The Data Revolution and the Pharmaceutical Industry; what is Industry 4.0?
By Kimberley Loynes, 31 March 2021
Digital technology has transformed the world of business in a very short time. While it creates opportunities, many businesses are struggling to adapt their models to keep pace. The world of business is undergoing a new revolution. Industry 4.0 technologies are sweeping all before them as digital transformation sweeps all before it. However, innovation is changing the game faster than many businesses can keep up. Companies need to adopt data driven business models to understand the market, predict the future, reveal fresh insights and optimise costs across all processes. This is particularly true of the pharmaceutical industry in which the marketplace is becoming increasingly dynamic, innovative and competitive. Demands are changing and pressures on costs and profit margins are growing. Advanced analytics will be increasingly vital for firms which want to keep pace with a changing environment.
The pharmaceutical industry has been relatively slow on the uptake. Innovation is stymied by a lack of technological infrastructure, risk averse culture and shortage of expertise. However, such are the pressures of the digital economy that companies are making the move. Those early adopters are showing the way for the others and piling on more pressure to those who are still reluctant to move. In this digital world, it will be a case of adapt or die, with late adopters finding it increasingly difficult to compete in the digital marketplace of the future.
If steam powered the industrial revolution, data is providing the fuel for the digital.
The amount of data available to organisations has exploded in the last few years. The next five years are likely to see an even bigger explosion in data quantity. IDC has warned businesses to expect 175 zettabytes of data by 2025, a 61% increase on where we stand today with the cloud holding as much data as is held in data centres.
From artificial intelligence to machine learning, data mining, predictive analytics and process automation businesses are harnessing digital technologies to boost their performance across all commercial areas. However, this is a revolution which is unevenly applied. Adoption varies between industries and companies. While some are powering into the future others are lagging behind. This is creating a digital gap between the early adopters and the slow movers and that is also having an impact on how businesses are being valued.
A report from Palladium Digital says most private equity investors say digital is high on their agenda and are gradually starting to adopt methodologies for factoring digital adoption into their investment decisions. They will look at how far a business has progressed with digital integration compared to its peers. If a business has fallen behind it will affect their valuation and may even cause them to avoid a business altogether, even if the current balance sheet looks good. Such is the digital gap, they will feel, that it will soon become almost impossible for that firm to compete
The pharmaceutical industry has been slower than most in making the change. As elsewhere, part of the reason comes down to fears of risk, cost, a lack of expertise or infrastructure. However, integrating real time data into the health sector is particularly challenging. Records can often be months old and arrive in unstructured and digitally incompatible format. The challenge of accessing that data and integrating it into business operations is much higher than in other data driven businesses which regularly connect with the web.
Data analytics will be vital for pharmaceutical manufacturing companies as they seek to cope with these various commercial pressures. It helps at both ends of the funnel; reducing costs by optimising operations and increasing revenue by using data insights to identify new opportunities and maximise profitability. They are using data in a number of ways including the acceleration of drug discovery, cleaning, maintenance scheduling, improving the efficiency of clinical trials and much more. Once again, a gap is opening up between the digital haves and have nots. Those which have successfully identified opportunities and implemented digital transformative products are surging ahead of those which have not.
How the Industry Is Changing
In the digital age standing still is not an option. It is a case of adapt or die. As such, companies of all kinds are assessing their operations and identifying ways in which digital technology can help them achieve their objectives. According to a 2019 survey from IDC Insights, 94% of respondents in the US and UK agreed on the importance of applying advanced analytics to data across their industry.
For example, AstraZeneca, Bayer, Celgene, Janssen Research and Development, Memorial Sloan Kettering Cancer Center, and Sanofi recently announced a new data sharing initiative. Dubbed Project Data Sphere, it will allow companies to share historical cancer research data in a globally available database provided by a software as a service provider.
The push to adopt advanced analytics becomes even stronger with the arrival of COVID 19. The pandemic has created challenges for industries of all kinds. The pressure is on to make the best strategic decisions about the future of the company.
Data will be crucial in making certain key decision makers have the most accurate and up to date information at their fingertips to help them make effective choices which safeguard the future of the business. The benefits of doing so can be transformative to a company’s fortunes. McKinsey & Company estimates the impact of advanced analytics can be as high as 15 and 30% of earnings before interest, with the difference rising as high as 70% over a ten year period.
The scene is set for a period of rapid digital transformation within the industry. Companies understand the need to change and the technology is increasingly available to facilitate the change. Even so, challenges remain in terms of infrastructure, personnel, security and culture. To truly move into the digital future, firms will need to understand what they want to achieve, what the technology can do and how they can benefit.