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Predicts 2020: Life Science CIOs Must

Digitalize for Business Growth
Published: 23 December 2019 ID: G00451197

Analyst(s): Animesh Gandhi, Michael Shanler, Jeff Smith, Andrew Stevens

Smart uses of disruptive technologies like AI, IoT and cloud are transforming
how healthcare organizations deliver value to consumers. Life science CIOs
must incorporate these capabilities in their strategic plans and accelerate
their adoption to fully transform their businesses.

Key Findings
■ Digitalization enabled by advancing technologies is changing the nature, value and design of
healthcare products and services and altering the ways that organizations deliver value to
consumers.
■ Digital natives and healthcare companies have created market opportunities across the
healthcare continuum by embracing a consumer-first ethos and leveraging advanced data and
analytics capabilities at scale.
■ Artificial intelligence (AI) is the most powerful and pervasive emerging technology across
healthcare and life sciences. Over 50% of the innovation profiles on the 2019 healthcare and life
science Hype Cycles are amenable to some form of AI.
■ Life science CIOs have cited culture and scarce digital-era talent as top barriers to their digital
transformation success. The pressure to compete with digital giants for highly skilled resources
will require innovative strategies to access, recruit and retain top technical talent.

Recommendations
Life science CIOs seeking to enable digital R&D and commercial strategy and innovation impact:

■ Make digital transformation real by engaging your business colleagues to assess how you
currently support and measure the progress of your digitalization efforts. Leverage innovation
sprints, design thinking methodologies and outside-in digital KPIs.
■ Avail your organization of new opportunities for consumer engagement by partnering with digital
natives and digital healthcare companies to expand your health impact for consumers with
specific needs and diseases.

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■ Minimize time and cost overruns in AI projects by using a combination of proven tools and
preintegrated solutions and focusing on adapting them for your organization’s specific use
cases.

Strategic Planning Assumptions

By 2022, the percentage of life science R&D IT groups with “cloud only” strategies will double,
driven by the speed, innovation and collaboration needs of the business.

By 2023, life science business leaders will push AI into 50% of enterprise core processes —
exposing gaps in IT architecture, governance and skills.

By 2023, a major life science organization will abandon U.S. television advertising for a new product
in favor of an AI-driven all-digital engagement strategy.

By 2023, Internet of Things (IoT) sensors and devices used to augment existing clinical and
commercial product monitoring, tracking and management technologies will be used in 25% of the
top 50 life science companies.

By 2025, a top 20 pharmaceutical company will directly engage patients to provide therapy as a
service, bypassing healthcare payers.

Analysis
What You Need to Know
The life science industry is in the midst of a seismic transformation to digitalization enabled by
disruptive technologies, such as AI, cloud computing and IoT. These technologies have accelerated
scientific discovery and medical advancement at a breathtaking pace, creating a force multiplier
that is propelling healthcare into uncharted and radically different territory. Over the next decade,
digital technologies will fuel the broad industry transition to precision medicine, personalized
healthcare and real-time operating models.

Many life science companies have already reached the digital tipping point. As the 2020 Gartner
CIO Survey highlights, life science CIOs’ efforts to drive growth through digitalization are
accelerating, and 50% say they are actively building a digital foundation (see “2020 CIO Agenda:
Life Science, Medical Equipment and Other Science-Based Manufacturers’ Perspective”). Data
analytics has become the highest priority for increased investment.

Last year, Gartner’s life science predictions focused on CIOs’ urgent need to develop a strategy that
creates new value for customers by tapping the capabilities of a broad range of ecosystem partners
(see “Predicts 2019: Life Science Companies Will Partner to Create and Deliver Essential Digital
Capabilities”). This year, the industry is moving into execution mode. Many life science organizations
are actively partnering to accelerate their digital transformation — for example:

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■ Verily is partnering with multiple pharmaceutical firms to transform clinical research using its
evidence generation platform and tools.1
■ Through clinical partnerships, life science organizations seek to implement more technology-
driven approaches to reach a wider range of clinical research participants.
■ Novartis is partnering with Microsoft to provide AI desktop tools for each of its research
associates, as well as to jointly execute projects spanning research, clinical development and
manufacturing.2
■ AstraZeneca and Microsoft have partnered to create an AI Factory for Health, which aims to
accelerate innovative solutions for healthcare consumers and medical professionals.3
■ Sanofi and Google are teaming up to utilize Google Cloud Platform (GCP) to “accelerate the
cycle of healthcare innovation to populations throughout the world” by developing enhanced
understanding of patients and diseases and promoting access to healthcare through
technology.4
■ Bristol-Myers Squibb and Pfizer are both partnering with Fitbit, a healthcare wearable company,
to drive timely diagnosis of atrial fibrillation.5 Fitbit has recently been acquired by Google, which
is driving conversations about digital giants and access and ownership to patient health
information.6
■ Otsuka Pharmaceuticals and Click Therapeutics are collaborating to jointly develop and
commercialize a digital therapeutic for treatment of a major depressive disorder (MDD).7

These are just a few examples of organizations forging new connections to leverage disruptive
technologies to accelerate business transformation. Disruption can be encouraging if your
organization stands to gain from the change or frightening if your organization won’t benefit. To
grow revenue, CIOs must focus on business-enabling technology, organizational capabilities and
end-user engagement, and align to rapidly evolving business outcomes (see Figure 1). CIOs must
examine these business pressure points to then proactively address life science industry disruption
and accelerate transformation in their organizations.

