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Does pharma have a maturity problem?

Post By Meghan Oates

February 13, 2018

Early Renaissance alchemist, philosopher, and physician Paracelsus first used ether on animals in 1525. Among other things, Paracelsus is considered the father of modern pharmacology and toxicology.

It would be 321 years later on October 16, 1846 that William T. G. Morton would demonstrate that ether could be used as an effective anesthetic for humans. Patient Edward Gilbert Abbott had a neck tumor removed successfully at what would come to be known as the “Ether Dome” of Massachusetts General Hospital in Boston. Eight years later, in 1854, Edward Robinson Squibb developed a process for mass production of ether through a new distillation method. The process of molecule discovery, animal testing, human testing, and mainstream use took a total of 329 year.

Though the drug development process has come a long way since Paracelsus, Morton, and Squibb, creating a new drug is still no small feat today. The process itself, from molecule to medicine, takes more than a decade in most cases and costs $2.6 billion, according to the Tufts Center for the Study of Drug Development. Food and Drug Administration (FDA) regulations drive a healthy degree of caution to ensure patient safety throughout the process, while trepidation around change and risk hinder adoption of new, time saving innovations.

Measuring Digital Maturity

As industries go, pharma is on the infantile end of digital maturity, according to a recent study by McKinsey. In assessing nine major industries, the study ranked pharma second to last in digital maturity, placing it just ahead of the public sector and just behind the insurance industry. Pharma received a 27 Digital Quotient (DQ) score out of 100, measured by 18 different management practices across strategy, culture, management, and capabilities.

A company’s digital maturity speaks volumes about its openness to innovation. A digital organization can aggregate data, analyze it, share it cross functionally, and learn from it much more easily than companies not operating with robust digital capabilities.

Though the McKinsey study found a significant range of scores within pharma, with more digitally mature players scoring greater than 32 and some further behind with less than 25. Those players with higher scorers have typically defined their digital strategy, assigned resources to implement it, and determined how to scale their capabilities. Pharma companies on the lower end of the scoring have yet to define their strategy and those in the middle struggle to execute it.

When considering the cost and duration of drug development, advancing digital maturity could contribute significantly to reducing both, expediting data sharing while providing a gateway for data-driven innovations.

However, as pharma companies commit to bring drugs to market faster, embracing data analytics capabilities will not be enough. According to McKinsey the barriers keeping pharma companies from becoming digitally mature lie in strategy, culture, and organization.

Addressing the Digital Maturity Gap

The study notes that Pharma companies have key areas they can address to become more digitally mature, such as:

  • Becoming more customer-centric, understanding the customer buyer journey and aligning their digital strategy with it-more than 40% of pharma executives said they did not understand these connections within their companies.
  • Aligning digital objectives with the broader business objectives-60% of pharma executives admitted that their digital initiatives are linked only in part to the company’s broader strategy.
  • Maintaining an efficient operations model-McKinsey notes key operating gaps that include:
    • Leadership mind-set, only 15% of pharma chiefs and their direct reports could name their digital goals. At top performing, high DQ, digitally mature organizations that number was 70%.
    • Defining roles is critical to success. Only 15% of pharma companies have clearly defined roles and responsibilities around digital processes and 38% for digital leaders.
    • Oversight of digital spending is vital, with only 30% of pharma companies able to track digital budgets across the organization.
    • The organizational structure of a company is foundational for success in realizing the company’s digital goals. Successful players have a digital center of excellence and a chief digital officer-among other resources-to provide direction operationally and accountability.

It is true that the drug development process has evolved significantly since the first use of ether on animals 493 years ago. However, the benefits of our era of rapid technological advancement offer pharma companies an opportunity to fast forward their work. A focus on digital maturity and innovation could revolutionize the process, bringing improved efficiency and a shorter timeline from molecule to medicine-realizing financial benefits for pharma companies, as well as the ability to improve the lives of more patients.

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