
Life sciences executives need to understand their company’s core capabilities, determine where they need help and be willing to embrace “co-opetition” that can lift the entire industry with them in the leadership position.
3. Augment the diverse capabilities of the C-suite to flawlessly develop and execute strategy
Life sciences companies were far more likely (28% vs. 18%) to have created the role of chief innovation officer than all sector respondents, not surprising given the industry is spending 17% of its revenues on R&D to develop a successful product pipeline. The role is also delivering: 90% of those that have added such a role say it has delivered a major or moderate impact.
At the same time, life sciences companies lag compared to global respondents in adding the role of chief digital officer (11% vs 20%), which can leave them at a disadvantage. Digitization has been an area of focus in the life sciences industry over the last decade, but the pandemic has underscored the importance of a digital business model, digital clinical trials, digital supply chain and has accelerated the utilization of digital processes in biopharma. This trend is expected to continue and ultimately the industry will catch up to others.
Among the life sciences companies that consider themselves high-performers, half say they plan to digitize operations in the short-term, despite the disruption caused by the pandemic. This commitment can enhance operational efficiencies and reduce cost across the pharmaceutical value chain, from automating supply chain operations; using the Internet of Things (IoT), machine learning, analytics and intelligent automation tools; and leveraging technology for research and development, commercialization, regulatory compliance and support functions.
Impact of new C-suite roles
86%of companies that said they added the roles of chief transformation officer, chief innovation officer and chief growth officer over the past five years said those roles have had a major or moderate impact.
While steps have been made to bring new roles into the C-suite to develop and implement strategy, there is still much work to do. Adding roles like chief digital officer and chief innovation officer can help bring necessary viewpoints to the table in order to develop a sustainable long-term strategy.
4. Rewire the organization to move at the speed of thought
The pandemic has underscored the need to move faster when it comes to developing and adapting strategy. Supply chains need to be more secure and product development needs to be able to pivot to address areas of immediate need.
There has been some progress: 41% are implementing agile processes into the organization. At the same time, 47% say they will increase the speed of capital reallocation. But more need to adopt these practices.
Life science executives need to re-optimize the portfolio to fill in capability gaps, consider whether and how to repatriate the supply chain, enhance digital capabilities through partnerships or acquisitions, and make sure internal processes are streamlined to allow for a more nimble response to shocks and opportunities.
Eight key actions for reimagining and realizing your long-term strategy
- Understand the totality of your ecosystem to effectively compete and innovate
- Focus on total stakeholder return to enhance enterprise value
- Build real-time, dynamic analytics for strategic planning that better preempts disruption
- Inject agility in your organization’s DNA to increase adaptability
- Create a repertoire of playbooks to boost ROI from all types of partnerships and transactions
- Rework key processes, such as risk management, internal controls, legal and compliance, to enhance the value from your ecosystem
- Align the digital strategy with the enterprise strategy to unlock the full potential
- Redesign the capital allocation process to augment swifter capital redeployment
Summary
In order to thrive in the post-pandemic future, life sciences companies need to become closer to all stakeholders, including suppliers; make sure executives with the necessary skills, such as digitization and innovation, have a seat at the strategy table; and change any internal processes that hinder an agile strategy.