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Article
August 2015

The road to digital success in pharma

By David Champagne, Amy Hung, and Olivier Leclerc

Pharmaceutical companies can play a central role in the digital revolution of

healthcare. But capturing this opportunity requires identifying the right initiatives.

P
harmaceutical companies are running hard to keep pace with changes
brought about by digital technology. Mobile communications, the cloud,
advanced analytics, and the Internet of Things are among the innovations that are
starting to transform the healthcare industry in the ways they have already
transformed the media, retail, and banking industries. Pharma executives are well
aware of the disruptive potential and are experimenting with a wide range of digital
initiatives. Yet many find it hard to determine what initiatives to scale up and how, as
they are still unclear what digital success will look like five years from now. This article
aims to remedy that. We believe disruptive trends indicate where digital technology
will drive the most value in the pharmaceutical industry, and they should guide
companies as they build a strategy for digital success.

Trends reshaping healthcare

Outcomes-based care is moving to center stage

Payors and governments have an ever sharper focus on managing costs while
delivering improved patient outcomes, putting an even greater onus on pharma
companies to demonstrate the value of their drugs in the real world—not just in
randomized controlled trials—if they are to retain market access and premium
pricing. In this environment, digitally enabled "beyond the pill" solutions, which
include not just drugs but also sensors to collect and analyze data to monitor a
patient's condition between visits to healthcare providers, are becoming critical to
serving both parties' needs. These solutions help drive the adherence to treatment and
outcomes that payors and governments seek, and they generate the data that pharma
companies need to demonstrate their drugs' superior efficacy.

Patients are becoming more engaged

In a digital age, patients are much less dependent on their doctors for advice,
increasingly able and willing to take greater control of their own health. They feel
empowered by the vast amount of health information available online and on apps,
and by the array of health and fitness wearables such as FitBit and Apple Watch. In one
survey, more than 85 percent of patients said they were confident in their ability to
take responsibility for their health and knew how to access online resources to help
them do so.1 In addition, patients are becoming keener to evaluate different healthcare
products and services given that they bear a growing proportion of the costs. In a
digital world, the ability to engage with patients as they make such evaluations could
be key to the success of a pharma company's commercial model.

New competitors are moving in

Information and insights into patients' histories and clinical pathways are no longer
the preserve of the traditional healthcare establishment. Where once health
providers' paper-based medical records were the main source of patient health data,
and drug research and development data were kept within the walls of the pharma
companies, today, technology companies such as Apple, IBM, and Qualcomm
Technologies are moving into healthcare. They are able to engage with patients
through apps, health and fitness devices, and online communities, for example. And
they are able to collect petabytes of data from these and other sources, such as
electronic medical records and insurance claims, capturing valuable insights. For
example, the IBM Watson Health platform—recently at the center of a partnership
with Apple and its HealthKit health-sensor data platform—is using advanced analytics
and natural-language-processing capabilities to deliver clinical decision support.
Pharma companies will need to decide soon how to position themselves to compete or
collaborate with these new players, or build complementary capabilities.

More information is available about product performance

Historically, pharma companies have controlled both the generation and
dissemination of information about their products. Digital technologies have
weakened that control, opening an array of new, independent information channels.
There are online communities for sharing and discussing patients' experiences, apps
and sensors to monitor the impact of therapy on a patient's daily life, and advanced
data aggregation and analysis to link disparate, complex data sets and generate new
insights into drug safety and efficacy. In response, pharma companies will have to
build the capabilities to anticipate or react rapidly to these new sources of evidence,
and remain the main source of authority on the performance of their products.

Process efficiency and agility is improving dramatically

Advanced analytics, sensors, and the automation of complex decisions are capable of
delivering a step change in the efficiency, speed, quality, and responsiveness of
business processes in all industries. The pharmaceutical industry is no exception. To
thrive in a digital world, pharma companies will need to deploy next-generation
technologies to streamline their business processes. They need to achieve near real-
time transparency of their clinical-trials portfolio in R&D, for example, and
frictionless sales and operations planning in the supply chain, as well as meet new
expectations in efficiency and agility from customers, employees, patients, and
suppliers.