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Figure 1. Digital Transformation Spans the Entire Life Science Business Model

CIOs at innovative companies are leveraging three key technologies: data and analytics, IoT, and
cloud computing. These technologies are enabling life science firms to reach a “digital tipping point”
and transforming their entire business model from drug discovery to health engagement with
patients. This research speaks to disruptive trends that life science CIOs must prepare for and
capitalize on, and how we see them developing in the next three to five years.

Strategic Planning Assumptions

Strategic Planning Assumption: By 2022, the percentage of life science R&D IT groups with cloud-
only strategies will double, driven by the speed, innovation and collaboration needs of the business.

Analysis by: Michael Shanler, Jeff Smith

Key Findings:

■ Life science companies’ movement to the cloud as a strategic IT goal has reached an inflection
point, with the cloud-first strategy a standard practice in the majority of organizations. Much of
the original reluctance and delays have now been overcome.
■ In some areas such as manufacturing and clinical laboratories, however, organizations remain
reluctant to embrace multitenant cloud. They regard private-cloud-hosted models as more
secure and controlled, even though this is not true in practice.

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■ SaaS and application platform as a service (aPaaS) are often the preferred flavors of cloud,
although this depends on the business area. For example, research areas often prefer PaaS
models due to the wide variety of hosted niche applications needed in this space.

Market Implications:

In “Predicts 2017: Life Science R&D — Digital R&D Gets Smart,” we predicted that, by this year,
over 75% of life science R&D IT organizations will finally support cloud-first strategies. At that time,
cloud adoption was still relatively low, and many life science companies were reluctant to support
cloud as a strategic goal. However, in 2019, the cross-industry numbers for cloud adoption speak
for themselves:

■ Cloud initiatives are expected to account for 70% of all tech spending by 2020.8
■ In 2018, public cloud adoption grew to 92% from 89% in 2017.
■ Companies plan to spend 24% more on public cloud in 2019 vs. 2018.9

Furthermore, in last year’s “2019 CIO Agenda: Life Science Industry Insights,” there was ample
evidence that investments in cloud were a key priority for many organizations. In that survey, 39% of
life science CIOs planned investments in cloud services and solutions, which is a significant
increase from 10% in the previous year’s survey. Also, the survey results indicated a disinvestment
in on-premises data centers and IT infrastructure. Based on Gartner’s voluminous interactions with
clients this past year, we believe the inflection point for cloud adoption in life sciences mentioned in
the 2017 Predicts report has finally been reached.

Many of the cloud-first strategies that have become ubiquitous among clients are morphing into
cloud-only strategies. Organizations have moved from a preference for cloud-based solutions to an
organizational mandate, as their confidence in cloud solution stability and robustness has
increased.

Today, life science CIOs are more likely to take time and consider what type of cloud to select,
whether multitenant, single-tenant-hosted, public cloud or private cloud, and deliberate over the
various merits of each for the solution being implemented. Our prediction is that the cloud-only
preference will only increase among life science R&D deployments, doubling over the next two to
three years.

Life science businesses have broadly adopted cloud at different rates over time, but the adoption of
cloud varies further by R&D function as follows:

■ R&D research — Now moving toward a distributed model, with reduced direct investment in
building out R&D teams in life sciences and more focus on seed investment, partnering and a
networked approach to research (see “Predicts 2019: Life Science Companies Will Partner to
Create and Deliver Essential Digital Capabilities”). R&D labs increasingly adopt and use cloud
systems as an enabler to aid collaboration and communication.

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■ Clinical laboratories — Slow to adopt, due to the high compliance requirements that make
both life science companies and their vendors reluctant to take risks on cloud-based systems.
■ Clinical development — Very cloud-friendly and mature, due in part to the field-facing aspect
of clinical systems, in which various systems that support clinical trials must be exposed over
the internet for data entry and communication exchange. For example, cloud systems are
commonly used to facilitate communication between clinical sites, external labs, biospecimen
repositories, and in some cases, the patients themselves.
■ Regulatory, quality and safety operations — Adopting widely and maturing very quickly,
particularly in the area of content management, which has long been a critical system for the
management of submission content, procedures and safety reports. Gartner has observed a
clear shift toward newer cloud-native communications service providers (CSPs) and away from
older CSPs, even though many of these have been ported to managed service cloud
deployments.

Other life science divisions and departments include:

■ Manufacturing — Slow to adopt and mature, due to lower investment and locally maintained
on-premises systems. IT teams are more likely to opt for managed validated clouds for secure
application hosting. But recently, they have begun to invest in content management systems for
better control and sharing of data across their organizations.
■ Commercial — Like clinical development, commercial operations services are becoming cloud-
friendly and more mature, due to utilization of “cloud-based” CRM software for field personnel
and digital touchpoints with pharmaceutical customers. More recently, analytical data lakes are
being deployed in the cloud.

