Advanced Operating Models Research Insights: Life Sciences Commercial Operations

LIFE SCIENCES COMMERCIAL OPERATIONS

v1.0 (July 2014)

Advanced Operating Models

Research Insights

PROCESS • ANALYTICS • TECHNOLOGY 2© 2014 Copyright Genpact. All Rights Reserved.

Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm

Contents

Survey demographics 3

Executive summary 4

Key challenges 6,7

Functions’ impact on challenges 9,10

Preparedness level to achieve process maturity

Conclusion

14,15,16

Overall ability to transform 18

Impact of operating model initiatives 20,21

22

Functions’ maturity levels 12



10%25%

65%Risk 15%

Operations

40%

Marketing

15%

Procurement

13%

Finance 17%

84%

16%

19% of operations executives are from life sciences commercial operations

Sample of over 900 senior executives across industries, over 80 from commercial operations of large life sciences companies

METHODOLOGY

64% of life sciences commercial operations respondents are from North America

94% of life sciences commercial operations respondents are from larger companies (size > 10000 employees)

84%

16%

10000+

5001-10000

Regions Size* Functions

n=912*Company size defined by number of employees

Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm. The respondents were selected on the basis of their ability to make or materially influence operating model decisions, and likely range from senior executives to top management.



Transforming life sciences operating models: what are the imperatives and means for large players headquartered in developed markets?

Management agenda

• Compliance, growth and scalability most important challenges for life sciences organizations today according to commercial operations executives

• Least pressing are capital asset intensity, risk management and agility

EXECUTIVE SUMMARY ► LIFE SCIENCES COMMERCIAL OPERATIONS

Advanced operations can address imperatives

• Commercial strategy, access and reimbursement (contact center, pricing and analytics) operations seen as having impact on strategic challenges

• Compliance and advertising/promotion management most mature and most prepared to evolve, multi-channel marketing least mature

• Advanced organizational structures (shared services and BPO) seen as useful by many executives, but radically improved use of technology and business process reengineering have slightly more impact where applicable



What are the most pressing company challenges?

How can functions and related operations address them? Which functions are most

effective at it?

Are those functions mature?

Are those functions ready to transform further?

Can new operating models of those functions help them transform? Which ones?

What can the impact of that transformation be?

INSIGHTS NARRATIVE ► LIFE SCIENCES COMMERCIAL



Compliance most important challenge across functions; growth and scalability critical according to commercial operations executives

CHALLENGES ► LIFE SCIENCES

% of respondents from various functions rating challenge as among the 'Top 3'

Overall

Research and development

Commercial operations

Procurement

0 10 20 30 40 50 60 70 80

Ensure compliance to regulations

Increase customer satisfaction

Reduce capital and asset intensity

Manage risk

Increase growth and scalability

Enable company’s innovation

Enable agility and adaptability

Reduce costs

n=233 life sciences executives



Cost, innovation and growth also seen as the most important challenges after regulatory compliance

Regulatory compliance seen as the biggest challenge for life sciences companiesImportance of the challenge (% of respondents from life sciences companies stating that the challenge is among the ‘Top 3‘ for their company )

0 10 20 30 40 50 60 70 80

DIRECTIONAL

LIFE SCIENCES COMMERCIAL OPERATIONS ► CHALLENGES

Increase customer satisfaction

Manage risk

Ensure compliance to regulations

Enable company’s innovation

Enable agility and adaptability

Increase growth and scalability

Reduce capital and asset intensity

Reduce costs

n=69 life sciences commercial operations executives





effective at it?





LIFE SCIENCES COMMERCIAL OPERATIONS ► FUNCTION IMPACT



Commercial operations portfolio components have diverse impact on strategic challenges

72 4346 44 36

Ens

ure

co

mpl

ianc

eto

reg

ulat

ion

s

Red

uce

cost

s

Incr

ease

cu

sto

mer

sa

tisfa

ctio

n

Incr

ease

gro

wth

an

d s

cala

bilit

y

Ena

ble

com

pany

in

nova

tion

Commercial strategy

CRM and sales support


Compliance

Advertising and promotions management

Contract management/managed care

82Multi-channel marketing

Access and reimbursement(contact center, pricing and analytics)

24 8427 56 61

26 6136 37 78

91 119 26 9

24 6839 37 48

30 5855 19 48

7 33 44 57

24 6639 37 52

Magnitude of challenge1


DIRECTIONAL

% o

f re

spon

den

ts s

tatin

g fu

nctio

n ca

n ha

ve m

ate

rial

impa

ct o

n ad

dre

ssin

g ch

alle

nge

1 % of respondents from life sciences across all functions (n=233) stating it is one of the top 3 challenges in their company



* Impact of a function on company’s challenges is defined as , where is the % of respondents who believe that improvement in the function will have a material impact on the challenge ; is the % of respondents citing the challenge as among the 'Top 3'

Function Impact Index* combining stated importance of challenges and stated ability of a function to address them

Commercial strategy seen as important in solving many pressing challenges; compliance’s impact narrower

95

108

110

112

114

116

127


Compliance

Multi-channel marketing

Commercial strategy

Access and reimbursements

Advertising and promotions management






INSIGHTS NARRATIVE ► LIFE SCIENCES COMMERCIAL OPERATIONS ► MATURITY



effective at it?







