Smart asset management and success in the pharma industry

The Digital revolution may lead to a crisis in the pharmaceutical industry. Pharma companies will need to adjust their digital strategies and radically rethink their asset portfolios to be successful in the future.

Like nearly every sector of the economy, the life sciences industry is undergoing rapid change, which presents significant challenges and opportunities for companies in this space. The burning question is whether traditional pharmaceutical companies are agile enough to cope with three major disruptions: the rise of the tech giants, a shift from treatment to prevention care, and substantial growth opportunities in new treatments and therapies. The successful life science companies of tomorrow will be the ones that are currently figuring out whether they have the right assets to be competitive in the future.

Rise of the tech giants

Big platform companies like Amazon, Google, and Apple are purchasing their way into the life sciences market, and are leveraging digital solutions, such as data analytics, artificial intelligence and blockchain technology, to gain market share. Amazon has purchased PillPack, an important pharma distributor in the US. Google is developing smart health apps and Apple has already added health monitoring to their Watch. If those companies are also able to tap more and more into the development of new products and therapies and disrupt the traditional supply chain, the life sciences sector will look completely different in just a few years’ time.

There is also great potential to accelerate the drug development process, by using massive datasets to create efficiencies and to better predict possible adverse effects of new products. These techniques can help expedite clinical trials and hasten efforts to get new products onto the market. As a result, there’s reason to believe that, in the future, the fastest growing companies in this sector will no longer be the traditional giants in the industry.

Prevention care will become the new norm

A big move to personalized healthcare & treatment is underway. The landscape will change dramatically from sick care to true healthcare, with an emphasis on personal preventative care: healthy food, proper work-life balance, and exercise.  The professional distance between patients and healthcare professionals will decrease. Many commonly-used pieces of medical equipment will become obsolete and make way for new, intelligent devices, which will empower individuals to monitor their health in real time and take more control of their own care. This will have a huge impact on the assets pharmaceutical and life sciences companies will need to deliver products and services to the market.

New sources of growth

Due to the expanding global middle class, which can spend more money on better healthcare, people around the world have better access to medicine than ever in history. But, at the same time, healthcare costs are increasing, as more and more of us reach advanced ages or because of the discovery of new treatments or products for rare diseases (the so called “orphan drugs”) or hard to cure aggressive diseases. This may well lead to regulatory interventions in prescription drug prices and treatments. In order to remain competitive in these markets, traditional pharmaceutical companies need to drastically revise their strategies, placing much more focus on the use of data and digital tools to address pain points, reduce costs, make efficiency gains and drive innovation. This will also be the key for entering new markets that are emerging around the world.

How this will affect existing assets

Factories are becoming increasingly automated, with manufacturing plants around the world starting to tap into big data, collaborative robotics, artificial intelligence and circular economic thinking. Pharma 4.0. will facilitate the continuous production of drugs with a much smaller asset base. Also, as companies shift to biotherapies and other innovations, they will need new types of assets. “Factory on a bench” is a second trend: moving the supply chain to smaller production sites in the vicinity of cities or upscaling the typical R&D activities to accelerate time to market. Finally, the rapid increase in demand for data processing, such as collecting and analyzing personal health data, is driving rapid growth in data centers.

All of this will enable better planning, reduce the need for large-scale manufacturing and storage capacity, and help increase productivity, while reducing waste. This evolution can also help offset some of the costs associated with potential relocations. Smart companies are already conducting an asset portfolio review to help drive efficiencies, and inform a master plan to balance workforce, logistics, and resiliency.

Taking advantage of these developments

With so much change underway in the industry, pharmaceutical and life sciences companies are faced with a fundamental choice. Those that take a strategic, data-driven approach to asset management, will have an advantage over companies that adopt a business as usual approach. At Arcadis, we have deep knowledge of the assets used by life sciences companies and a proven track record of delivering masterplans and asset portfolio plans for leading industry players. This helps our clients position themselves for success by making smart capital investment decisions, divesting unnecessary assets and bringing products to market faster.