Gartner observes that life science companies’ cloud adoption continues to be segmented based on
organizational size. Smaller startups have pursued cloud-only approaches for several years now,
while midsize organizations prioritize cloud systems opportunistically. Larger organizations continue
to rearchitect legacy on-premises systems to facilitate a shift to cloud.

Although the specter of GxP validation has slowed this shift somewhat, companies are adopting a
risk-managed approach. There is increasing recognition that digital technologies, such as AI and
IoT, succeed best in the cloud, further incentivizing IT teams to better position their organizations to
take advantage of these approaches. CIOs are best-advised to stay in front of this change, leading
this shift in a controlled and managed approach.

Recommendations:

■ Drive cloud vendor partners to improve reliability of services to equal the level you expect of
internal informatics and clinical IT support teams. Continue to push the message of SaaS as an
investment in evolving capabilities, and ensure you are consulted in deciding on software
enhancements.
■ Treat cloud vendors as long-term partners to continue scaling, and develop your partnerability
approach to better enable the onboarding of new vendors and their solutions. Accept legacy
on-premises solutions only when better options do not exist, and ensure the total cost of

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ownership is acknowledged in a clear comparison with cloud license costs. See our Toolkit for
help with this comparison — “Toolkit: Comparison of Total Cost of Ownership Between On-
Premises and SaaS Business Applications for Midsize Enterprises.”

Related Research:

“Life Science CIOs, Accelerate Early-Stage Discovery Research With New Applications of Artificial
Intelligence”

“Market Guide for Life Science Regulatory Information Management Solutions”

“Strategic Life Science Regulatory Information Management: From Fragmented to Holistic”

Strategic Planning Assumption: By 2023, life science business leaders will push AI into 50% of
enterprise core processes — exposing gaps in IT architecture, governance and skills.

Analysis by: Animesh Gandhi, Michael Shanler

Key Findings:

■ Many life science organizations struggle to rapidly extend AI prototypes beyond their initial use
cases and scale pilot projects up to global operations.
■ Many life science companies will require modernization and streamlining of their legacy data
environments and business processes to take advantage of new AI technologies.
■ CIOs at most life science organizations lament a talent gap in data science and AI. This gap is
motivating CIOs to recruit and upskill their data and technology professionals at all levels of
sophistication.

Market Implications:

AI is one of the most powerful, transformational technologies to enable new business models,
customer experiences, service offerings and business ecosystems across multiple industries (see
“Five Ways Artificial Intelligence and Machine Learning Deliver Business Impacts”). Life science
CEOs have clearly identified AI as one of the most strategically important technologies for the
industry to drive drug discovery, personalized medicine, biotechnology and clinical trials.10
However, many life science CIOs require clarity on how to best use AI technology across the value
chain, the scope and scale of data required, and the opportunities to support digital transformation
over the long term.

Life science organizations have generally first adopted AI in drug discovery and early research, and
now are piloting AI in solutions across the life science value chain. Business leaders are actively
forging new partnerships to accelerate their organizations’ business objectives (for instance, to drive
drug safety, new molecular leads, better trial design or commercial effectiveness) and prefer to
leverage external vendors and services when possible. As a result, business leaders are working

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more closely with vendors and taking greater responsibility for AI technology decisions — for
example:

■ R&D CIOs are engaging a high number of AI-enabled startups. New AI-enabled companies are
forming every month. These startups run the gamut of adding value for a variety of areas, such
as discovering mechanisms of diseases, finding new biomarkers, creating new drug candidates,
repurposing existing drugs, and designing and running clinical trials.11 (For instance, companies
such as Deep 6 AI and Trials.ai are using pattern-based learning to improve patient trial
matching and clinical trial protocol design.) These companies represent a growing trend: Many
life science R&D groups view machine learning as an avenue for fixing a broken drug discovery
and development process, where the sheer volume of information is impossible to navigate
using human-dependent techniques.12
■ Large AI partnerships with megavendors are forming, as well. Novartis and Microsoft
announced a partnership to explore novel ways to address challenges within drug discovery,
development and operations with AI.13 Similarly, AstraZeneca and Microsoft have also
announced AI Factory for Health to support healthcare innovation and to assist early-stage
startups to pursue development in AI and cloud computing.14
■ Leaders across the life science spectrum see the value of leveraging partnerships to improve
and refine AI-driven capabilities. For example, the MELLODDY Project, a public-private-
partnership-driven consortium involving 10 big pharma companies, is pooling billions of data
points related to chemical libraries with extended privacy management to protect intellectual
property. At the same time, it is drawing machine-learning-based relationships between a vast
set of molecules and diseases.15,16

CIOs continue to invest in AI pilot programs, and some become savvy at execution. However, they
struggle to scale these pilots into production. Gartner has broadly observed three challenges that
are limiting CIOs’ ability to scale:

■ Lack of enterprise architecture and AI development stack

■ Lack of a robust AI governance program
■ Lack of skilled resources

To scale, CIOs must address all three challenges.

Technology Architecture

Business users seek agility, speed and integrated high-quality data to implement AI solutions and
train their machine learning (ML) models. To accomplish these objectives, CIOs need to match the
AI implementation architecture to the deployment model.