Access and reimbursements 23 35 42


42

Compliance

28

2412 64

Contract management/managed Care 21 36 43

Commercial strategy

31 44 25Advertising and promotions management

52 30 18

CRM and sales support 15 30 55

30

% respondents stating the maturity of the functions in their organizations

Compliance, promotion management considered mature by most; multi-channel marketing, CRM and sales support less so

MatureVery mature Somewhat mature/Immature

LIFE SCIENCES COMMERCIAL OPERATIONS ► MATURITY


DIRECTIONAL



INSIGHTS NARRATIVE ► LIFE SCIENCES COMMERCIAL OPERATIONS ► PREPAREDNESS



effective at it?







© 2014 Copyright Genpact. All Rights Reserved.

CRM and sales support 9 33 58

12 41 47

Multi-channel marketing 16 29 55

Access and reimbursements 20 39 41

Advertising and promotions management 22 43 35

Commercial strategy 25 43 32

Compliance 51 32 16

Contract management/managed Care

% respondents stating the preparedness of their organization to mature a function

Compliance and commercial strategy most prepared mature further; CRM, sales support and multi-channel marketing lag

Somewhat prepared/ Not PreparedFully prepared Prepared

LIFE SCIENCES COMMERCIAL OPERATIONS ► PREPAREDNESS


DIRECTIONAL



36

Many important functions not fully mature nor ready to develop further

72

Ens

ure

co

mpl

ianc

eto

reg

ulat

ion

s

Incr

ease

cu

stom

er

satis

fact

ion

Commercial strategy


24

26

91Compliance

24Advertising and

promotions management

30Contract management/Managed care

7Multi-channel marketing

Access and reimbursements 24

43

Incr

ease

gro

wth

an

d s

cala

bilit

y

84

61

11

68

58

82

66

44

Ena

ble

com

pany

in

nova

tion

56

37

26

37

19

44

37

61

78

9

48

48

57

52

Mat

urity

of

proc

ess

Pre

pare

dto

mat

ure

LIFE SCIENCES COMMERCIAL OPERATIONS ► OVERALL ABILITY TO IMPACT

Somewhat mature or Immature

Very mature or mature

Somewhat prepared or Not prepared

Fully prepared or Prepared

Magnitude of challenge1

% of respondents assessing maturity and preparedness

% o

f re

spo

nd

en

ts s

tatin

g f

un

ctio

n

can

ha

ve m

ate

rial i

mp

act

on

a

dd

ress

ing

ch

alle

ng

e

DIRECTIONAL


46

Red

uce

cost

s

27

36

39

55

33

39

9

1 % of respondents from life sciences across all functions (n=233) stating it is one of the top 3 challenges in their company



30

40

50

60

70

80

90

100

30 40 50 60 70 80 90 100


Commercial strategy


Compliance


Advertising and promotions managementMulti-channel marketing

Size of the bubble proportional to impact of function on many strategic challenges

Important functions seen as neither mature nor ready to evolve; compliance at the other end of the spectrum

LIFE SCIENCES COMMERCIAL OPERATIONS ► OVERALL ABILITY TO IMPACT


DIRECTIONAL

PR

EP

AR

ED

NE

SS

% o

f co

mp

an

ies

sta

ted

as

very

pre

pa

red

or

pre

pa

red

to

ma

ture

in s

pe

cifie

d f

un

ctio

ns

MATURITY% of companies stated as very mature or mature in the specified functions



INSIGHTS NARRATIVE ►LIFE SCIENCES COMMERCIAL OPERATIONS ► OPERATING MODELS



effective at it?








Business process re-engineering

Radically improved use of technology

Impact Index*

Many believe advanced organizational structures (SSC / BPO) have impact across many functions

45 12753

25Commercial strategy 26

BPO or SSC or hybrid1

463853

13 95Compliance

6514 11053

30Advertising and promotions

management

6241 11253

16Contract management/managed care

6433 11653

17Access and reimbursements

57325349CRM and sales support 11432

108Multi-channel marketing 235348 58

LIFE SCIENCES COMMERCIAL OPERATIONS ► OPERATING MODEL INITIATIVES

% of respondents stating the initiative can have a material impact on the function

* Function Impact Index combining stated importance of challenges and stated ability of a function to address them1 BPO – Business Process Outsourcing, SSC – Shared Services


DIRECTIONAL



INSIGHTS NARRATIVE ► LIFE SCIENCES COMMERCIAL OPERATIONS ►OPERATING MODEL IMPACT



effective at it?








% of respondents; Width of the column indicates the % of respondents who believe that the organizational structure initiative will have a material impact on the function.

