Executing to a Vision of High Performance

Shaping the Future of Pharmaceutical R&D

This paper is based on marketplace insights developed by Accenture and refined through discussions held in the summer of 2009 with R&D heads of informatics (R&D chief information officers) from a number of the worlds leading pharmaceutical companies.

The R&D process in the pharmaceutical industry has reached a tipping point. As a result of a number of high-impact change drivers and for R&D organizations to remain competitive, R&D organizations will be forced to evolve significantly or abandon traditional approaches in favor of new R&D models.

Going forward, leading R&D organizations will forsake existing organizational barriers in favor of a networked, virtual and flexible approach to R&D. They will also expand their focus from generating products and information alone to delivering bundles of health care services focused on improving patient outcomes. To realize the full potential of the new R&D model, R&D organizations will need to cope with ever-expanding volumes of relevant data crucial to the business. This imperative will require R&D and R&D informatics organizations to continue changing or evolve radically their focus and approach. Instead of engaging in the traditional management and reporting of data, R&D informatics will need to help R&D organizations convert the ever-increasing flow of data into insights that inform outcomes for the patient. The companies that achieve high performance in the future will be the ones in which R&D and R&D informatics organizations align themselves to jointly pursue the Data to Insights (D2i) capabilities needed to execute on the promise of the new R&D model. Some nonpharmaceutical companies and a handful of pharmaceutical companies are already making the investments to capitalize fully on this opportunity. However, most pharmaceutical companies are under-investing significantly both in resources and timing relative to the size of the opportunity. For those companies, there are specific actions that should be considered.

High-performance R&D organizations will emerge as a group utilizing D2i capabilitiesequipped and empowered to make the best possible decisions and take the most appropriate actions in pursuit of developing, delivering, understanding and maintaining the best possible therapies and services to the global market.

The R&D model requires dramatic transformation

Today and over the next five years, due to a number of irreversible change drivers, the pharmaceutical industrys current R&D model will continue to undergo a dramatic transformation. Cost, value, data Pharmaceutical companies have seen pressures for R&D cost reduction over the past decade. These pressures will continue to increase and intensify as products come off patents in the next several years and the value proposition for future differentiated products becomes more difficult for companies to define. Differentiated products will be those that address unmet medical needs while meeting the additional emerging profiles of patients, payers, providers and regulatory agencies globally, including traditional as well as emerging marketsto achieve ultimately the optimal label and pricing and the appropriate position on formulary lists. Companies will need to balance requirements for larger trials for certain products with the increasing need for personalized medicinea novel paradigm which will impact both the cost and value equations.

Another important driver of change is the growing availability of product and patient data that can and increasingly will be used to pursue improved health outcomes as well as to measure product safety. On the latter point, regulatory bars will continue to be raised as agencies will require a more sophisticated approach to understand, report and communicate products safety performance.

model to give way to a networked approach, in which different players are integrated into virtual teams. Members of these teams require the ability to work not just across the organization, but in acquisitions, alliances and partnerships that stretch across the industry and beyond. 2. Global The diverse array of worldwide differentiation/value and pricing requirements placed on products demands a truly global R&D model, in which team members are able to bring together requirements from a variety of sources and geographies into uniquely defined R&D strategies. 3. Capable of providing bundled health care capabilities and services Growing requirements for all health care consumers, e.g., patients,

physicians, patient advocacy groups, and payers, require that the model focus on bundled health care capabilities and services. The R&D organization will need to expand its thinking away from a traditional product plus information model into a broader health care capability in which the emphasis is placed on overall patient outcomes in the context of the total clinical picture. 4. Transparent The new model will be a transparent one, in which the R&D organization will require the ability to synthesize and react to the growing wealth of information that is becoming available on its own assets, services and capabilities and those of companies throughout the industryultimately permitting more informed decisions to be made.