Four areas of digital opportunity

Against this backdrop, we believe there are four main areas where digital
developments will drive value for pharma companies, building on what we see as the
key components of digital success—an ability to deliver more personalized patient
care, engage more fully with physicians and patients, use data to drive superior insight
and decision making, and transform business processes to provide real-time
responsiveness.

Companies do not have to become leaders in all four areas across the enterprise—
some will deliver more value than others in relation to any given disease, depending on
market dynamics and their portfolio. But to decide where to concentrate their efforts,
they do need to develop a point of view on each area's potential to transform their
commercial and innovation models. To help in these decisions, we sketch here a
picture of how we believe successful pharma companies will operate in each area in
the near future.

Personalized care: Sensors and digital services for tailored, 24/7

treatment

The ability to personalize interactions with stakeholders is a key value driver from
digital technology in any industry. In pharma, this value will be realized in large part
through the use of sensors and digital services to provide tailored care around the
clock.

Within five to seven years, a significant proportion of the pharmaceutical portfolio

will create value through more than just drugs. Many drugs will be part of a digital
ecosystem that constantly monitors a patient's condition and provides feedback to the
patient and other stakeholders. This ecosystem will help improve health outcomes by
tailoring therapy to a patient's clinical and lifestyle needs and enable remote
monitoring by health professionals of a patient's condition and adherence to
treatment. There is already a plethora of wireless sensors on the market to measure a
patient's biophysical signals. Combining these with other data about patients as they
go about their daily lives—nutritional information collected by a smart refrigerator,
for instance, or exercise information from smart gym weights—will allow real-time
alerts to be issued to caregivers and physicians when there is a need for intervention.

For example, a care plan for a Parkinson's patient might include a medication regimen
with "chip on a pill" technology to monitor drug taking along with a smartwatch that
monitors the patient's condition, sends him or her reminders to adhere to the
prescribed treatment, and sends the neurologist compliance and health-status
reports. The neurologist can then coach patients on lifestyle changes or even
customize therapy remotely. Such digitally enabled approaches to patient care are
likely to improve outcomes to the extent that they could become a condition of
reimbursement, particularly for expensive specialty drugs.

Several companies already offer integrated products and services. WellDoc, for
example, has launched BlueStar, the first FDA-approved mobile app for managing type
2 diabetes, while AliveCor has built a smartphone-based electrocardiogram. Patients
take their own readings, which can be reviewed by a remote expert without the cost
and delay associated with seeing a specialist. Many more of these kinds of products
have recently been approved or are in development.

Medication itself will of course still be important. But it will be more personalized,
targeting the needs of each patient with greater precision than before. Advanced data
analytics that mine electronic medical records, including diagnostic results,
medication history, and genomic, proteomic, and gene-expression data will help
identify optimal therapies and predict how individual patients will respond to
treatment.

Fuller engagement: Omnichannel conversations with physicians

and patients

Digital-engagement technologies open up a whole new world for marketing, the

exchange of information, and recruitment for trials. Pharmaceutical sales reps,
medical-science liaisons, and patient-service teams can inform and influence patients,
physicians, and caregivers in person or via mobile phones, the Internet, apps, or social
media. Patients are already starting to use patient portals for their medical records
and to communicate with their physicians, and they use apps to fill scripts and online
patient communities to speak to other patients with the same disease.

Anytime-anywhere virtual care will become increasingly commonplace. Specialist

virtual-care apps already exist. NeoCare Solutions, developed by Aetna, gives new
parents returning home with infants from the intensive care unit on-demand
coaching from a neonatal nurse. The US Department of Defense is testing robots to
engage and screen soldiers for posttraumatic stress disorder,2 while in the United
Kingdom, political parties are making promises to enable patients to use Skype to call
their general practitioners by 2020.

