Life Sciences Companies on their Way to Digital Leadership

4.1. Value Chain Optimization – Making the Value Chain more flexible, efficient and collaborative

Digital leadership begins with the optimization of processes across the entire value chain. This can be achieved using existing IT solutions and represents the initial step toward digital leadership. Through process reengineering and business process optimization, efficiency gains can be realized, unlocking potential cost savings.

In the Life Sciences industry, significant improvements are possible due to historically evolved, outdated, or overly complex processes that lack efficient IT support and automation. In 2022, McKinsey’s “Digital Transformation in Life Sciences: The $300 Billion Opportunity” study found that digitalizing Life Sciences value chains could reduce development costs by 20%, increase production efficiency by 15%, and improve patient care by 10%.

Business process optimization is key in this context. First, process mining creates a clear picture of the current situation. Based on this, business processes can be enhanced and continually optimized. Once established, this continuous improvement process leads to cumulatively significant efficiency gains and speed.

Even more critical than enhancing efficiency is increasing focus on customers or patients and leveraging data to guide decision-making and optimization. Traditionally, healthcare models have focused on healthcare providers and payers, with little direct involvement of patients. Using patient data poses challenges such as data privacy and security, technical integration with third parties, and change management. Finally, IT systems need to be able to work with a lot more and different data, like patient weight, which can be a challenge for IT departments.

Another important aspect with a significant impact on Life Sciences value chains is environmental, social, and governance (ESG). Full transparency in ESG is becoming crucial for Life Sciences companies, along with the ability to efficiently manage ESG across global supply networks.

Last but not least, the value chain must be able to collaborate, integrate and disintegrate partners, suppliers, subsidiaries and client organizations. 

 

4.2. ERP-Transformations – Evolving the system of record to an enabling Digital Core

For many Life Sciences companies, the ERP system serves as the Digital Core of their operations, integrating many different solutions and providing essential interfaces for seamless operations of the whole business. Most Life Sciences companies are working with SAP S/4HANA as their Digital Core.

According to Gartner’s Pace-Layered Application Strategy, there are three categories of applications: Systems of Record, Systems of Differentiation, and Systems of Innovation (see Graph below). The Systems of Record Layer is the foundation for a company’s fundamental business processes. These systems evolve slowly and provide the backbone of the organization. In the Life Sciences industry, SAP S/4HANA is often used to handle tasks such as financials, procurement, and regulatory compliance. These are typically well-established practices that change gradually. Regulatory requirements, including accounting and HR rules, often play a crucial role in this layer.

While these fundamental functionalities remain important, they are no longer sufficient in ’the Life Sciences’ rapidly changing business environment. The Digital Core encompasses the Systems of Record Layer and lays the foundation for differentiation and innovation. It should have the capacity to integrate solutions and provide interfaces for the next two layers. Only with the right setup of the Digital Core can AI and other game-changing digital solutions access the necessary data and realize their full potential.

This is why SAP S/4HANA transformations are of great significance. Digital leaders in the Life Sciences industry recognize the pivotal role of the Digital Core. They utilize the capabilities of the Digital Dore not only for basic functions but also to enable new systems of differentiation and innovation. This is where the true added value of the Digital Dore emerges.

 

Gartner's Pace-Layered Application Strategy

4.3. Life Sciences Industry Solutions – Creating differentiation and competitive advantages

In light of the ongoing digital transformation in Life Sciences, having a robust Digital Core is no longer sufficient. To best support the business and meet new demands, specific solutions are required. Gartner refers to these as the “Systems of Differentiation Layer.” These solutions enhance a company’s competitive edge and are subject to ongoing evolution. However, many of these solutions become standard within a few years. Currently, there are solutions not yet widely embraced in the Life Sciences industry, including SAP Batch Release Hub, Clinical Supply Management Solutions, and Patient Data Management platforms. Digital Leaders are able to implement the right solutions in the right way.

Example: SAP Batch Release Hub (BRH) is a prime example of a system of differentiation. Life Sciences companies can elevate their batch release operations with a single, integrated hub that empowers quality teams to exert control over vast amounts of batch release data. BRH streamlines processes, ultimately leading to faster order fulfillment. Even more crucial is the reduction of human errors through automation and improved user guidance, thereby reducing the risk of quality noncompliance while minimizing risk management costs. If you want to learn more about SAP Batch Release Hub, click here: BRH.