R&D model attributes

Together, these and other change drivers are giving rise to a number of business attributes that must be considered when reshaping the R&D model. Four are explored here: 1. Networked The increasing complexity of cost and value demands being placed on the R&D organization requires the traditional, company-constrained R&D

Implications for informatics

While change in the R&D model is inevitable, success in deploying the new model is not certain. In order for the R&D organization to address these business imperatives successfully, the R&D informatics organization must play a key enabling role. This holds true for several reasons: R&D organizations to work effectively using the new networked approach, R&D informatics organizations need to strengthen their capabilities to support enhanced collaboration and integrationencompassing both internal and external stakeholders, in a manner that accommodates both structured and unstructured interaction. To foster a truly global R&D approach, R&D informatics organizations need to develop a flexible infrastructure one that is highly secure, yet also elastic, globally present and cost-effective.
For

To support an R&D model that looks beyond product plus information to explore bundled health care capabilities in the service of patient outcomes, R&D informatics organizations need to facilitate the incorporation of new sources of datafrom partners, providers, CROs, patients and third-party sourcesinto an improved decisionmaking model. To take full advantage of transparency in the new R&D model and its opportunity to utilize a wealth of available internal and external data, R&D informatics organizations will need to enhance their capabilities to assimilate and interpret a wide array of inputs, ranging from sentiment monitoring and social networks to fully digital operational data that is integrated and accessible. These organizations will also be required to incorporate a broad spectrum of analytics and predictive capabilities, ranging from simulation

and modeling tools to visualization techniques that provide the means to absorb massive volumes of data. Figure 1 provides an overview of the new R&D model that is emerging in response to key business imperatives, and the implications for R&D informatics in enabling R&D organizations to take advantage of the new models full potential. In addition to the evolutionary steps described, a set of revolutionary approaches are destined to emerge as companies face the reality that the historic methodology of focusing holistically on drug discovery through development, supported by internal processes, networks, platforms and infrastructures will no longer be sustainable.

Crucial capability: the conversion of data into insights (D2i)

This ability to deal effectively with massive amounts of data is central to realizing the promise of the new R&D model. While leading R&D organizations will certainly build new strengths across the models attributes, they will be empowered for high performance only if they develop a fundamental, underlying new capability. This critical new capability is D2i: the ability to convert data into decision-making, product-shaping, market/customerinfluencing insights. D2i is the culmination of a broad, cross-industry trend that is changing the rules of the game in many industries. A number of select companies outside the pharmaceutical industry have already realized significant value from D2i capabilities:
Netflix uses analytics to optimize its business in a number of ways. Its Cinematch movie-recommendation engine, which is based on algorithmically driven software, analyzes customers movie choices and feedback and recommends films that will delight the customer, while optimizing inventory conditions. Analytics also give Netflix a decided competitive advantage when deciding what to pay for the distribution rights to DVDs.1 Harrahs use of analytics in its gaming business enables pricing to be adjusted based on the estimated demand curve for a given gameenhancing profitability while being unobservable to the customer.2 A number of companies in the travel and transportation industries are recognizing value from a D2i approach. A number of airlines, for example, are using improved analytical methods to understand the energy marketplace in order to route flights based on the locations where they will obtain the cheapest refueling.3

A global energy company is using sophisticated analytics models to address a chronic industry concern: unplanned losses in upstream operations. The company is seeking trends and patterns in a wide range of data, including production losses, maintenance and work orders, well tests and data from offshore sensors. The goal is to identify equipment faults and suboptimal performance issues before they happen, so that operations personnel can then move proactively to minimize failures, reduce maintenance costs and better manage enterprise assets.4

companies, spends $3 billion to $4 billion annually on external health care data for decision support around discovery, product development, clinical trial design, safety, product launch, and sales and marketing. Yet the value generated by this expenditure has not been maximized. Companies in the industry currently lack true businessdriven, extensible analytics capabilities that bring value to data. Today, most of the focus of R&D informatics organizations lies in executing traditional and expanded noncore activities, including maintaining current systems, enhancing existing systems, filling technology gaps, and implementing technologies that will supplement existing processes and create further efficiencies. Informatics organizations are also focusing their thinking on emerging activities, including the development of strategies and requirements for three to five years in the future.
1 Thomas H. Davenport and Jeanne G. Harris, Competing on Analytics: The New Science of Winning, 2007. 2 Thomas H. Davenport and Jeanne G. Harris, Competing on Analytics: The New Science of Winning, 2007. 3 Accenture Research. 4 Accenture Research.