All of these interactions offer pharma companies the opportunity to derive value. To
realize it, they will have to build advanced digital marketing and engagement
capabilities similar to those deployed by leading retailers, airlines, telecom companies,
and consumer-goods companies.

Data-driven insight: Advanced analytics to increase pipeline and

commercial value
Pharma companies sit on a wealth of data, usually locked away in different technical
and organizational silos. Some are already linking and mining their data sets to
improve their pipelines, products, and strategies. But there remains a huge
opportunity to create further value from data and analytics using internal and
external data sources to drive superior results. A few examples follow:

In R&D, digital discovery and the testing of molecules with advanced

modeling and simulation techniques will be commonplace. For instance,
physiological simulation will accelerate product development, and 3-D
tissue modeling will help assess potential toxicity using computer
simulation. In late development, sensor-data streams from in vivo clinical
trials captured by wearables will be factored into registration filings and
value dossiers to give an early indication of real-world effectiveness.

Marketing and sales forces will deploy advanced analytics to understand

prescribing behavior and potential patient profiles, enabling more precise
targeting of providers and increasing the number of prescriptions filed. For
example, a “patient finder” technology that mines electronic medical
records to identify sufferers from specific rare diseases will enable sales
forces and medical science liaisons to focus on providers caring for patients
likely to have those diseases, although they are as yet undiagnosed.

Pharma companies and other healthcare players link and analyze data from
insurance claims, clinics, laboratories, sensors, apps, social media, and
more in order to generate real-world evidence about a drug's efficacy,
guiding reimbursement and clinical practices. We envisage a world in which
most care is "protocolized"—that is, in which clinical decisions on the best
treatment options are suggested to physicians by an automated decision
algorithm informed by advanced analytics. In this environment, winning
pharmaceutical companies will be those able to influence the algorithm.
Payors, meanwhile, will be able to develop new approaches to contracting
and risk sharing for specialty drugs. Payment based on adherence or cure-
rate data, or even "micropricing" based on the daily measurement of
specific outcomes and quality of life, are some of the possibilities.

Real-time responsiveness: Automated processes to improve cost,

reactions, and agility
Cloud and mobile technology, sensors, and next-generation business intelligence will
bring about a new wave of automation in business processes—that is, streamlined,
automated work flows with few handovers and end-to-end, real-time transparency on
progress, costs, and business value. This will drive a step change in the efficiency,
responsiveness, and agility of a wide range of complex, often cross-functional,
processes, be they in the back office, the supply chain, R&D, or commercial. Banks
have shown that the processing time and costs associated with opening an account or
mortgage origination can be reduced by up to 99 percent and 70 percent respectively,
with a clean-slate redesign of these cross-functional processes and state-of-the-art
digital technology enablement.

In pharmaceuticals, employee on-boarding, sales and operations planning, launch

monitoring, and marketing-content approval would especially benefit from
streamlined, automated work flows and increased transparency. Clinical-trial
management, from recruitment to submission, is another area that will see dramatic
change with advanced automation. Targeted online recruitment and remote-
monitoring technology (sensors, connected devices, and apps) will increasingly enable
clinical trials to take place in "real world" settings so that patients can go about their
lives with very minor changes in habits, while participating in a trial. Greatly reducing
interventions in clinics or trial sites during the trial of a drug will reduce the burden on
patients and make trial conditions more akin to a patient's life when he or she is
prescribed the drug outside a trial setting. Increased connectivity and automation in
trial-management processes will also enable advanced trial design and monitoring
approaches. For example, sites and sponsors can be connected in order to support the
data management and analytics required for adaptive trial designs.

Capturing the value

Most pharma companies have started to build some digital capabilities, but talent and
resources for their efforts can be fragmented, often across hundreds of small
initiatives. Without clear strategic direction and strong senior sponsorship, digital
initiatives often struggle to secure the funding and human resources required to reach
a viable scale, and they cannot overcome barriers related to inflexible legacy IT
systems. Talent and partnerships are also critical issues—many companies realize they
need to form partnerships to acquire digital capabilities and specialist skills but are
often unclear about what kinds of partnerships to set up and how to extract value from
them.
We believe there are three strategic actions pharma companies should take to
overcome these obstacles and start on a path that will capture value from digital.

