• Industry: Healthcare
  • Type: Press release
  • Date: 7/8/2013

Life Sciences Companies Must Act as Partners, not Suppliers 

Partnerships with payers, providers create new growth opportunities for life sciences sector, greater value for health systems

As global healthcare systems evolve to deliver better patient outcomes at lower costs, the life sciences sector must seek ways to adapt to the changing environment, according to a new report by KPMG’s Global Life Sciences practice.

“Life sciences companies can drive increased brand value, higher margins and improved business performance by positioning themselves as a partner in the system rather than a supplier to it”, said Chris Stirling, Global Chair of KPMG’s Life Sciences practice. “As global healthcare systems find themselves under increasing pressure to deliver better quality care for less, the life sciences sector can align its interests by partnering to share costs, data and risk to improve the value and effectiveness of its therapies.”

The report, entitled More than Medicine, identifies a number of emerging opportunities for the industry to use its talents, scale and data to partner with healthcare systems to support transformative change and create new growth opportunities for the sector.

Responding to forces of change

With many payers around the world now seeking new ways to contract with providers for value rather than volume, the report finds that the industry will need to redesign its approach to payers and patients in order to remain relevant and profitable in the new healthcare environment.

“Life sciences organizations must be much more engaged than they currently are with the rapidly changing healthcare landscape,” said Liam Walsh, KPMG in the US’sAdvisory Leader for Healthcare and Life Sciences. “So while there is certainly still time to make the changes required to meet the needs of the healthcare systems, the scale of the challenge suggests that time is running out for those who have yet to consider how they will operate in this new world.”

Greater rigor around R&D spending pays off

While sector returns on capitalized research and development (R&D) have fallen steadily over the past 20 years, new KPMG analysis in the report indicates a 14 percent year-over-year increase in returns on capitalized R&D for 2011. This uptick suggests that some of the steps life sciences companies have been taking to improve the return on investment (ROI) of their R&D efforts are having a positive impact. However, as the demands of the new healthcare economy deepen and broaden, maintaining this upward swing and developing new drugs that satisfy both payers and shareholders will be difficult.

Seizing emerging opportunities

More than Medicine outlines a number of specific opportunities for life sciences organizations to partner with health systems. These include strategies such as improving patient outcomes and lowering healthcare costs by taking on risk-sharing agreements, optimizing IT and leveraging existing data to uncover actionable insights about patients, healthcare professionals or the behavior of payers and providers.

“These advances could make a measurable difference in health systems around the world by uncovering new treatment pathways and epidemiology trends that can then be used to identify underserved patient populations,” added Walsh. “Advances in mobile health systems also open the door for life sciences organizations to become part of the relationship between healthcare professionals and patients by helping with compliance and populating electronic health records.”

Strategies for success

Based on these findings, the report outlines three practical yet crucial strategies that the life sciences sector must consider to evolve alongside the healthcare sector:

  1. Understand the customer and what they want - Life sciences companies must become better at identifying who their new customers are, what they want and how they want it delivered. In different geographies, these key customers vary and strategies need to be adapted to maximize returns on new products.
  2. Reshape R&D to provide reimbursable drugs and devices that deliver shareholder value - The industry should consider whether it is investing in the development of the right drugs at a cost that will allow satisfactory pricing for the new healthcare environment as well as an ROI that is acceptable to stakeholders.
  3. Anticipate shifting power structures in the wider healthcare ecosystem - While more time is needed to understand the competing priorities that healthcare systems face as they navigate the transformation, it is clear that strong leadership will be critical to manage the impact that regional approaches will have on the business.

“There is considerable opportunity to improve margins for life sciences companies that can capitalize on the changing healthcare landscape,” noted Stirling. “They certainly have the talent and ability to demonstrate their value as a partner to healthcare systems around the world, but they’ll need to rethink both their business models and the way they interact with their stakeholders to achieve success.”

About the report

More than Medicine, a new report from KPMG’s Global Life Sciences practice examines the impacts of healthcare transformation on the life sciences sector, as well as practical strategies and growth opportunities life sciences companies can leverage to align their interests and expertise to the healthcare sector.

For further information, please contact:

Jennifer Samuel

KPMG International

+1 416 777 8491

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

News - Stay up to date with the latest global KPMG news, including press releases. 

Share this

Share this

Press contacts

Do you need to speak to our Press Office? Here's how to get in touch.

More than medicine

More than medicine
More than medicine examines strategies and emerging opportunities life sciences companies can use to align their interests and expertise to evolving healthcare systems.

News items search

Find news and press releases from across KPMG’s global network of firms.

Subscribe to related feeds