There are three distinct approaches for accelerating AI capabilities — buy, build or rent. The
appropriate approach depends on several organizational considerations, such as resourcing,
technical abilities, management focus, and investment and culture (see “Data Science and Machine
Learning Solutions: Buy, Build or Outsource?”). Choosing the wrong approach (or mix of

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approaches) can result in lost opportunities, wasted money, missed deadlines, suboptimal solutions
and even catastrophic project failure.

Governance

AI models are increasingly deployed in healthcare settings to augment and replace human decision
making, from drug discovery to patient diagnosis. However, most of these advanced AI models are
complex black boxes that cannot explain why they reached a specific recommendation or a
decision. This has implications for line-of-business users seeking greater transparency in how AI-
based models are arriving at their decisions and weighing the potential value against organizational,
compliance and reputational risks.

To build trust, CIOs must engage with business users to understand the need for explainability and
to prioritize making models more interpretable and explainable. At the same time, CIOs must trade
off making models more explainable versus model performance and accuracy.

Talent Skills

Many Gartner clients report significant difficulties finding talent with adequate skills, causing
significant impediments to AI initiatives. Life science CIOs recognize that the AI talent gap may
never be closed, as talented experts continue to be scooped up by the digital natives. CIOs should
look to train current and future staff with AI skills that augment their existing life science domain
expertise.

CIOs should begin by developing a holistic AI-driven analytics strategy with a clear vision by
collaborating with business peers to define business outcomes, measurable performance metrics
and actionable roadmaps. This strategy should inform an enterprise architecture and AI
development stack. CIOs must collaborate with business peers on an AI governance model, and
partner with human resources to address the AI talent gap.

Recommendations:

■ Enhance the business value of analytical deployments, while prioritizing use cases by
establishing close, ongoing dialogue with — and explicit buy-in from — your business
counterparts. Match your implementation approach to your overall AI strategy, portfolio of AI
solutions (whether built, bought or rented), and organizational capabilities as part of assessing
the benefits and challenges of a preferred approach.
■ Build trust with business stakeholders by providing visibility into training data by leveraging
historical data, explaining model inputs, simplifying results or exposing underlying data in ways
understandable to humans.
■ Engage with business users, empowering them with a choice of more explainable vs. more
accurate AI models, so they can decide on an approach that best fits their circumstances.

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Related Research:

“Life Science CIOs, Accelerate Early-Stage Discovery Research With New Applications of Artificial
Intelligence”

“Build Trust With Business Users by Moving Toward Explainable AI”

“Life Science CIOs: Use Artificial Intelligence to Optimize Sales Force Effectiveness”

Strategic Planning Assumption: By 2023, a major life science organization will abandon U.S.
television advertising for a new product in favor of an AI-driven all-digital engagement strategy.

Analysis by: Animesh Gandhi

Key Findings:

■ In the U.S., direct-to-consumer advertising (on television, print media and radio) now represents
32% of the brand’s overall marketing spend, with the other 68% allocated to marketing to
healthcare professionals (through sales representatives, speaker programs and so on).17
■ In the U.S., direct-to-consumer (DTC) marketing spend has risen 65% over the past five years,
reaching $5.1 billion in 2018 for television advertising alone.18

Market Implications:

Traditional DTC communication media, such as television advertising, continue to be the most
preferred channel for pharmaceutical brand marketers. Brand marketers value the scale that DTC
offers in allowing them to raise consumers’ awareness of diseases, illnesses and symptoms, and to
help eliminate the stigma associated with discussing them with their doctors. A recent physician
survey also revealed that patients are more proactive in scheduling appointments with healthcare
providers to discuss their symptoms, are more informed about their treatment choices, and adhere
better to therapies as a result of viewing DTC advertising.19

Pharmaceutical brands continue to spend heavily on DTC (pharmaceuticals rank fourth in TV

advertising spend across industries in the U.S.20). But CIOs should start to plan for personalized
digital engagement due to macro trends, such as:

■ The shift toward online-only media consumption is accelerating. For example, media consultant
and communications firm informitv finds that the cable industry is losing 14,000 subscribers
daily to alternatives such as streaming media.21
■ While life science companies and industry groups were successful in arguing against
government rules that require disclosing a drug’s list price in DTC television advertising, the
underlying political pressure has not dissipated and is likely to resurface.22
■ Healthcare consumers are increasingly utilizing online resources to obtain medical information
about their treatment options.23

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As a result of these macro trends, multinational pharmaceutical companies have already increased
their regional digital marketing competencies, albeit in a fragmented manner. With continued
digitalization of healthcare, brand managers must understand patients’ expectations are changing,
with greater demand for coordinated, personalized solutions on their terms. Brand managers need
to focus on holistic patient engagement and to deliver improved real-world outcomes.

Digital health companies are quickly filling the void by addressing patient needs with the aim of
owning the patient relationship. For example, Livongo provides care management for diabetics
through a unified, immersive experience across digital, telephone and physical channels that
marries technology with human touch. Early results indicate that Livongo is tangibly delivering on
improving health outcomes, helping manage costs and improving patient experience.

