The Digitization of the Life Sciences Industry
The Digitization of the Life Sciences Industry
Service providers seek to optimize delivery mix by exploring new locations while also developing onshore capabilities
The tumultuous healthcare market, particularly in the U.S., is compelling buyers to take measured steps when engaging with service providers
The Healthcare and Life Sciences (HLS) ITO market has been buzzing with activity in 2015. At just seven months into the year, Everest Group’s projected market size for the HLS ITO market size is US$39 billion.
Here are some of the standout messages from our 2015 research to date that address some of the contributors to this enormous market size.
While robust in their coverage, these already published 2015 research reports paint only a portion of the picture enterprises need to view to address cost-cutting imperatives and deliver metrics-driven business outcomes through alignment of their technology strategy with their lines of business.
For example, an increasing number of life sciences clients, especially large pharmaceutical firms, have been reaching out to Everest Group for assistance in evaluating technology partners not only to drive digitization of their critical operational components, but also higher R&D productivity through next-generation analytics and high-tech systems. Similarly, while payer and provider organizations are starting to view technology from an entirely new prism, they are uncertain how to leverage technological solutions and platform to address concerns and initiatives including growing consumerization (patient engagement), population health initiatives, and care-risk convergence.
To inform the marketplace on issues and exciting opportunities in ITO for the HLS industry, Everest Group is significantly expanding its portfolio of published PEAK Matrix evaluations in 2015. New reports we’ll be publishing through the end of the year are:
Everest Group’s goal is to help ensure enterprises and service providers achieve maximum success from their sourcing initiatives. Thus, we encourage you to reach out to us directly with your queries.
Abhishek Singh, Practice Director, [email protected]
Nitish Mittal, Senior Analyst, [email protected]
Mayank Maria, Analyst, [email protected]
A variety of factors affect the choice of a life sciences organization’s analytics service partner
New demands are driving changes in location maturity for life sciences ITO, but India remains the preferred delivery location
Technology plays a critical role at all stages of the life sciences value chain and is key to navigating industry challenges
The healthcare IT outsourcing (ITO) market will see healthy growth over the next several years driven by reform mandates, payer-provider convergence, consumerization, evolving reimbursement models, and value-chain digitization
On 19 May, Wipro signed a US$400 million+, multi-year strategic alliance deal with Japan’s largest pharmaceutical firm, Takeda Pharmaceutical. Wipro will provide infrastructure management services across Takeda’s global operations, thereby creating a unified platform across the company. Less than a week earlier, HCL announced a landmark infrastructure deal with pharmaceutical major Novartis. Per the terms of the deal, HCL will provide remote infrastructure management services for Novartis across its entire data center landscape, covering more than 70 countries across six continents.
The Life Sciences Infrastructure Bandwagon
These deals are indicative of a sharp inflection point for IT infrastructure services in the life sciences industry. Until now, service providers have been largely focused on delivering application outsourcing services such as ADM, testing, ERP, and package implementation. Demand for infrastructure services was largely linear and predictable. However, the winds of change sweeping the overall healthcare landscape have brought about strong momentum to infrastructure uptake.
These winds include regulatory reform, consumerization, market consolidation, and the emergence of next-generation digital avenues. The volume, variety, and velocity of incoming data are fundamentally impacting how life sciences organizations view their infrastructure needs. Exponential growth in data, coupled with evolving engagement and drug development models, has resulted in a significant need for analytics. Dimensions such as real-time reporting, proliferation of mobile devices, and automation are providing additional impetus.
The Opportunity At Hand
Among the various sub-segments of life sciences IT outsourcing, we see infrastructure poised to assume the lion’s share of growth in the coming years. While applications and SI/consulting are likely to grow at a healthy rate, the infrastructure opportunity in life sciences could triple in value over 2014-2020. This is likely to be fueled by increasing traction in cloud delivery and storage models, data warehousing efforts, consolidation of information systems, and the move to obtain a unified view of customer data to enable actionable business outcomes.
