q Why biotech needs to upgrade its systems - Business Reporter

The looming productivity crisis may increase biotech’s appetite for digitalisation

On the face of it, the awe-inspiring success of British biotech would be the perfect anti-depressant to readers who tend to get despondent over news of negative trends, lingering uncertainties and doomsday scenarios regarding the UK economy.

UK Biotech companies harnessing living organisms to fight illnesses such as cancer and leukemia, are becoming ever-bigger-favourites with investors, who had already pumped more than £1.6billion into the sector by September last year, 30 per cent more than in the whole of 2017. New advancements in revolutionary gene therapies that involve taking cells from the cancer patient, reprogramming them to recognise cancer cells, then reintroducing them to the patient, are announced by the month. We also hear of the opening of government-funded treatment centres, and the NHS already making certain gene therapies available for children.

However, an increasing number of experts are talking about a biotech bubble, and argue that giving too much priority to the biotech industry could throw the funding of the healthcare system completely out of balance.

For instance, a report from Professor James Wilsdon, Professor of Research Policy and Professor Richard Jones from the Department of Physics and Astronomy at the University of Sheffield –  published in collaboration with NESTA, the innovation foundation – argues that the pharmaceutical and biotechnological sectors have dominated policy thinking for too long, while “much of the wider innovation needed for the NHS, public health and social care has been under-resourced”.

The aim of the professors’ report is to set out the evidence, facts and analysis needed to challenge the current overreliance on biomedical approaches in British healthcare funding, and they call on UKRI, the recently established UK Research and Innovation Organisation, to question outdated practices and look afresh at priorities across the funding system.

The underlying weakness

But what drives the two Sheffield professors to put this beacon of the UK economy in the crosshairs? Tackling the problems of underfunded areas by diverting money from one that is actually delivering sounds rather counterintuitive.

Professors Wilsdon and Jones argue that the golden age of biomedical research, globally speaking, is about to come to an end. And indeed, in the last eight years, return on investment in R&D by the top 12 companies in the pharma industry has fallen from 10.1 per cent in 2010 to 3.2 per cent in 2017. The reasons cited for this downward trend include the increasing pressure coming from the stricter licensing criteria of regulators, an aging population and the growing complexities and costs of clinical trials carried out on more specific groups of subjects than previously.

However, the most eye-opening factor of the RoI crisis in biotech research, say experts, is the reluctance of this world-class sector to digitalise itself.

But how has an industry that is all about technological advancement and innovation in its outcomes become such a late adopter in digitalising its research and operational processes? Is it that a roaring business is less likely to notice – until an approaching crisis alerts it to the fact that things should be done more efficiently?

Biopharma seems to be getting closer to this sobering moment by the day. This is not to say that no digitalisation of any sort is happening in the sector. When representatives of pharmaceutical companies were asked in a survey about digitalisation, 55 per cent of R&D executives confirmed that their companies are adopting digital.

The problem with the kind of digitalisation respondents talked about, according to a report from management consulting company Accenture, is that these are mostly limited to “disconnected pilots and isolated initiatives”. What biotech companies actually need is a more holistic embrace of the digital in order to achieve significant improvements in research productivity, as well as meet the expectations of stakeholders, who already regard living in a digital world as the norm.

What improvements can digitalisation offer?

The area where biotech companies could see the largest benefit of digitalisation is in digital data capture and advanced analytics. The insights gained through digital analytical tools enable researchers to make better decisions in the early stages of the R&D process. Engaging patients in clinical trials, and getting their results in real time through wearables, could lead not only to reduced clinical trial costs but also diminish the time to market. Furthermore, digitalisation offers highly efficient platforms that makes collaboration between colleagues as well as with external partners and regulatory organisations seamless.

To fully assess the transformational power of digitalisation in biotechnology when applied to all the activities along the whole value chain, it could be worthwhile for biotech companies to get a clear understanding of the impact digital has already had in early adopter industries.

According to the Accenture study, the estimated improvement a well-designed and successfully executed digital transformation programme can have on today’s profitability baseline is an astonishing 61 per cent. So, even allowing for the considerable costs of the transformation itself, there seems to be a strong case for biotech to tackle the unproductivity trap by going down the digitalisation route. Greater financial self-reliance of the sector, on the other hand, could release considerable amounts of government funding in the long run, which could be put to better use in other areas.

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