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The Realities of a Digital World

Mobile communications, the Internet of things, the cloud, advanced analytics… digital technology is advancing rapidly and changing the world around us. Significant transformations have already been witnessed in a number of industries, including retail and media – will healthcare and pharmaceuticals be immune? Olivier Leclerc, senior partner at McKinsey & Company, believes that the digital revolution of the pharma industry has already begun. In 2014, $6.5 billion was invested in digital health, a 125 percent increase compared with 2013 (1). The traditional models of the pharma industry are changing as patients begin to take healthcare into their own hands by seeking information online or tracking their health through mobile apps. This provides an unprecedented transparency into outcomes, and pharmaceutical companies need to adapt by becoming solutions companies. Many digital technologies are available to enable this shift, but how do companies harness them? A recent white paper co-authored by Leclerc sought to bring structure and clarity to this issue (2). Two outcomes seem certain: i) there will be disruption, ii) there will be opportunities for business growth and innovation. We spoke with Leclerc to find out more.

What digital technologies are the ones to watch?

Digital technology is having a growing impact on every level in the pharma enterprise, but many companies in the field are struggling to understand what digital initiatives they should be focusing on. We believe that there are three fundamental technology gaps that should be watched closely.

But given the rate of change, it is no surprise that some executives are struggling to identify and prioritize all of the opportunities.

Smart phones. Today, almost all consumers are carrying a high-powered computer, which means there is huge potential for using digital tools to connect with them and gather data.

The cloud. People are only now realizing the implications of the cloud in terms of cost reduction and increased application flexibility. Consider that we can now develop useful applications in six weeks; previously, we would need a system integrator working on it for months. This change alone is triggering a lot of innovation.

Advance of informatics, enabled by computer power. Not only can you now collect a huge amount of data, but you also have the computer power and analytic techniques to analyze the datasets. Such power will generate many new insights as these big datasets are fully mined. And we’re not just talking about genomics data – gigabytes of data can also come from clinical trials, or even tracking technologies.

But given the rate of change, it is no surprise that some executives are struggling to identify and prioritize all of the opportunities.

How do you pick which projects to prioritize?

This is a crucial issue. You need to be able to measure success so that you know which projects are working and worth continuing. Even a medium biopharma company can typically have upwards of 250 digital projects – and large companies have many more. Often, these projects are initially developed to fulfill specific needs from marketing or other functions and tend to grow organically; no one is really tracking their actual impact on the business. So although digital technology already has some momentum in pharma companies, it is not always carefully directed.

The problem for the biopharma industry then is not just how to harness this momentum, but also how to direct it so that it adds the most value. And to direct it effectively, you need an infrastructure and a measurement system that alerts you to failing projects. When we started working in this field, tools were limited and it was difficult to assess which digital projects were creating impact. It’s a very different story today.

What practical examples can you give that highlight the benefits of digital?

One of the great benefits of digital is that once you have the right measurement systems collecting the right data, your decision making can be accelerated because the feedback cycle is faster. In other words, you generate the datasets, you analyze them, you derive insights from the analysis, and then you take the appropriate action. For example, if you measure drug response in different patients, and generate insights from that data, you could act upon it by segmenting patients according to predictors of response – and then you could continue collecting data to monitor the effect of that action.

Ten years ago, if you were conducting a trial that incorporated quality of life measures, you would typically rely on patient diaries. Every day, patients would write up how they felt, what they did, what their treatment was, and what the effect was. And you would have to rely exclusively on the patient to record the information accurately over the period of the trial. You would probably also be restricted to a small trial because the approach is costly – and slow. It takes months to gather and analyze the data from all the diaries. Today, you don’t need diaries. Instead you use an application, and directly collect patient data using wearable technology that measures vital signs or by using smartphone-based sensors. Data collection is very fast – in real time in some cases. It is this dramatic acceleration in the cycle of data collection, analysis, insight and action – enabled by digital technologies – that is transforming the industry.

Will digital also have a significant impact on R&D activities?

Yes – I believe that the speed of R&D activities can be accelerated thanks to the combination of genomics and digital technology, which together enable the generation and analysis of massive amounts of data – and the derivation of valuable, novel insights. At the same time, we’re also seeing the emergence of powerful biotechnology platforms (for example, gene-editing and mRNA), which can generate tailored drug candidates very fast – in a matter of weeks. Not only are you generating novel insights around disease biology – that ‘wow’ moment when you realize that a gene is involved in a disease – but you also have the ability to quickly develop and test new treatment options. The upshot? Generating hypotheses – and eventually treatments – is much faster than it used to be.