Pharmaceutical companies have taken notice and are addressing unmet engagement needs:

■ Companies are progressing “beyond the pill” solutions from simple mobile apps to
comprehensive wraparound solutions, providing an opportunity to comprehensively engage
consumers who use their therapies. At the 2019 HLTH conference, chief digital officers
confirmed needing to do more and to establish wraparound solutions for their drugs. Pfizer
called this a “digital companion,” and GSK called it a “computational companion.” Novartis
focused on the continuum of “awareness to adherence.”
■ Despite recent challenges of eroding trust and concerns about data privacy, social media
remains embedded in the daily routines and lives of people globally. Ogilvy Health’s “The Social
Check-up 2018: Pharma in the Social Space”24 report revealed that social media usage across
life science organizations has increased year over year, with companies accelerating their social
media engagement maturity.
■ Digital engagement tactics are becoming more sophisticated and include integration with
chatbots, virtual assistants and wearables to engage patients. For example, UCB recently
deployed an AI-based voice assistant app to modernize patient interactions and improve their
overall journey.25 GSK China deployed “Breath of Life,” a COPD diagnostic app, on the WeChat
platform to measure lung capacity by having consumers breathe directly into their
smartphones.26

CIOs supporting brand marketing should establish technology capabilities that help their
organizations deliver personalized consumer engagement. This includes deployment of
multichannel campaign management suites that enable brand communications to be consistent and
coordinated across all channels. For example, a coordinated strategy should encompass traditional
touchpoints, such as nurse navigators, and patient support personal and digital touchpoints, such
as virtual personal assistants, chatbots, websites and social channels.

Recommendations:

■ The marketing technology landscape is highly fragmented between internal capabilities,

technology vendors and marketing agencies offering overlapping solutions. Partner with your
marketing peers to audit your existing marketing technology assets and capabilities against
your business goals.

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■ To create an effective digital journey, establish capabilities to collect and analyze an

amalgamation of data within the engagement continuum. Examples of such data include
demographic, behavioral and transactional data that allows marketers to derive personas and
cluster consumers based on their wants, needs and expectations.

Related Research:

“5 Best Practices for Success in Life Science Digital Multichannel Marketing”

“Crawl, Walk, Run: Define Your Vision, Strategy and Roadmap for Personalization”

“Use Gartner’s Customer Analytics Maturity Model to Create Better Customer Experiences”

Strategic Planning Assumption: By 2023, IoT sensors and devices used to augment existing
clinical and commercial product monitoring, tracking and management technologies will be used in
25% of the top 50 life science companies.

Analysis by: Jeff Smith, Andrew Stevens

Key Findings:

■ IoT has had explosive growth over the past two years. Industries find new use cases monthly,
running proofs of concept (POCs) and scaling when ROI is demonstrated. IoT deployed as an
enabler and optimizer across connected supply chain networks is quickly becoming more
mainstream.
■ Increasing diversity in product portfolios, coupled with regulations such as the European
Medicines Agency’s good distribution practices (GDPs), makes it even more relevant for life
science companies to track and monitor products closely all the way from the manufacturing
line to the patient.
■ Life science companies continue to look beyond the traditional pill, developing new therapies
like chimeric antigen receptor (CAR) T-cell therapy, sensitive products such as large-molecule
biologics, and new vaccines in which close management of the supply chain is of increasing
importance.

Market Implications:

Gartner has copious reports that review the status of IoT technology currently in use by industry,
and several surveys that track the progress of this technology in different use cases. Uses of smart
connected devices continue to expand, often in surprising ways. Concepts such as the connected
home offer abundant utility at the consumer level. But at the commercial and industrial levels, use
cases like asset tracking, automated maintenance, power grid optimization, fleet management and
even agricultural pest control have appeared, offering many benefits. Indeed, Gartner projects that
the asset-tracking tag market alone to have a compound annual growth rate (CAGR) of 20% from
2018 through 2028.27

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Life science has not been immune to this trend. According to Gartner’s 2019 IoT survey, industry-
leading life science companies have implemented IoT technology, in many cases having these
systems in place for several years. Of particular interest have been the following life science IoT use
cases where we have observed clients engaging in POCs or actively scaling:

■ IoT device networks are increasingly used to monitor the manufacturing and packing lines,
reducing full-time equivalents (FTEs) and improving real-time intelligence about line status. Data
collected from IoT devices can be used across analytics engines to predict issues and prevent
shutdowns for repair.
■ IoT sensors are used to better manage the status and integrity of products, reporting (in a real-
time setting) parameters that include temperature, humidity and motion.
■ With increasing numbers of products being of high value and risk, tamper evidence and security
measures embedded across packaging are used to communicate products’ events and data via
IoT devices.
■ IoT devices and RFID are set up to work in concert to track data via serialized coding, as well as
to identify changes of ownership and product and asset location. They are also used to
maintain critical cold chain temperature profiles, reporting any deviations or gaps as part of an
entire product shipping cycle.28

The impacts of these use cases of IoT are undeniable and are quickly going mainstream across
industry and driving large investments. Even more IoT use cases are gaining traction, moving from
track and trace, logistics, and manufacturing areas into clinical development and even product
development:

