2019: The Year of the Digital Pharma?

January 8, 2019 | Company

Melanie senior

Mergers and acquisitions (M&A) used to be the most disruptive force affecting pharma. Mega-deals continue: Takeda’s $59 billion deal for Shire in 2018, a record-breaker, has just been surpassed in early 2019 by Bristol Myers Squibb’s surprise $74 billion cash and stock deal for Celgene.

But digital technologies are changing pharma more profoundly than even the largest mega-deal. And while several Big Pharma CEOs have said they’re now avoiding large M&A, the digital shift will doubtless continue in 2019, as technology’s potential to improve drug industry productivity becomes clearer – and as pharma’s need grows.

New tools and capabilities, including back-office data capture and analysis, artificial-intelligence-based algorithms to accelerate drug discovery and development, virtual clinical trial platforms, wearables and smartphone-based therapeutics are impacting every business function. “Digital” isn’t a single department or skillset. “Going digital” – establishing a robust digital infrastructure and user-friendly tools that can help improve efficiency and output – requires people from across the entire organisation to engage with new kinds of systems and ways of working. It requires a change in culture.

Changing culture is the hardest part. The workings of AI-based algorithms and data analytics tools may be complicated. Using them effectively does not usually require a deep understanding of those workings, though: we all use smartphones and GPS in our cars. We need to want to use them. We need to be convinced that they can help us get to where we want to be – rather than see them as a threat.

Hence leadership in digital transformation must come from the top. Yet turning digital into a core capability also requires support and expertise at all levels. It also involves partnering with new kinds of organisations – from Google or Amazon to tiny digital start-ups and technology-makers – with entirely different cultures and far more rapid innovation cycles than in the highly-regulated pharmaceutical industry.

After a slow start, many pharma firms are well underway in their digital transformation. These transformations vary widely in their speed and focus. Few initiatives are made public – although those that are give a sense of the scope of change. Novartis claims it is already seeing results from huge, CEO-led digital initiatives such as its ‘mission control’ centre for clinical trials, and from its Digital Cortex data analysis and simulation program in discovery. Otsuka Pharmaceuticals in late 2017 achieved FDA approval of its schizophrenia pill, Abilify (aripiprazole) combined with a tiny ingestible sensor, made by Proteus Digital Health. The combination – a data-collecting pill — is designed to track adherence among patients with CNS disorders. Roche says it is using data from high quality electronic health records (EHR) as a surrogate for standard-of-care control arms in cancer trials.

That data came from Roche’s $1.9 billion purchase of oncology-focused Flatiron in February 2018.  This new kind of pharma M&A  – accessing data, not just pipeline or products –will likely increase in 2019 and beyond, as the era of Digital Pharma begins.