Figure 1. The Transformed R&D Model Model Attributes

Networked/virtual/integrated

In the area of R&D, pharmaceutical companies face an accelerating need to compete on the basis of analytic excellence. There is a competitive advantage for companies that can rapidly harness analytical capabilities to collaborate in new ways, e.g., to generate new insights on disease progression in order to find novel therapies, or to connect disparate patient information in order to refine existing studies through adaptive trial design. In enabling this kind of insight, D2i approaches provide pharmaceutical R&D functional groups with unprecedented power to cope with todays torrent of information. Such power, until now, has been sorely lacking. Over the course of a products lifecycle, pharmaceutical companies generate terabytes of discovery and clinical data. The industry as a whole, including pharmaceutical and medical device

Business Imperatives
Ability

Informatics Implications
Flexible

Truly global

to work across the organization, the industry, alliances and partnerships Ability to change behaviors, adjust cultures

infrastructurehighly secure, elastic, global and cost-effective Collaboration capabilities Integration capabilitiesboth structured and unstructured, internal and external
Predictive

Bundled health care capabilities/ services/outcomes

Ability

to expand thinking away from traditional product plus information model into broader health care capability

modeling for health outcomes and comparative effectiveness New models and informatics capabilities for evidence-based medicine Data integration for biomarker discovery and validation
Sentiment Social

Transparent

Ability

to synthesize and react to all information available on company, assets, services, capabilities Ability to make more informed decisions utilizing wealth of data

monitoring networks Analytics, predictive capabilities Visualizationways to absorb massive data volumes Simulation/Modeling Fully electronic operational data integrated and accessible

Figure 2. The Evolution of R&D Informatics Capabilities Outputs

Insights

D2i
Knowledge Traditional Noncore Activities Information Expanded Noncore Activities Emerging Activities

Data

Run

Build

Design

Requirements

Strategy

Focus Areas

As Figure 2 illustrates, most of this current work deals with the management of data and information, and in some cases it results in the creation of knowledge. Yet very little of it rises to the level of generating insight. By contrast, there is tremendous value to be gained by focusing on the D2i capabilities that enable organizations to generate valuable insights from existing and new sources of data. In the future, these capabilities and the value delivered will be game changing. For example:
The global attributes of the future model are already evident today in many organizations multinational regulatory intelligence capabilities. Five years from now, areas of global capability will have expanded to include such functions as sentiment monitoring across patient support and advocacy groups, regulatory advisory panels, and physicians.

The transparency attributes of the future model are likely to take fuller shape in such capabilities as pharmacovigilance (PV) and predictive toxicology. The networked aspect of the future model is already evident in genomic target qualification and validation, which connects the dots across research sources through such functionalities as unstructured text analysis of the literature for the creation of biology pathways databases, as well as linking target and mechanism data to adverse events.

In five years, this focus will have emerged more fully in such applications as evidence-based medicine that leverages health outcome data; trial design based on information contained in electronic health records (EHRs); and the conversion of genomic data into insights for truly personalized medicine.

outcomes-based focus that lends itself to the bundling of health care services is already evident today in tools such as patient characterization and segmentation, cohort analysis, predictive modeling, simulation/modeling for protocol design and adaptive clinical trials, expert finders/social networks, indication hopping and patient recruitment.

The

Such capabilities will have revolutionary impact in a number of key areas. In the area of clinical program and study design, D2i will yield the ability to answer key questions, such as: How do we make go/no-go decisions earlier? How do we demonstrably raise confidence levels at each development stage around efficacy and safety? What biomarkers or surrogate markers offer the most value in fostering definitive decisions around a therapeutic area or asset?

Likewise, in the area of attrition and study execution, D2i will permit answers to such questions as: What is the right patient strategy, and how do we adapt based on new data and clinical trial experience? How do we identify the right patients for our trial? What is the optimal geographic region and site selection strategy to achieve our patient enrollment goals? The enhanced use of internal and external clinical data will also give companies the ability to create a unique set of performance metrics, which can be used as benchmarks for monitoring each therapeutic asset/ compound from preclinical through regulatory filing. Decision makers will be empowered to evaluate a drugs potential for approval quickly and with a high degree of predictive accuracy. Thanks to the insights generated

from advanced analytics, clinical data will also be used to improve protocol design, optimize the clinical trial supply chain, and shift the attrition curve. R&D informatics organizations will enable their organizations to achieve this kind of benefit only by expanding on their traditional capabilities using D2i. By capitalizing on new data sources and sophisticated analytics tools, pharmaceutical companies will gain an unprecedented ability to optimize their pipelines, while focusing on their ultimate goalthe improvement of patient outcomes.