And let us not forget the huge impact at the other end of the spectrum – the patient. Digital technology enables you to gather huge amounts of patient data, such as treatment responses, which leads us ever closer to precision or personalized medicine.  Tailored treatment is already happening for some diseases, such as cancer, but I expect this to dramatically accelerate in the coming years simply because we are collecting more and more data on patients. After all, it only takes $150 to sequence a genome...

What are the considerations around data?

To understand what data must be collected and how value can be extracted, you need to have a certain hypothesis. Let’s postulate a nervous system drug, which is efficacious at first but loses efficacy over time, after which the patient needs a higher dose. You want to know when to change the dose, and you want to know as soon as possible. If you only collect data when patients visit their physicians, you could be waiting three or four months between data points. During that time, the patient could have been receiving an ineffective dose for several weeks. You need to think about what kinds of data would be helpful and meaningful in this situation. For example, should you measure tremors in the patient’s arms or vital signs? You need to see what is happening to allow timely intervention – and you need to understand what you want to improve. Then it’s simple – you gather specific data that will enable you to address your goal.

Another important consideration with data is data transparency. Biotech and pharma companies historically controlled all data pertaining to a given treatment, such as clinical trial data. Today, with data transparency initiatives, more people have access to these data and can use them to make treatment and prescription decisions. Though such data access has advantages, there is a risk that someone else may use different methods to analyze the same data sets, and come to very different conclusions. To that end, you need good, trusted analytic methods backed by a solid methodology. I believe that we will see the emergence of academic or private ‘infomediaries’, which will become trusted advisors on real world data, as well as partners to the pharma industry. These experts will be able to suggest the best methodology to use when analyzing data.

What steps should pharma companies be taking on the road to digital success and what are the potential hurdles?

First, you must define the specific digital initiatives that will actually make a difference. This is a prioritization process where you focus on value: where is the value for the patients, where is the value for the enterprise, and how do I capture that value?

You’ll find that there can be many internal obstacles that should be addressed from the top. Complex projects that cut across multiple functions rarely work well unless you have a mandate from the CEO, which helps to spur the organization into action. One common internal challenge starts with the fact that IT departments are essentially complex, and typically deal with large, cross-functional projects. You need people that understand both digital technology and the pharma environment – and these people are rare. Also, the IT department must be willing to experiment because application development can take several attempts before finding the method that works best for your needs. You’ll probably discover that pharma IT departments are culturally inclined to enterprise resource planning (ERP) rather than experimentation. To overcome this, we advise companies to have two-speed IT departments; the ‘normal’ IT department focuses on ERP, running the core processes and features that are critically important to the supply chain, and so on, while at the same time, you carve out a group of people who are able to work with other groups in the company to make agile computations happen and integrate them into the system. This kind of two-speed IT organization is important if you want to develop digital capability.

Do all companies accept the importance of digital?

Companies’ rates of progress vary dramatically, but in general I believe that all pharma companies are committed and accept that digital advances are important for them. The one common question that I hear all the time, however, is: where is the return on investment? The answer to that question is not always straightforward, which is why it is important to have a measuring framework. You may not see the return on investment immediately since it can take time to implement new technologies and understand how best to use them in each company. However, some initiatives should pay off fairly quickly. For example, if you launch an app that measures and improves adherence, you may be able to judge its success within a few months, at which point you can tweak it or kill it. Improving patient outcomes is a longer-term objective and demands a very different measurement system. It will take time and research to define the projects that seem viable – and it will take more time to decide on the appropriate framework and metrics for measuring success. It’s better to start with two or three initiatives that are very clearly defined, and associated with very clear metrics. Not all projects will be successful, but it’s okay for some to fail – if you’re monitoring them. It’s a process.

Looking forward, with all the advances in digital technology, I am excited about the future of healthcare. We’re on the cusp of a big change and we’re seeing a lot more innovation now than we’ve seen in the last 30 years. Remember that we sequenced our first genome at a cost of a billion dollars, back in 2001, and today, we can see the fruits of that sequencing effort in new cancer research and other areas. I am also very positive about the influence of digital technology on the pharma industry. And it doesn’t end with drug discovery and development. Pharmaceutical companies are certainly not the leanest organizations, but digital technology can help manage and control the complex infrastructure at play. After all, in an expanding digital world, the scope is almost limitless…

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  1. StartUp Health Insights Annual Report, “2014: The Year Digital Health Broke Out” (December, 2014).
  2. O. Leclerc et al., “The Road to Digital Success in Pharma: Insights into Pharmaceuticals and Medical Products”, published by McKinsey & Company (2015).
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