Pharma 4.0: the industry is estimated to spend $4.5 billion on digital transformation by 2030

As in other industries, today’s exponential technological development reshapes the world. This means that today’s technology rapidly changes how patients engage with pharma and purchase therapeutics. Digitalisation is fundamentally changing the healthcare industry. As a core part of healthcare, the Pharma industry is no exception. New technologies and innovations are already enabling pharma companies to improve medicine development and patient care. At the same time, healthcare payers and other customers of pharma companies are demanding more and better data on medication efficacy and improved patient quality of life.

Pharma 4.0 are the concept taking hold in pharmaceutical manufacturing. The pharmaceutical industry’s unique characteristics drive investments in digital transformation by pharmaceutical manufacturers. Global tech market advisory firm ABI Research forecasts that overall, digital factory revenue will top with the staggering sum of US$4.5 billion in 2030, with spending by pharmaceutical manufacturers on data analytics forecast to grow by a 27% CAGR and estimated to be worth US$1.2 billion in 2030, as manufacturers look to track, optimise their operations, and boost productivity.

The pharmaceutical industry needs to move from manufacturing drugs and vaccines in batches to optimising the manufacturing process with a continuous improvement focus. ?This will be critical for the pharmaceutical industry to increase its yields. Pharmaceutical manufacturers will need to invest in analytics to help develop digital twins of their operations to prepare their production lines for continuous manufacturing.

A digitisation race with the introduction of, for example, a new ERP system leads to change on many levels. The literature research is detailed in that many pharmaceutical businesses, unfortunately, fail because they do not understand the importance of, among other things, change management in a digital transformation. Experience shows that companies often lack control over the actual implications of the changes a new ERP system entails. The introduction of a new ERP system, or an upgrade to a more recent version, will usually require redesigning the current work processes. To ensure that a business's introduction of a new ERP system is successful, it must have reasonable control over its contemporary architecture.

Pharmaceutical companies that fail in this area do not have control over important issues such as:

-?????????What does today's application landscape look like?

-?????????How are the dependencies between the applications, the processes, the suppliers, and the people in the business?

-?????????What kind of business processes will be affected by a new upgrade?

-?????????How will these processes be changed by a possible new version of the ERP system or a new ERP system?

-?????????Is it possible to change existing processes to fit a standard ERP solution ("fit-to-standard")?

-?????????If a standard cannot be used, has a calculation been made on the cost/benefit of tailoring?

-?????????Are any other changes affecting other business processes unrelated to the digitisation process?

The consequence of not being proven above means that you quickly lose control of the implications of changing or removing technology that affects other critical business processes. Such a lack of understanding could lead to decisions being made on a failing basis by the management. An imagined consequence could be that one discontinues business-critical applications or invests in the wrong technical solution, as I have witnessed for a Nordic pharmaceutical manufacturer.

Pharmaceutical companies with reasonable control over the business architecture before a decision to change is implemented more successful than other pharmaceutical companies in their digitisation journey. It is about having tools that help one to identify operational dependencies in the upcoming changes, and not least to create a functional road map for the business's digital transformation.

How digitally mature is your pharmaceutical business today?

Knowledge of and competence in digital change management is essential to map how digitally mature your pharmaceutical business is today to carry out a digital transformation. It is not without reason that we constantly see pharmaceutical companies failing when it comes to digital changes. It does not help at all how good a technical solution a pharmaceutical company chooses to buy in if critical capabilities are absent.

The most critical questions senior management must ask themselves in the pharmaceutical business: ?

-?????????“Does our pharmaceutical business have the capabilities, processes and expertise to use the new technology?”

-?????????“Do we have a good culture for changes and implementation of new technology, new working methods, etc.?”

o??Any change requires new skills and capabilities, and new technology usually requires new work processes.

-?????????“What about the human aspect of digitalisation in our business, is this taken into account if we lack critical human capabilities to succeed with a digital transformation?”

Digital transformations often fail because pharmaceutical businesses are not ready for the changes. As part of their business architecture, successful pharmaceutical companies have mapped out how the current IT structure supports the pharmaceutical business's capabilities and how these are connected to other applications and areas. They have made a good plan for phasing out outdated technology and planned other transformation projects based on dependencies. They also focus on correct user adoption through various skills development programs that contribute to upgrading the organisation with the capabilities needed to optimise the realisation of gains from new technology. The consequence of such digital maturity is that the pharmaceutical company's employees become ambassadors rather than opponents of a new technical solution.

Senior management in the pharmaceutical business needs to understand the importance of stakeholders’ involvement in the industry.

One of the main reasons why gains are not realised in a digitisation project is that pharmaceutical businesses fail to involve the right stakeholders in their business's transformation journey. It is fundamentally important to have input and involve the stakeholders who use and are experts in the technology to be phased out and will use the technology to be phased in. Digital change projects must be anchored by senior management so that the project receives the resources, mandate and necessary attention required to realise the gains described in the project rationale. I experienced that many transformation projects fail because they do not have the resources or the grounding needed to succeed.

Today's literature research is detailed that the businesses that are successful with their digital transformations have anchored the digital change journey and the changes in top management and have reasonable control over the effect of changes through obtaining input and involving the right stakeholders in the organisation.

The pharmaceutical business must be able to map the following:

-?????????Who in the pharmaceutical organisation is responsible for the critical capabilities that the change affects?

-?????????Which processes are comprehensively digitised today

-?????????Which processes should be automated?

-?????????An overview of the pharmaceutical company's current application portfolio

-?????????Where should the pharmaceutical business cut, and where should one invest?

-?????????Reasonable control of the pharmaceutical business architecture is a regular feature of successful businesses.

-?????????Digitalisation without clearly defined goals and a clear plan for profit realisation

A blind focus on the future, with associated organisational blinders on the way there, makes it easy to lose track of potentially critical conditions in the present. Experience shows that pharmaceutical businesses often lack the competence to define reasonable, transparent, measurable goals for the digital transformation process in their business. The pharmaceutical companies, therefore, do not have a scalable plan to extract the gains during the projects or after the technology implementation. This often means that simple value is not realised and that you do not start with the initiatives that add the most value to the pharmaceutical business.

The pharmaceutical business must link the business goals and the overall strategy for the pharmaceutical company with how and what a digitalisation project should realise. Furthermore, a plan must be drawn up with good and measurable KPIs to achieve the company's goals.

The literature research shows that those who create a change-willing/change-elastic culture will succeed and survive over time. Change today occurs almost exponentially, which means that the winners are those who realise value quickly by being capable of change and implementing new technology on an ongoing basis. The pharmaceutical company's culture is essential to any change journey in increasingly digital everyday life. The paradox is that the technology must be seen as a reinforcing supplement to such necessary changes/transformations. Today's technological development is exponential, and pharmaceutical businesses that cannot take advantage of the new technical opportunities will lose the market competition and be decimated like many before them.

Many senior executives and pharmaceutical businesses are blind to new technology opportunities and forget that technology is only a tool for achieving the pharmaceutical business's vision and goals. This means that the pharmaceutical company implements poorly planned changes on an ongoing basis to be at the forefront. The consequence is that the project rationale often falls apart if you look at the costs associated with the project over time. This leads to a need for expensive ad hoc assistance from management consultants. The fundamental here is that pharmaceutical businesses understand the importance of allocating resources and capacity for management internally or connecting with a good management partner already in the planning phase.