■ Clinical trial temperature excursion alerts — Ensuring there are no temperature excursions
when a pharmaceutical product must be maintained at a controlled temperature has long been
a headache during vaccine trials, or other trials where a product must be maintained under
refrigeration. Cold-chain-as-a-service vendors like Controlant help to manage this issue by
providing active monitoring and alerts to clinical teams.
■ Medication adherence — Using IoT to monitor whether patients have taken their pills or used
their inhalers is a novel solution in situations where timely adherence is critical to controlling a
medical condition. Asthma is a great example of this use case, as evidenced by ventures like
Cohero Health and Propeller Health and the development of Bluetooth-connected inhalers.29
■ T-cell therapy asset tracking and monitoring services — As CAR T-cell therapy grows in
utility and maturity, there is increased financial incentive to monitor the multiweek process in
which patient blood, and then T-cells, are processed, reengineered, reproduced and reinfused
into the patient.30 This very expensive process (over $500,000 per patient in some cases) makes
it critical to monitor the security, locality and delivery of patient treatments. IoT sensors used to
monitor environmental conditions and track and send geopositioning data make it possible to
ensure treatment quality and delivery.

These use cases offer even more tantalizing value, solving long-standing problems in clinical trials,
in treatment outcomes and even in conditions once thought to be incurable. IoT investments no

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longer only enable supply chain optimization, but also move into risk reduction, product valuation
and entirely new product lines that now become feasible.

Furthermore, as companies invest in IoT, they soon realize that it represents a gateway to more
powerful tools, such as digital twins, AI inference engines and even blockchain. When IoT is
combined with these tools, it becomes even more interesting, enabling digital twins of global supply
chain maps to optimize shipping, AI to point to trends in the data and make recommendations, and
blockchain to fill in the authentication gap when IoT devices are out of range.

Recommendations:

■ Begin your IoT investments by exploring not only supply-chain-centric use cases, but also use
cases gaining traction in the business. Partner with business teams to see how IT can help
enable and empower their needs in the field.
■ Launch a coordinated architecture as part of your strategy for IoT. Ensure that the data and
analytics tools are agile in providing insights from the IoT devices and can be well-aligned and
support the devices planned for use in the field. Building a center of excellence is also an
important step on the path to IoT maturity.

Related Research:

“Market Guide for Life Science E-Clinical Platforms”

“Life Sciences CIOs, Accelerate Clinical Development With New Applications of Artificial
Intelligence”

“Life Science CIOs: Embrace Next-Generation Data and Analytics Platforms to Manage Clinical
Data Challenges”

Strategic Planning Assumption: By 2025, a top 20 pharmaceutical company will directly engage
patients to provide therapy as a service, bypassing healthcare payers.

Analysis by: Animesh Gandhi

Key Findings:

■ Blockbuster treatments remain a focus for many life science organizations. But many more see
the consumer benefits and financial value in precision medicine31 as an opportunity for growth
and are racing toward building robust pipelines.
■ Precision medicine therapies continue to be approved at a breakneck pace, with 25 of the 59
new molecular entities that the U.S. Food and Drug Administration (FDA) approved in 2018
being classified as precision medicine.32
■ Despite high interest, outcome-based contracts (value-based contracts for drugs) between life
science organizations and U.S. payers are sporadic.33 One key hurdle is aligning on and
tracking clinical outcomes in a way that can be validated by all stakeholders.

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Near-Term Flags:

■ By 2021, the FDA will have approved 12 additional CAR-T therapies.

■ By 2023, a majority of approved CAR-T therapies will launch without having outcome-based
contracts with health systems and U.S. payers, which limits patients’ access to these therapies.

Market Implications:

Life science organizations are hungry to take advantage of technology innovation and scientific
advances to improve consumer outcomes and drive revenue growth by shifting toward precision
medicine. Life science organizations see these innovative, even curative, therapies as game-
changing for consumers with needs, such as restoring vision due to inherited retinal disease or
treating spinal muscular atrophy (SMA). However, access to these treatments has become a
challenge for consumers, as payers continue to resist granting access, citing lack of extended
clinical evidence demonstrating therapeutic effectiveness.

For payers, is the clinical evidence over a long period of time the real issue? Former U.S. FDA
Commissioner Scott Gottlieb has argued that payers are “using FDA’s regulatory process as a
gating mechanism to gain control over their own spending.”34 Gottlieb correctly identifies that
payers are concerned with current reimbursement frameworks and relatively high treatment costs
that impact their financial sustainability, while benefiting only a handful of consumers. For example,
while Novartis’ treatment for SMA costs $2.1 million per consumer, it represents a 50% savings
compared with current treatments over a 10-year period.35

Therapy as a service (TaaS) represents a golden opportunity for life science organizations to
transform their business models. Life science organizations are most knowledgeable about the
therapeutic areas they focus on, enabling them to optimally engage consumers throughout their
entire therapeutic journeys, from initial diagnosis to ongoing care management. Further, they want
to ensure that their consumers realize the benefits of precision medicine therapies, in turn enabling
them to realize value from their significant investments.

To realize this vision, life science organizations will need to partner with diagnostic companies,
academic institutions, provider networks, financiers and digital health natives. Life science
organizations will also need to work with regulatory bodies to establish TaaS models that enable
them to directly engage with consumers through their entire therapeutic journeys.

