In 2015, 90,000 applications were filed with the World Intellectual Property Organization (WIPO) in Asia Pacific (APAC). Meanwhile, in Europe and North America, this figure was significantly lower at approximately 50,000 in both regions. What we are therefore seeing is that APAC markets such as Japan, China, Singapore, Taiwan and South Korea are actively supporting Research and Development (R&D) education in life sciences with funding and incentives.
In the past decade especially, I’ve observed more life sciences sector activity moving to the East than before—placing executives in the hot seat to not only manage their operations more efficiently, but also increase the speed at which they obtain the right sites and talent they need to scale quickly. More recently, there have been some high profile global pharma R&D exits from Singapore and China, which has been a real shift in strategy for these companies.
Other trends are also creating an impact in this space. Let’s take a closer look at these trends and its implications for life sciences firms.
Trend no. 1: Expansion into APAC markets
Both Asia and Australasia are currently the fastest-growing healthcare region in the world, with a five percent growth predicted through 2020. If we were to look at Asia on its own, I’d imagine the figure to be significantly higher as emerging markets, such as India and China, are experiencing rising incomes, population growth, aging demographics and increased governmental financial commitments to healthcare—all of which are contributing to a rise in healthcare spending and investments.
Research has also found that 54 percent of life sciences companies have been actively seeking merger and acquisition (M&A) activities over the next year, suggesting that many of them are keen on moving quickly to capitalize on the market’s potential.
Breaking it down
- Be agile. Despite the recent R&D exits from APAC, M&A activity still looks set to focus primarily on R&D and manufacturing sites. Prime lab and manufacturing supplies will be highly sought after, so firms will have to quickly acquire the right sites and talent they need to carry out their business activities. Any companies divesting assets should find high demand from the market for that space.
- Manage and streamline. Following M&A, it is crucial to manage the new assets in the portfolio and look for ways to streamline operations across R&D, manufacturing and office spaces
- Conduct evaluation and due diligence. This is needed to ensure smooth operations of the new assets acquired. Depending on the delivery strategy, partnering with the right facilities and engineering management provider will be key
Trend no. 2: Increased focus on risk and compliance
During my conversations with clients, it’s clear that overregulation is now a top concern for global pharmaceuticals and life sciences companies. This is no surprise—the regulatory environment in life sciences is intensifying globally.
Business processes need to keep up and enforce stringent international standards for every region while adhering to individual market requirements; from production to distribution to engineering. In addition, there is also a significant shift from “after-the-fact” compliance checks to integrated, real-time detection and resolution of compliance and quality events. Interestingly, more and more companies are outsourcing areas closely associated with compliance risks.
Breaking it down
- Enforce operational excellence. Expect to see increased procedural control and governance structures across all facets of a life sciences firm’s business. Operational excellence from partners and suppliers will be absolutely non-negotiable
- Outsource to the experts. The desire to share risks or move risks to supply partners will continue to grow. Facility management and engineering functions will continue to shift from in-house toward being outsourced to specialist partners who have robust compliance management processes and systems
- Adopt the right tools. On-the-go compliance management technology will become crucial as the digitalization of compliance becomes increasingly agile and responsive
Trend no. 3: Cost reduction
Pressure on cost reduction is nothing new nor unique to the sector, but companies with high R&D costs are currently feeling the pinch. A study by Deloitte demonstrates this reality: it found a 63 percent decrease in estimated Return on Investment (ROI) between 2010 and 2016 for 12 leading biopharmaceutical companies’ late-stage pipelines. The focus will be for multinational companies to balance the R&D versus ROI equation as they are finding it increasingly difficult to meet their cost targets.
With cost reduction being a big part of corporate real estate (CRE) and facility management (FM) teams’ performance metrics and KPIs, delivering cost savings will play a critical role in elevating these functions within their organization.
Breaking it down
- Work with a partner to drive positive change. Strategic partnerships devising change programs that drive savings and improve resource efficiency will be increasingly common
- Upgrade your maintenance model. Asset management will continue to shift toward Next Generation Maintenance (NGM) to drive equipment reliability, increase productivity of technicians and maintenance teams, reduce reactive calls and faster repairs
- Embrace technology. Technology and services integration will be a key focus for the sector to simplify processes and reduce overall costs. 360-degree facilities management tools that allow for greater visibility and control in vendor management, inventory management and sharing of best practice will be increasingly sought after
Trend no. 4: Centralization of functions
Currently, CRE executives in most industries, including life sciences, feel that a lack of integration with the wider business and having a decentralized team hinders them from being a strategic value generator for their organizations. More companies are now reconsidering their operating models, and realizing that centralizing processes is both a strategic, long-term enabler as well as one that complements short-term tactical goals.
Breaking it down
- Bring it together. Given its benefits, centralization in overseeing real estate, FM and engineering functions will be likely in restructuring mandates
- Digitize your workflows. This creates closer links with CRE and produces effective data which teams can analyze to produce meaningful insights
- Focus on your core business. Businesses are beginning to realize the importance of focusing on their core business and have begun the journey of outsourcing regulated life sciences facility management and engineering services. Those who have outsourced before are taking their level of outsourcing deeper.
Continued evolution of the business
There are many pressures, challenges and big opportunities for life sciences. While the sector is moving in the right direction, change cannot happen overnight in the regulated environment—even with the right outsourcing partner – as the risk of change has to be managed.
But to remain successful and competitive, life sciences organizations must remain agile and open to making significant adjustments and changes to implement successful, long-term strategies in overseas expansion, cost reduction, risk and compliance, as well as centralization of functions.
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