Life sciences has traditionally been a mature IT market. Across medical device manufacturers, pharmaceutical firms, biotech companies, life science firms spend more on IT than typical buyers. Life science companies have innovative R&D efforts at the core of their operating model. Given the rise in personalized medicines, there will be a surge in data storage/processing requirements and, consequently, infrastructure needs. These themes impact life sciences IT infrastructure requirements to give rise to various technology imperatives across the ecosystem.
Buyers in the life sciences space need to evaluate their infrastructure services roadmap on a business impact versus investment paradigm. They need to establish meaningful relationships with strategic partners in order to enable the true synergistic benefits of a comprehensive and relevant infrastructure services roadmap.
At the same time, services providers need to expand their infrastructure footprint to partner with enterprises in this transformative journey. They need to adopt a holistic mix of traditional tenets (co-location models, data warehousing, BI, hosting, and network services) along with next-generation services such as multi-tenancy solutions, cloud delivery and storage, and BYOD.
What are you experiencing in infrastructure services? Our readers are eager to hear!
On April 23, Genpact announced it had signed an agreement to acquire Pharmalink Consulting, a global provider of regulatory services to the life sciences industry. The move brings Genpact valuable expertise in supporting life sciences research and development functions including regulatory strategy, filing submissions, complex compliance services, and post-licensing activities management. And it well complements Genpact’s traditional stronghold in FAO BPO for major pharma clients.
This strategic play is in line with a wider move by generalist IT-BPO service providers to compete with life sciences technology and process majors such as Accenture and Cognizant. These generalists are ramping up their capabilities in domain-specific areas including drug safety, regulatory services, pharmacovigilance, and clinical data management, to enable more broad-based engagement with pharma customers.
Life Sciences Regulatory Imperatives
The already complex life sciences regulatory landscape is further compounded by stringent quality measures, new drug approval regulations, restricted sales force access to physicians, increasing scrutiny of manufacturing processes, improving collaboration among regulatory agencies, and enhanced pharmacovigilance legislation. We estimate that compliance-related IT spending amounts to nearly 15 percent of the total IT budget of life sciences firms, with three to five percent annual increment.
Recent European data protection regulations call for greater control of personal data. Newer provisions include use of health data for only “absolutely necessary” purposes, as well as an additional onus on data controllers to formulate methodologies to adhere to “data minimization” practices. Pharmacovigilance, drug safety, and clinical data management have become key imperatives in this scenario. New technologies and systems can enable organizations to tackle the regulatory puzzle.
The Inorganic Route to Enabling Domain Expertise
In a significant change and recognition of new market realities, nearly all IT majors have separate business verticals specifically targeting clinical data management and pharmacovigilance. In 2011, Accenture even tied up with the Institute of Clinical Research in India (ICRI) to jointly develop a pharmacovigilance and clinical research program for the Indian market.
And in the last couple of years, there has been an increasing impetus on behalf of service providers to look at M&As to acquire these specific areas of expertise in the life sciences domain. For example, the Accenture/Octagon deal in 2012 signalled an important shift in focus as Accenture attempted to combine its life sciences offerings by adding elements of regulatory management and SI/consulting to have a more integrated portfolio with a cross-functional view. This is based on the belief that the marriage of functional expertise in conventional process-oriented outsourcing services with industry expertise across regulatory, drug safety and clinical trials, make for a very compelling business case. Additionally, regulatory work has been largely project-based, and typically short-term. The enhanced value players bring to the table can translate into longer and more meaningful IT-BPO engagements.
The moves by Accenture and Genpact herald the transformation of life sciences customers’ expectations for greater consolidation and efficiency in the aspects of regulatory activities management, bringing together different tenets such as clinical data management and pharmacovigilance. Service providers that seek to explore, leverage, and consolidate adjacencies in current scope of work, and assume a consolidated and integrated approach to IT-BPO services, will end up with a greater share of the life sciences pie.