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
PROCESS • ANALYTICS • TECHNOLOGY 3© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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.
PROCESS • ANALYTICS • TECHNOLOGY 4© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
PROCESS • ANALYTICS • TECHNOLOGY 5© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
PROCESS • ANALYTICS • TECHNOLOGY 6© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
PROCESS • ANALYTICS • TECHNOLOGY 7© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
PROCESS • ANALYTICS • TECHNOLOGY 8© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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?
LIFE SCIENCES COMMERCIAL OPERATIONS ► FUNCTION IMPACT
PROCESS • ANALYTICS • TECHNOLOGY 9© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
LIFE SCIENCES COMMERCIAL OPERATIONS ► FUNCTION IMPACT
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
n=69 life sciences commercial operations executives
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
PROCESS • ANALYTICS • TECHNOLOGY 10© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
* 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
Contract management/managed care
Compliance
Multi-channel marketing
Commercial strategy
Access and reimbursements
Advertising and promotions management
CRM and sales support
LIFE SCIENCES COMMERCIAL OPERATIONS ► FUNCTION IMPACT
n=69 life sciences commercial operations executives
PROCESS • ANALYTICS • TECHNOLOGY 11© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
INSIGHTS NARRATIVE ► LIFE SCIENCES COMMERCIAL OPERATIONS ► MATURITY
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?
PROCESS • ANALYTICS • TECHNOLOGY 12© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
Access and reimbursements 23 35 42
Multi-channel marketing
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
n=69 life sciences commercial operations executives
DIRECTIONAL
PROCESS • ANALYTICS • TECHNOLOGY 13© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
INSIGHTS NARRATIVE ► LIFE SCIENCES COMMERCIAL OPERATIONS ► PREPAREDNESS
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?
PROCESS • ANALYTICS • TECHNOLOGY 14© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
© 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
n=69 life sciences commercial operations executives
DIRECTIONAL
PROCESS • ANALYTICS • TECHNOLOGY 15© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
CRM and sales support
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
n=69 life sciences commercial operations executives
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
PROCESS • ANALYTICS • TECHNOLOGY 16© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
30
40
50
60
70
80
90
100
30 40 50 60 70 80 90 100
CRM and sales support
Commercial strategy
Access and reimbursements
Compliance
Contract management/managed care
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
n=69 life sciences commercial operations executives
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
PROCESS • ANALYTICS • TECHNOLOGY 17© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
INSIGHTS NARRATIVE ►LIFE SCIENCES COMMERCIAL OPERATIONS ► OPERATING MODELS
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?
PROCESS • ANALYTICS • TECHNOLOGY 18© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
© 2014 Copyright Genpact. All Rights Reserved.
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
n=69 life sciences commercial operations executives
DIRECTIONAL
PROCESS • ANALYTICS • TECHNOLOGY 19© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
INSIGHTS NARRATIVE ► LIFE SCIENCES COMMERCIAL OPERATIONS ►OPERATING MODEL IMPACT
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?
PROCESS • ANALYTICS • TECHNOLOGY 20© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
CRM and sales support
% 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
Multi-channel marketing
NA* 94
BPRE
4
96
Tech SSC, BPOor hybrid
6
Compliance
NA*
10
205
SSC, BPOor hybrid
Tech
65
BPR
14
18
68
Access and reimbursements
LIFE SCIENCES COMMERCIAL OPERATIONS ► OPERATING MODEL INITIATIVES ► PROGRESS
n=69 life sciences commercial operations executives
DIRECTIONAL
*Some data not reported due to small sample size
PROCESS • ANALYTICS • TECHNOLOGY 21© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
n=69 life sciences commercial operations executives
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
PROCESS • ANALYTICS • TECHNOLOGY 22© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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
PROCESS • ANALYTICS • TECHNOLOGY 23© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
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.
Follow Genpact on Twitter, Facebook, LinkedIn, and YouTube.
© 2014 Copyright Genpact. All Rights Reserved.
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.
www.genpact.com/research-institute
PROCESS • ANALYTICS • TECHNOLOGY 24© 2014 Copyright Genpact. All Rights Reserved.
Source: Survey of 912 senior executives commissioned by Genpact to an independent research firm
Thank you
Gianni Giacomelli
CMO, SVP Product Innovation
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