Life science organizations must establish care coordination platform capabilities across the broader
healthcare ecosystem partners that include:

■ Early detection and diagnosis — Capture biomarker and behavioral data from diagnostics and
digital health partners to identify appropriate consumers who will realize therapeutic benefits.
Early examples of such partnerships include the Bristol-Myers Squibb and Pfizer partnership
with Fitbit to detect atrial fibrillation in consumers with an increased risk of stroke.5 Diagnostic
companies are also advancing innovative solutions to facilitate easier and earlier detection of

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diseases. For example, Exact Sciences’ Cologuard enables consumers to take a noninvasive
colon cancer DNA test at home.
■ Treatment support — Develop wraparound solutions that utilize next-generation sensors,
devices and apps that help consumers adhere to therapy and manage their symptoms. An
example is the recently approved Voluntis FDA-approved oncology symptom management and
remote monitoring app.36
■ Monitoring and care management — Life science organizations will need to partner and
collaborate with providers and digital health companies to execute a personalized care plan for
each consumer at scale. Such partnerships have already demonstrated early success for
ongoing maintenance of chronic conditions, such as asthma, diabetes and depression. For
example, Sanofi’s collaboration with Verily provides end-to-end management for consumers
with Type 2 diabetes. The expansive platform consists of orchestration across medical devices
and digital sensors, digital therapeutics, provider medical systems, and remote care systems
with measurable reduction in consumers’ A1C levels.37

Payers continue to highlight financial challenges with current reimbursement approaches. For
example, payers make large upfront payments for treatments that deliver multiyear or even lifetime
health gains that can accrue long after a consumer’s coverage ends. Payers also highlight the lack
of financial return, because covered consumers who receive treatments can change plans at any
time, causing undue financial burden to the payer that initially approved and fully reimbursed the
cost of the treatment.

This presents an opportunity for life science organizations to collaborate with payers and create an
alternative reimbursement framework that addresses these concerns, as well as regulatory issues.
Examples include Medicaid best price and average selling price reporting, safe harbor statutes, and
anti-kickback rules. Potential models to address these challenges include shared risk pools with
Medicaid agencies, reinsurance through commercial insurers, and restructured stop-loss policies for
self-insured employers.

Payers must be equal collaborators in instituting alternate financial models, share in risks and
rewards, and become more transparent on access decisions. In the absence of such collaboration,
we believe at least one life science organization will opt to bypass payers and work directly with
government agencies, commercial reinsurers, banks or self-insured employers to institute
alternative payment models.

Recommendations:

■ Modernize your contract reimbursement systems to support evolving reimbursement

arrangements that include performance-based annuities, risk-pooling contracts and clinical-
milestone-based contracts. Reimbursement systems will also need to support second-line
payers, such as reinsurers, stop-loss insurers on behalf of self-insured employers, and
delegated payers such as managed Medicaid and Medicare Advantage plans.
■ Establish a 360-degree view of the patient’s longitudinal health journey that enables
personalization of healthcare services and interaction with the patient as an individual, not as a
member of a population group. Work with business peers to orchestrate patient relationships

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across the ecosystem, acting as the single voice of the patient and managing the patient
experience and engagement across all interactions within the ecosystem.

Related Research:

“The Future of Experience in Healthcare Demands a Consumer-Aligned, Collaborative Ecosystem”

“2019 Top Actions for Life Science CIOs: Engage Your Ecosystem”

“Hype Cycle for Life Science Commercial Operations, 2019”

A Look Back
In response to your requests, we are taking a look back at some key predictions from previous years.
We have intentionally selected predictions from opposite ends of the scale — one where we were
wholly or largely on target, as well as one we missed.

On Target: 2015 Prediction — By 2019, 30% of the top 100 life science R&D IT organizations will
have successfully moved big data projects from proof of concept and pilots into production (see
“Predicts 2016: Digital Generates Business Value Opportunities in Life Science”).

Going into 2015, many R&D IT organizations initially struggled with big data projects and their
scope, definition, approach, data governance, data platform and workflows. Many R&D IT groups
brought in vendors that had not yet proven their technology stacks or their capabilities for
integration into other sources. Clients initially reported major projects that stalled and could not
advance beyond the POC phase due to economics or inability to scale into the organization. As
cloud technology made great advances since 2017, technical challenges in dealing with the volume,
velocity, variety and complexity of big data were mostly mitigated.

Today, life science R&D IT organizations have adopted a blend of data lake, data warehouse and
data hub approaches for handling big data. Most organizations have scalable cloud-based
infrastructures that have caught up with the demands of big data. In 2019, based on interactions
with Gartner clients, we estimate that nearly one in three organizations report having core big data
systems that are in production and are serving critical processes. In biotech and pharma, we see
these for research informatics and drug discovery, and clinical development. Similarly, interactions
with Gartner medical device clients highlight that one in three manufacturers have big data
capabilities serving R&D data science, design and engineering, product verification, and customer
observational systems that drive product development processes.

Missed: 2015 Prediction — By 2018, digital drug launches will be standard, with 80% of the top
pharma companies announcing new products via at least five digital channels (see “Predicts 2016:
Digital Generates Business Value Opportunities in Life Science”).