 

4.4. Innovating New Solutions – Taking the step to market leadership

Digital leaders don’t merely respond to change; they recognize digital transformation as a strategic opportunity and proactively embark on developing their own digital innovations. In Gartner’s framework, the "Systems of Innovation Layer" comprises systems engineered to establish future competitive advantages. From our perspective, these systems are of paramount importance. However, the capability to develop innovative systems is even more critical for Life Sciences companies.

To attain market leadership, they must evolve into something akin to a technology company, consistently creating, implementing, and deploying digital solutions. A digital strategy, the right mindset, technological proficiency, and a network of partners all play pivotal roles in this endeavor. As a result, digital leaders in Life Sciences adopt a strategic approach to cultivating the capability for digital innovations.

Example: One of the world’s largest biotech companies wanted to optimize their clinical trials management. They aimed not only to develop a ground-breaking solution for their own use but to establish an industry standard. To realize this vision, they approached Tenthpin and SAP for a collaborative effort. A pivotal step in this journey was the formation of a consortium consisting of 30+ pharma companies and vendors.

Building on SAP Business Technology Platform (BTP) and leveraging S/4HANA while adopting SAP’s industry cloud, they created a new industry standard for Clinical Supply named SAP Intelligent Clinical Supply Management (ICSM). Business cases indicate the potential for up to a 20% reduction in clinical trial costs. These solutions were jointly developed and implemented, and they are now available as SAP standard solutions for the entire Life Sciences industry.

This case study illustrates, how Digital Leaders proceed. However, there are many additional needs for digital innovations in the Life Sciences industry to address business challenges. Recognizing this, Tenthpin has established its own business unit, Tenthpin Solutions, following successful co-innovations with industry consortia and SAP. This move aims to meet the high demand for innovative software solutions. One of the first products is Tenthpin Quality Management Evolved (T/QME). T/QME enriches the existing SAP Quality Management module, providing a tailored solution to cover the requirements along the processes in the labs from sample creation to managing batch data. If you want to learn more about Tenthpin Solutions, visit their webpage here: Tenthpin Solutions

 

4.5. Data Analytics – Fuel the systems of record, differentiation & innovation

In the Life Sciences industry, the digital shift hinges on the transformative power of data. Data fuels the systems of record, differentiation, and innovation, propelling the Life Sciences industry into a new era of possibilities. For example, these new possibilities include gaining insights from data (especially patient data), improving decision-making, speeding up innovation, and creating business value. Additionally, Life Sciences companies must be able to use patient data for individualized treatments with batch size 1.

Advanced Analytics and Artificial Intelligence (AI) are catalyzing breakthroughs by offering insights and predictions that were once unimaginable. Business Intelligence and Data Visualization tools provide stakeholders with intuitive access to data, enabling informed decision-making. Enterprise Data Modernization, Governance, and Architecture establish the framework for managing and securing critical information assets. Moreover, Digital Process Excellence and Automation, including Robotic Process Automation (RPA), streamline operations by eliminating bottlenecks and increasing efficiency. This comprehensive approach to data analytics fuels the systems of record, differentiation, and innovation, and it propels Digital Leaders in the Life Sciences industry into a new era of possibilities and requirements. With our 7-step approach, Tenthpin supports you in developing your digital data and analytics roadmap. Learn more here: Data & Analytics.

 

4.6. Transformation Management – Change as new normal in Life Sciences

Transformations are already part of everyday life. Therefore, managing these transformations is a core capability in the digital age and an enabling function for the entire organization. Unlike Data & Analytics, which focuses on people, Transformation Management involves Organizational Change Management, Mergers & Acquisitions, Project Management, and new business models.

Companies, especially IT organizations, that view digital transformation not as a one-time revolution but as continuous disruption and master it as daily business will be successful tomorrow and the day after and be counted among the digital leaders.

 

Digital Leadership in Life Sciences

4.7. Conclusion

The six action areas described for digital leadership in the life sciences industry are not sequential. For example, data analytics and transformation management play a fundamental role and strongly impact the other areas. Additionally, these six areas work together to magnify each other’s benefits. For example, value chain optimization is less effective without a good data basis.

Life Sciences companies need to define the right strategy based on their market and positioning, which is very specific and should be aligned in the context of a digital assessment. In such an assessment, the shifts and their impact are evaluated. When developing the roadmap, it is important to address specific challenges and lay the foundation for future transformations. Being prepared for these disruptions is the key to digital leadership.