Trends and challenges in a VUCA world

Utkarsh Palnitkar, Partner, National Head – Infrastructure, Government & Healthcare National Head – Life Sciences practice, KPMG India informs that the VUCA world has thrown up a new set of exigencies and pharma leaders need to possess adaptive skills to overcome them

Volatility, Uncertainty, Complexity and Ambiguity (VUCA) characterise any business environment today. Moreover, VUCA has led to an increased recognition that new and unprecedented risks are emerging all the time. The pharma industry is also operating in this environment, and is increasingly facing challenges in its day-to-day operations. Industrial complexities are being accentuated by changing demographics, technology and innovations, globalisation, products and services variations, etc. These complexities are posing a new set of exigencies, which require pharma leaders to possess adaptive skills. It has, therefore, become highly important for leaders to foresee upcoming trends and plan ahead of the competition to succeed. The following VUCA trends and challenges are impacting the pharma industry, and leaders must prepare themselves in advance to overcome these –

Empowered patients moving towards convenience

• Technology Enabled Care (TEC) for improving quality, enhancing patient experience and reducing cost: TEC involves the convergence of technology, digital and mobile telecommunications. It can help to effectively integrate care by empowering patients to self-manage their health. Cumulative data collated through multiple initiatives of telemedicine, telehealth, telecare, digital-health devices, mHealth, eHealth and remote monitoring solutions provides access to the verifiable, real-time patient-generated data. This data enables physicians to plan progressive care and avoid adverse health events, keeping patients healthy even out of clinical facilities.
• Home-based care for convenience and flexibility: Home-based care involves health, personal and support services to help people receive healthcare services conveniently at their place. The point-of-care devices and remote monitoring equipment are helping physicians to manage patients at home. Therefore, pharmaceutical companies need to align their business model to serve patients through a home-based care model.
• Digital apps and wearables for real-time monitoring: Applications and wearables that allow patients to manage their own health outside the clinical environment are becoming increasingly important. In fact, they allow patients with greater autonomy in managing their health. For example, bio-sensing wearables such as glucose sensors and blood pressure monitors help patients and providers to access real-time healthcare data. The importance of such ‘beyond the pill’ services is expected to increase in the near future, and pharma companies need to adapt to these changes.

Greater adoption of value-based healthcare system

• Outcome-based care: Governments, healthcare providers and payers are moving towards an approach where the healthcare system could focus on the outcomes rather than products and services. This approach intends to manage costs by necessitating comparative effectiveness and evidence of value, so that healthcare providers can focus on patient impact. This is also leading to a transformation in the healthcare system from a ‘provider-dominated and product-focussed’ system to a ‘patient-centric and customer-focussed’ model. These market dynamics have led pharma companies to think of transformative ways that could replace traditional blockbuster drugs, incremental innovation and physician-preferred models to patient-centric models.

Emergence of new competitors

• Entry of non-traditional players in the healthcare ecosystem: Information around a patient’s clinical data and disease history are no longer a realm of the traditional healthcare establishments. Today, technology-based companies are moving into the healthcare domain with integrated platforms, and are engaging with patients constantly through wearables, apps, fitness devices and online communities. These technology companies collect significant amount of data from a combination of sources, such as insurance claims and electronic medical records. In such a scenario, pharma companies need to either compete or collaborate with these technology companies to be able to provide personalised care to customers.

Shift towards superiority metrics in clinical trials

• Increase in superiority trials for marketing: Nowadays, superiority clinical trials are being performed frequently as healthcare providers and patients want to take an informed decision to accept a new or existing drug over its competitors. The onus is on the pharma companies to establish the value of their drugs for healthcare providers and patients.

Rising pressure to improve efficiency and profitability

• Increase in M&A activities: Due to the high costs involved in marketing, and R&D of new products, pharma companies are generally involved in M&A activities. Many companies are selling their non-core business, replenishing their new drug pipeline and buying products aligned to their core strengths. This trend is expected to continue in the near future and could impact the pharma industry significantly.
• Advanced analytics to improve drug pipeline: In research and development (R&D), advanced predictive modelling and simulation techniques would help leverage the available molecular and clinical data. 3D tissue modelling through computer simulation can help pharma companies to access potential toxicity. Further, clinical trials can be monitored real-time and patients can be identified for enrolment based on social media analysis.

Strategies adopted by global pharma companies to tackle VUCA challenges

In order to stay competitive, deliver effectively, and to future-proof the company against VUCA times, global pharma companies have adopted various strategies. A few such cases are mentioned below:

• A global pharma company has adopted the following themes to shape its strategies:
• A global pharma company has taken the following restructuring exercise to tackle high business cost, claims of unethical sales practices and increased competition.

Indian pharma industry in VUCA times

Pharma companies have long relied on successful launches of generic drugs in India and abroad. However, pharma companies need more preparedness as compared to any other industry for VUCA. The new and previously unconsidered threats are re-emerging all the time, leading to increased recognition of VUCA challenges.

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Learnings for pharma leaders

• Focus on new drugs to shore up growth: There is a need to increase R&D spending to master more complex therapies, as the prices of basic generic treatments fall. Also, success in complex therapies offer greater profits abroad.
• Adoption of M&A route for expansion: An M&A route in the global arena could help Indian companies increase their market access and strengthen their position in a particular country. Moreover, Indian companies also need to follow asset-swapping deals to strengthen their product portfolio in a particular segment and remove non-core assets.
• Embrace technology to increase efficiency: The Indian pharma industry is often slow to adopt new technologies. However, technology adoption can increase supply chain efficiency and compliance to international standards. The adoption of digital technology can also help the companies to market their products and services in an effective way to end-customers.

Business icons for the industry

As the healthcare industry is moving to a value-based healthcare system, the new business icons can future proof their organisations by establishing an ongoing process of redefinition in three areas — agilities, capabilities and values.

(Disclaimer: The views and opinions in this article are those of the author and do not represent the views and opinions of KPMG in India)