Despite expanding regulatory and market pressures, the life sciences industry will continue to grow. Innovative diverse businesses will find a wealth of expanding opportunities in the global marketplace.
By Donna Benjamin
The life sciences industry is not only huge; it holds the keys to advancing the quality of human life and the health of the environment. It is made up of a number of sectors that include pharmaceuticals, biotechnology, life-systems technologies, biomedical technologies, cosmeceuticals, nutraceuticals, biomedical devices, food processing and environmental sciences.
For suppliers, each sector represents a set of global opportunities in developed and emerging markets. Opportunities stretch across R&D, managing government compliance, cost control, technology, manufacturing, safety, and supply chain risk management.
As the life sciences industry faces increasing cost and market pressures, there is a strong demand for skilled and innovative suppliers and outsourcing partners who can help businesses within sectors achieve goals through supply-chain focused innovation.
Convergence of Risks
If there is any industry that has been seriously challenged from all sides, it is life sciences.
Consumers are more vocal about product pricing. The regulatory environment gets more complex each year. Supply chain vulnerabilities create enormous product liability and disruption risks, especially when utilizing global suppliers. R&D costs continue to increase, putting pressure on pricing. Product manufacturers are under pressure to increase efficiency, lower costs and reduce waste.
The list of factors goes on to include the risk of intellectual property infringement, the difficulty of developing and maintaining a strong pipeline of skilled employees, and volatile economic conditions. Also presenting a risk is the shift to outcomes-focused reimbursement systems, putting even more pressure on life sciences organizations to produce products that are more effective and contribute to the minimization of healthcare costs. An aging global population and recognition of the need to better manage chronic diseases is driving demand for targeted therapies.
Despite the complex set of challenges, each risk is also an opportunity for suppliers who can bring new ideas and approaches to the table. The supply chain for life sciences organizations can be complex, but that also presents opportunities.
Suppliers are providing goods and services, manufacturing, insurance, logistics, safety, quality control, sales organizations, and technology. The supply chain of large life sciences firms also include contract research organizations.
Improving operational efficiency across the supply chain has become critical to managing costs in an era when consumer and insurance resistance to high prices on innovative products is strengthening.
Integrated Business Models Creating New Opportunities
There is general agreement that technology can offer some of the solutions. Suppliers can improve demand visibility, inventory control, and forecasting which contributes to customer cost control. That is the use of technology at its most basic level at this point.
Life sciences organizations are moving toward more integrated business models in which, for example, medical technology, biotechnology, and pharmaceutical companies become partners in R&D to minimize costs while maximizing efficiencies to bring costs savings. In fact, scientific advances in molecular and cellular biology have led to a convergence of life sciences, physics, and engineering.
Technology suppliers are essential to this value proposition because analytics are critical to visibility or transparency. Accenture stats found that 42 percent of pharmaceutical R&D executives characterize their companies as exploring digital. Accenture Consulting also started the HealthTech Innovation Challenge to bring together leading-edge startups and health/life sciences companies to address challenges like transparency, costs, and access. The invitation is extended to businesses around the world.
Four categories of solutions or products offer an important clue as the most important challenges faced by life sciences companies based on Accenture research. These categories include developing easier access to healthcare, adhering to a care plan and generating improved outcomes, keeping information private and secure, and getting consumers the health information and services needed at the right time.
Life sciences organizations are increasingly outsourcing information technology—related services. These include IT Outsourcing (ITO), strategic consulting services and Business Processing Outsourcing (BPO). ITO includes anything to do with software applications, data integration, systems implementation, infrastructure development, and systems maintenance and support. Suppliers with global delivery capabilities, the ability to develop a breadth of supply chain services, industry expertise in life sciences, and financial stability are prime candidates for selection.
Another area of opportunity exists for staffing companies. The life sciences industry has a growing and expanding demand for employees with necessary skills. This is also an industry that is noted for its lack of diversity which discourages qualified diverse candidates from applying.
John Carese, executive director of the California Life Sciences Institute, says there is an enormous gap between demand and supply in California, and one reason is that life sciences companies are mostly recruiting applicants with four-year degrees when entry-level positions can be filled with community college graduates. There is a real need for Human Resources suppliers able to recruit globally for the tens of thousands available entry-level jobs.
Bring Opportunities with Solutions
Research by IDC Health Insights and reported in “IDC MarketScape: Worldwide Life Science Manufacturing and Supply Chain ITO 2013 Vendor Assessment” found that life sciences companies are seeking vendors who have deep and proven industry-specific expertise, ability to provide dedicated resources on an ongoing basis across sequential projects to maintain best practices, and proven understanding of regulations and compliance initiatives.
Though the research focused on ITO, the information is relevant to all suppliers. The report evaluated 12 top suppliers in the life sciences industry and noted each vendor’s strengths and opportunities. Opportunities include things like flexible pricing contracts, and well-develop demand forecasting and track and trace technology.
Cross-company partnerships, global expansion, increased outsourcing, and the need for advanced risk management strategies in the life sciences industry have created an environment filled with opportunities for enterprising suppliers. As the life sciences companies focus on business solutions, they are relying more on vendors as partners.
Successful vendors are innovative and able to regularly invest in products and services, bringing state-of-the-art solutions. Coupled with the need for innovation is a desire to attract more diverse businesses. It is a double set of opportunities that can reap big results.
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