Advertising and promotions

management

Contract management/ managed care

Most operating model initiatives already in progress for most of the functions

Not Considered

Planned after 12 months

Planned in next 12 months

Currently in Progress

SSC, BPOor hybrid

9

91

BPR

116

83

Tech

24

6

71

SSC, BPOor hybrid

13

147

67

BPR

51015

70

Tech

6

22

16

56

NA*

194

11

67

BPR

13917

61

Tech SSC, BPOor hybrid

SSC, BPOor hybrid

185 5

71

BPR

NA*

Tech

611

6

78

Commercial strategy

12

19

66

18

65

BPR SSC, BPOor hybrid

126

73

Tech

3

1413


NA* 94

BPRE

4

96

Tech SSC, BPOor hybrid

6

Compliance

NA*

10

205

SSC, BPOor hybrid

Tech

65

BPR

14

18

68


LIFE SCIENCES COMMERCIAL OPERATIONS ► OPERATING MODEL INITIATIVES ► PROGRESS


DIRECTIONAL

*Some data not reported due to small sample size



Technology and BPR considered to have slightly higher when applicable

Advanced organizational structures (shared services and BPO) seen more often as having impact yet the monetary impact expected is less compared to other initiatives

$165m

SSC, BPO, HybridBPR

$209m

Tech

$225m

SSC, BPO, Hybrid1

$109m

BPR

$186m

Tech

$ 242m

LIFE SCIENCES COMMERCIAL OPERATIONS ► OPERATING MODEL IMPACT

OPERATIONS – LIFE SCIENCES COMMERCIAL

OPERATIONS - ALL INDUSTRIES#

# n=365 executives responsible for industry specific operations from retail and commercial banking, insurance, healthcare payer and life sciences


Annual $ impact is the impact of operating model initiatives in US$ per annum including reduction of cost, capital required, improvement of cash and revenue growth

Average $ impact, bar width proportional to percent of respondents stating that the initiative will have a material impact

1 BPO – Business Process Outsourcing, SSC – Shared Services, BPR – Business Process Reengineering, Tech - radically improved use of technology

DIRECTIONAL

Average $ impact



In conclusion

Senior life sciences R&D executives are challenged to adapt to a rapidly changing business environment in an economy that remains unpredictable. They say that intense regulatory scrutiny, increasing cost pressures, and the need for innovation are the most important business concerns.

This research examined how those challenges can be tackled by three levers of operating model transformation: technology, process re-engineering, and advanced organizational structures. The related transformation of operations is an untapped strategic lever for the COO as well as the CEO.

However, it is sometimes seen as a formidable undertaking. Few understand the “IT + analytics + process operations” nexus sufficiently. Technological excesses of the past (such as ERP or data warehouses) are well documented. Some technologies are unproven, some uses of analytics are unclear, and older technologies are rigid and expensive to evolve. Finally, it is frequently a struggle to scale deep analytics throughout the enterprise.

Our experience of advanced operating models, accumulated over 15 years, clearly indicates that there are agile and practical ways to transform.

The key is to design, transform, and run the processes that power advanced operating models so that they closely align with measurable business goals, thereby avoiding saddling the company with unnecessary and often unmanageable complexity.

This approach focuses more rigorously on the sources of impact and deliberately disregards any practice that does not yield material outcomes. It also takes a more objective and holistic look at technology, analytics and organizational practices. It leverages now-mature “system of engagement” technologies that complement “system of record” technologies. It treats analytics (the arc of data-to-insight-to-action) as a process and determines how to embed insight at scale into the fabric of other enterprise processes; it does not take the typical approach of viewing analytics as a task and a set of technologies. Finally, it harnesses the process and organizational levers available from established disciplines, such as reengineering, shared services, outsourcing, and global delivery.

We think that there is a smarter way to transform operating models and address the most complex strategic challenges. This is a way for COOs to make their enterprises more intelligent and generate material impact.

LIFE SCIENCES COMMERCIAL OPERATIONS



About Genpact

Genpact (NYSE: G) stands for “generating business impact.” We design, transform, and run business operations including those that are complex and industry-specific. We believe that our approach, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, is more focused, unbiased and agile than that of our competitors. Our solutions integrate technology, data and processes into advanced and adaptable operating models that foster growth and facilitate better management of cost and regulations in uncertain times. The result is intelligent operations of a range of functions such as finance, supply chain, origination and client servicing, compliance, and risk. We have hundreds of long-term clients including more than one-fourth of the Fortune Global 500. We have rapidly grown to over 66,000 people in 25 countries with key management and corporate offices in New York City. Our global critical mass doesn’t dilute our flexible and collaborative approach, and our management team drives client partnerships personally. We attribute much of our success to our unique history – behind our passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 16 years.

For more information, visit www.genpact.com.

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Genpact Research Institute

The Genpact Research Institute is a specialized think tank harnessing the collective intelligence of Genpact – as the leading business process service provider worldwide - its ecosystem of clients and partners, and thousands of process operations experts. Its mission is to advance the “art of the possible” in our clients’ journey of business transformation and adoption of advanced operating models.

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Thank you

Gianni Giacomelli

CMO, SVP Product Innovation

Advanced Operating Models Research Insights: Life Sciences Commercial Operations

Business

Transcript of Advanced Operating Models Research Insights: Life Sciences Commercial Operations