2021 in Focus: Pharm Execs Annual Industry Outlook

15 January 2021

Pharmaceutical Executive

With a complicated and challenging global picture greeting the new year, driven by the continuing pandemic and historic political and regulatory changes in the US and Europe, we outline eight diverse trends critical to biopharma’s future health and growth.

Destined for Digitalization

Pharma is in a better position to shoot for its digital transformation goal.

In comparison with other sectors—such as retail, hospitality, banking, and media—pharma is still in its infancy as far as the journey to digital transformation goes. There are many reasons, of course, for the industry’s reticence and risk aversion, not least having to advance against a stronger tide of regulatory restrictions. No doubt pharma would have continued to tread cautiously through this digital infancy in 2020 had it not been for COVID-19. As Arda Ural, EY Americas industry markets leader, health sciences and wellness, observes, “For all the terrible things that COVID unleashed, it also offered a real-life experiment to test some of the hypotheses pharma has been thinking about with regard to digital.”

Patient engagement

Ural identifies a number of areas where digital took a stronger foothold in the industry last year. First, not surprisingly, is patient engagement. While the use of telehealth has been increasing for the last few years, the pandemic saw a surge in the rate of older patients using telehealth technology. Ural points to an EY-Parthenon Consumer Health Survey (published August 2020) that tracked 1,400 consumers throughout the patient journey that revealed both a stronger desire to self-manage their care and growing tech savviness among the over-65s. “Telehealth’s moment has arrived,” the report’s authors concluded.1 “And that behavior is going to stick,” adds Ural.

The surge in digital engagement is propelling further advances in dealing with patient data. Pascal Bécache, co-founder of Digital Pharma Lab—which helps European biopharma companies to accelerate and integrate innovations provided by selected startups into their business models—told Pharm Exec that more than half of the projects his company saw in 2020 were concerned with patient data. “Pharma companies really want to understand what is going on with their patients, how their drugs are accepted into the patient pathway, and how the medical professional is administering them,” he explains. “They need this to add further products and services to their portfolios. Digital technology, digital products, and digital metrics will become more and more embedded in pharma companies as we go forward.”

Commercialization

Concerning pharma’s commercialization activities, during the pandemic, companies began to observe that the virtual environment “is actually productive,” says Ural. He notes that not only were there companies who continued to launch products, but also companies launching their first product in this environment. While the one-to-one sales model has long been “in the pharma industry’s DNA”—the introduction of the tablet a decade ago did not fundamentally change that—Ural says that a shift is happening as we now have “a generation of physicians who grew up with video games and who are more open to consuming content through digital means.” He adds that there’s even data to suggest that physicians will be harder to engage in-person going forward. “As with Netflix and Amazon, we consume things on demand as opposed to watching TV and waiting for shows like we used to,” says Ural. “That same phenomenon is translating to pharma providers.”

Clinical trials

“We were all very humbled to see a 10-year vaccine development process crushed into 10 months,” says Ural. “That was a science and innovation victory. But it also showed that a new approach to the clinical trial process could work. We saw that patients can be enrolled and monitored remotely and site audits by pharma companies can be done remotely.” A BMJ piece by a trio of Imperial College London professors noted in July that the benefits of virtual trials extend to “patient recruitment, engagement, retention, and data collection with favorable effects on trial duration and costs.” While COVID-19 has resulted in “the greatest global disruption to clinical research since the Second World War,” they wrote, “the widespread implementation of virtual trial designs may mitigate some of the significant challenges ahead.”2 In October, Ashley George, co-founder of the Pistoia Alliance, asserted that the use of virtual trials “will surge in the future and could become the de facto standard for clinical studies,” citing a recent poll by the alliance that found more than half (55%) of life science professionals believed a quarter of all trials would go virtual within one year.3

Dealmaking

“Apparently, the IPO market is immune from the current pandemic,” wrote lawyer Laura Anthony in October 2020. Of the IPOs that have been completed since March, she observed, all priced their deals at the midpoint or higher of their ranges. She added: “The nearly absolute elimination of face-to-face presentations has not impacted deal pricing.” Not only did US tech and pharma IPOs continue unabated in 2020, their frequency increased when compared to other mid-summer years, especially election years. While there was a steep plunge in economic activity in the second quarter, tech and pharma stocks were “trading at historical premiums, pushing domestic indexes even higher,” Anthony explained.4

“Dealmakers are acknowledging that they don’t have to go on the road show. Virtual meetings have shown they can present more information to more people and do it faster,” notes Ural. “Now people who’ve never met in their lives sign off on multi-billion dollar transactions. This is another manifestation of the advance of digitalization.”

Pay it forward

Unlike some of the sectors that were badly damaged, biopharma emerged relatively unscathed, overall, from the pandemic. The industry thus retains “enough fire power and balance sheet strength to fund its ongoing digitalization,” says Ural. “If the pharma industry can afford digitalization by the ability to deploy capital against massive capital expenditures, I think this is the time to do it,” he adds. An EY survey of 500 US-based, C-suite executives, published in November, reported that 54% of respondents cited digital investment as a top investment priority going forward.

Loren Garruto, EY global and Americas corporate finance leader, strategy and transactions, commented: “Companies are innovating their capital deployment strategies—from reinvesting divestment proceeds to boosting their digital capabilities through M&A, rather than building resources internally—to stay ahead of current market and economic disruption.”5

For Ural, the answer to whether pharma companies should buy in extra digital capabilities or build them “is probably somewhere in between.” He explains, “You don’t want to be competing with people whose day job is technology. You want to own your own business strategy and prioritization, but you need to find the right partners to help you with the digitalization journey.”

Whatever path companies take to achieve full digital transformation, Ural says he is optimistic that the industry is finally reaching the inflection point: “The era of the digitalization of pharma has arrived.”

References

  1. “COVID-19: What patients are saying and how providers should respond,” www.ey.com, Aug. 10, 2020.
  2. Simon Erridge, Azeem Majeed, and Mikael Sodergren, “Virtual trials: looking beyond COVID-19,” blogs.bmj.com, July 6, 2020.
  3. Prof. Ashley George, “Virtual Clinical Trials Post-COVID-19: Collaboration Will Be Key to Success,” appliedclinicaltrialsonline.com, Oct. 6, 2020.
  4. “A COVID IPO: The Virtual Road Show,” prnewswire.com, Oct. 5, 2020.
  5. US executives rethink corporate strategies in anticipation of post-election legislation, regulation and policy changes, ey.com, Nov. 11, 2020.
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