Adoption of utilizing digital channels for launch has not progressed as widely as we thought it would
across the pharmaceutical industry. While growth in multichannel marketing continues to accelerate,
life science organizations also continue to rely on digital engagement through sales representatives,
email marketing and websites. Life science organizations continue to invest in and utilize DTC

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television ads as the primary mechanism in the U.S. to raise awareness of diseases and
communicate therapeutic value, based on brand budget allocations. However, Gartner continues to
observe an increase in social media presence and deployment of beyond-the-pill engagement tools
to improve health outcomes for consumers.

We continue to believe that digital technology will play a pivotal role in life science transformation,
and expect adoption of digital channels to accelerate further in the years ahead. Life science
organizations have accelerated the development of digital therapeutics and care management
solutions internally or through partnerships with digital natives and health companies. For example,
the Sanofi-Verily joint venture created Onduo to help consumers make informed decisions about
their daily health, improve medical adherence and management, and reinforce positive behavior
change.37

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

“2019 Top Actions for Life Science CIOs: Engage Your Ecosystem”

“Hype Cycle for Life Science Research and Development, 2019”

“Hype Cycle for Life Science Commercial Operations, 2019”

“2019 CIO Agenda: A Life Science Perspective”

“Business Drivers of Technology Decisions for Life Science Organizations, 2019”

Evidence
1 “Verily
Forms Strategic Alliances With Novartis, Otsuka, Pfizer and Sanofi to Transform Clinical
Research,” Verily press release

2 “Novartis to Put AI on Every Employee’s Desk Through Microsoft Partnership,” FierceBiotech

3 “Microsoft and AstraZeneca Join Forces on Artificial Intelligence for Healthcare,” Microsoft

4 “Sanofi Drives Digital Transformation With Google Cloud,” Google Cloud

5 “The Bristol-Myers Squibb-Pfizer Alliance and Fitbit Collaborate to Address Gaps in Atrial
Fibrillation Detection With the Aim of Accelerating Diagnosis,” Bristol-Myers Squibb

6 “Fitbit to Be Acquired by Google,” Fitbit

7 “Otsuka and Click Therapeutics Collaborate to Develop and Commercialize Digital Therapeutics
for Patients With Major Depressive Disorder,” Otsuka

8 “The Cloud in 2019: Current Uses and Emerging Risks,” Trend Micro

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9 “Cloud Computing Trends: 2019 State of the Cloud Survey,” Flexera’s Cloud Management Blog

10 “‘We’reLight Years Ahead of Where We Were’: Novartis CEO Vas Narasimhan Told Us How the
Swiss Drug Giant Is Using AI for Everything From Evaluating Managers to Predicting Its Financials,”
Business Insider India

11 “177 Startups Using Artificial Intelligence in Drug Discovery,” BenchSci (Blog)

12 “Artificial Intelligence Shakes Up Drug Discovery,” The Scientist

13 “Novartis and Microsoft Announce Collaboration to Transform Medicine With Artificial

Intelligence,” Novartis

14 “Microsoft and AstraZeneca Join Forces on Artificial Intelligence for Healthcare,” Microsoft

15 “Artificial Intelligence in the World of Drug Discovery,” Drug Target Review

16 “The MELLODDY Project,” FierceBiotech

17 “Medical Marketing in the United States, 1997-2016,” JAMA Network

18 “Don’t Call It a Comeback: Why TV Remains an Effective Ad Medium for Pharma,” MM&M

19 “Should Prescription Drugs Be Advertised Directly to Consumers?,” ProCon.org

20 “Hey,Big Spender: Pharma’s $6.6B TV Ad Outlay Outranks Most Other Industries, Report Says,”
FiercePharma

21 “Dire New Figures Show the Cable Industry Is Now Losing 14,000 Subscribers Every Day,” BGR

22 “Judge Blocks Trump Rule Requiring Drug Companies to List Prices in TV Ads,” The New York
Times

23 “More People Search for Health Online,” NBC News Digital

24 “The Social Check-Up 2018: Pharma in the Social Space,” LinkedIn SlideShare

25 “New PD Coach App ‘April’ for Those Living With Parkinson’s Disease,” UCB

26 “The‘Breath of Life’ App Helps Detects Whether Someone Has Chronic Obstructive Pulmonary
Disease,” AdAge

27 “Forecast: IoT Tracking Tags by Use Case, Worldwide, 2018-2028”

28 “Here’s How Blockchain and IoT Are Going to Impact the Pharmaceutical Cold Chain,” Hacker
Noon

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29 “How Can the Pharmaceutical Industry Benefit From the IoT?” The IOT Magazine

30 Definition of CAR T-cell therapy, National Cancer Institute

31 “The Basics: What Is Personalized Medicine?” The Personalized Medicine Coalition (PMC)

32 “Personalized Medicine at FDA: A Progress & Outlook Report,” The Personalized Medicine
Coalition (PMC)

33 “Value-Based Pricing vs. Outcomes-Based Contracting,” Drug Pricing Lab (DPL)

34 “Gottlieb: Gene Therapies Could Transform Health Care, If Payers Cover,” InsideHealthPolicy.com

35 “FDA Approves Novartis’ $2.1 Million Gene Therapy — Making It the World’s Most Expensive
Drug,” CNBC

36 “Voluntis Announces Market Authorization for Oleena, First Digital Therapeutic in Oncology,”
Voluntis

37 “Onduo,” Verily

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