Focus on two or three flagship initiatives. It is important to place a few big

bets that will each be sponsored by a senior executive, made highly visible
to the organization throughout design and pilot phases, and lauded when
early wins start coming in. These flagships will need to be properly
resourced from the start and supported by partnership initiatives that
complement a company's existing capabilities. The objective is to secure
early success, which in turn generates the buy-in and momentum required
to drive the next wave of initiatives. The choice of flagship initiatives needs
to be based on a company's pipeline, product portfolio, and business
strategy. Companies should therefore identify the distinctive sources of
value that digital technologies and capabilities can create in the disease
areas in which they operate, and then define the flagship initiatives to
develop solutions for two or three specific use cases. For example, a flagship
initiative could be building a digital ecosystem (a solution combining
sensors, apps, and services) for patient adherence to an upcoming oncology
blockbuster launch drug (the use case).

Run collaborative experiments, and then scale what works. Companies

cannot be expected to know in detail up front what a winning solution looks
like for any particular set of assets in any particular market. For example, it
is not possible for a company to design from A to Z a digital medical-affairs
ecosystem on paper without experimenting with different channel
platforms and content types to understand how key opinion leaders prefer
to interact with the company. Hence, companies need to set up the right
environment for collaborative experimentation within the initiative: for
example, by putting the right people from IT, business compliance, and
outside partners in a "war room" to run quick test-and-learn cycles. When
results are positive—patient awareness of a disease and a particular drug
increases, for instance—efforts can be scaled up. Technology prototypes can
become enterprise solutions, and new ways of working become formalized
and integrated into business processes.

Develop the organization for new business models. Digital talent may be
scarce to begin with, but a digital center of excellence can help bring
together what capabilities there are, concentrating them into a critical
 mass and avoiding duplication of resources across commercial and R&D. It
can also run the portfolio of digital partnerships, ring-fence funding for
digital initiatives, and codify and export learnings from pilots across
markets. In this new world, it will be vital that IT evolves to be able to
manage faster experimentation cycles, while still managing the legacy
estate for cost and reliability. This should lead to a two-speed IT function,3
where “fast domains" operate with different skills, architecture principles,
budgeting, and planning cycles to those that exist in "legacy domains" that
remain focused on enterprise resource planning and traditional business
applications.

We have outlined the four areas in which we believe digital will drive the most value
for pharma companies. The areas leverage digital innovation to make products and
services more personalized, physicians and patients more engaged, decisions and
product evidence more data driven, and business processes more immediate. To
capture this value, each company will need to consider how its businesses are set to be
affected by the digital changes under way, and then chart its own course accordingly. A
better understanding of what digital success looks like will help companies get to their
destination: improved innovation and commercial models for pharma companies and
better care for patients.

1.  "Two­thirds of people believe they could be making more decisions about personal
health and wellness on their own," a survey conducted by Ipsos in collaboration with the
National Council on Patient Information and Education and Pfizer, 2015, multivu.com.
2.  Multiple articles have been published on the use of technology in post­traumatic stress
disorder (PTSD), including Patrick Tucker, "The military is building brain chips to treat
PTSD," Defense One, May 28, 2014, defenseone.com.
3.  Oliver Bossert, Chris Ip, and Jürgen Laartz, "A two­speed IT architecture for the digital
enterprise," December 2014.

About the author(s)

David Champagne is an associate principal in the London office, Amy Hung is a

specialist in the New Jersey office, and Olivier Leclerc is a director in the Southern
California office.
The authors wish to thank Micah Bregman, Sastry Chilukuri, Joanne Mason, and
Nadine Mansour for their contributions to this article.

The road to digital success in pharma