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Pharma must use cloud-based tech, says report

Published on 13/03/14 at 11:01am
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Cloud-based technologies are the way forward for the pharma sector as global budget pressures continue to bite - that is the conclusion of a report by the IMS Institute.

The report, ‘Riding the information technology wave in life sciences: Priorities, pitfalls and promise’, says that companies in the industry have been late adopters of cloud-based technologies, thus ignoring ‘significant efficiencies and cost savings’.

“As market pressures reduce the lifetime earnings of medicines, life sciences companies will need to reduce spend within their commercial operations, and use new information technologies to accomplish this,” the report suggests.

Moving to more cloud-based technology in some way mirrors the conscious move away from ‘bricks and mortar’ which has been a feature of several recent pharma restructures.

However, the authors acknowledge that greater take-up from the sector will require cloud providers to beef-up security and make a clear commitment on thorny issues such as compliance.

But, it claims, these changes are ‘occurring rapidly’. It points to recent legal rulings in the US which have clarified that cloud providers are responsible for maintaining HIPAA compliance - the standard for protecting sensitive patient data.

This should in turn make it easier for patient data sources to become more widely available in the cloud and, IMS adds, “a growing number of cloud solutions are being developed specifically for the life sciences industry”.  

For pharma companies reading the report, it is perhaps the question of data management and cost savings which will give them the greatest pause for thought.

While huge amounts of data are being generated and accessed by life sciences outfits, analytic systems designed to interpret it and create concrete commercial actions from it ‘have not kept pace’.

A survey carried out by IMS revealed 74% of respondents said they have a ‘high level’ of need for greater insights from data, particularly since the shift to increasingly personalised medicines will require the identification of smaller groups of patients and doctors.

Cloud-based applications which focus on the commercial operations of life sciences companies are also important in areas such as master data management, handling large unstructured data streams, improving commercial operations and implementing multichannel marketing systems, the report adds.

Meanwhile the largest life sciences companies need to cut annual operating costs by at least $35 billion by 2017 in order to maintain their current operating margins and R&D investment, the report says.

“New approaches to reducing costs through optimising performance are needed as recent efforts, across-the-board cuts and outsourcing, have not delivered adequate improvements,” it goes on.

At the same time, customers want ‘more compelling evidence’ of the value of products, which means companies need to think anew about how they commercialise what they produce.

Embracing the cloud can help with each of these, IMS believes, with opportunities in storage, applications, systems integration and analytic tools all providing cost benefits.

Large companies which have developed large on-premises data warehouses and applications may be in something of a fix, unable to adapt quickly to cloud technologies for reasons of cost and sheer practicality.

But if legacy systems have significant inefficiencies, this means smaller life sciences firms could have an advantage if they invest now, the report suggests, opting to build on public or private cloud platforms and “acquiring cloud-based applications rather than build expensive on-premises infrastructure”.

This may allow them to ‘leapfrog traditional development cycles’.

The report identifies the role of chief information officer (CIO) as vital in making this work, finding ways to “leverage cloud storage, platforms and applications to create interoperable systems that save money”.

But such strategies can only be undertaken as part of an integrated effort within companies - in other words, it will require “the entire executive management team of life sciences companies to recognise the transformation that new technologies can bring to their organisations”.

IMS’ research suggests the need and desire is there: in its survey, 45% of executives in life sciences firms said cuts of more than 10% are planned over three years, while over 80% have ongoing plans to centralise certain functions.

In addition, the integration of point-solutions or systems across the organisation for improved workflow is seen by 85% of survey respondents as necessary, with 42% saying it is either a high need or even of ‘greatest’ need.

New companies may have the most to gain from all this, since it could be possible to use commercial cloud applications to market their first drugs successfully without signing commercialisation agreements with large companies, IMS believes.

“The shift to specialty drugs which may have relatively small target patient populations and fewer prescribers, and a marketplace with tighter payer controls, have already diminished the need for large direct-to-doctor sales forces,” the authors continue.

And they warn: “Cloud technologies may further lessen the need for distribution power of larger companies. Consequently, this may restrict the ability of larger companies to find in-licensing and commercialisation candidates that currently help fill their pipelines.”

Adam Hill 

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