Barriers to appropriate investment

Despite the clear value to be gained from D2i, very few of the industrys players are aggressively exploring D2i capabilities. Instead, based on Accenture research, todays pharmaceutical R&D organizations are arrayed along a continuum of D2i investment strategies: Early adoptersof which there are very feware aggressively pursuing D2i and are placing a number of bets in this space, making minimal investments in areas such as the ones we have outlined. We have identified a few companies that are aggressively looking at new models for decision support in areas such as comparative effectiveness and evidence-based medicine. These companies have begun building the appropriate data warehouse infrastructure and creating predictive modeling capabilities to advance drug development based on large volumes of R&D data. Selective investors are investing within a middle range of funding, while scaling up their investment in select areas. We have identified a number of companies that are making selective investments in D2i capabilities including limited forays into adaptive clinical trial data platforms and expanded use of existing assets (SAS, Oracle 11g) to explore predictive modeling and simulation, patient recruitment and clinical trial supply chain optimization. Observers, while interested in potential developments in D2i, are pursuing very limited investments that may ultimately place them at a disadvantage. These companies, which make up a large percentage of the industry, are aware of the issues and some have pursued

limited evaluation of their existing capabilities, but for the most part are looking to other companies or academic research institutions to take the lead. Within this group of companies, there are individuals exploring opportunities and formulating the future vision, but these insights are not communicated to decision makers and insufficient investment is being made. There are multiple reasons for this disparity in companies investment strategies. The business case for making this investment, and the value to be realized, are not yet well understood. Cost pressures also pose challenges to expand beyond the current capability base, particularly if the new capabilities required are considered speculative in nature. Meanwhile, current capabilities will continue to require real work and focus, as well as real continued funding. In some cases, such as the integration of two organizations after a merger, this traditional work will take on real urgencyand potential precedence as an area for investment. Other potential barriers to investment include the fact that the function making the investment in informatics could be distinct from the function that is likely to realize a return on this investment, as well as the fact that the investment is likely to require significant time before its promised impact can be demonstrated.

The need for alignment

While these barriers are understandable, they must be overcome. In order to achieve high performance in the face of such investment challenges, senior R&D and R&D informatics leadership must jointly respond to todays call to action, which is defined by a three-step process of alignment, strategy and execution. The first step is alignment. To secure the requisite investment, there is a clear need to enlist sponsorship from enlightened senior leaders. R&D executives and R&D informatics leadership must join together to clearly develop the business case for D2i, and to outline the value that will be derived from the investment required. One useful preliminary step may be to conduct a head of R&D/head of R&D informatics forum outlining the trends that favor the new R&D model and how R&D informatics could enable its success coupled with discussions around other illustrative cross-industry examples. Thinking through cross-industry solutions is another interpretation of alignment. Companies will benefit from working as a group in some areas to reduce cost and realize efficiencies on noncompetitive IT elements. These synergies would then free up resources for more of the D2i type, differentiating capabilities. Each company must then move forward with key strategic steps, including establishing its own specific business case; developing a business capability road map; and aligning its investments with emerging priorities. Ultimately, then, each company will need to execute against the resulting plan. Even after the requisite investment has been greenlighted, executional challenges will remain and will need to be addressed thoughtfully with an emphasis on measuring performance to keep the organization aligned to its agreed upon mission and set of objectives. One of these challenges may be a skills gap: the current skills possessed by Informatics organizations may not be the same skills that will be required to develop new D2i capabilities. Clearly, extensive training will also be needed in order to enable people to operate effectively using D2i. Another potential executional barrier is attitudinal: there is a natural tendency for individuals, when confronted with change, to be risk-averse or to feel threatened. While this three-step process may be difficult, it must be undertaken. Over the next five years, a clear set of industry leaders will emerge. High-performance businesses will be the ones that have acquired the D2i capabilities necessary to execute successfully the strategy of the transformed R&D model. Today, only a few large players are investing at a level commensurate with the potential value. Those who continue to lag behindas most of the industry does todaywill struggle to keep up with the fast pace of the future and with the requirements necessary to be successful.

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To find out more, please contact: Arjun Bedi Global Managing Partner, Life Sciences R&D Practice +1 267 216 1003 arjun.bedi@accenture.com Nicole Faust Cohen Senior Manager, Life Sciences R&D Practice +1 267 216 1912 nicole.f.cohen@accenture.com

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