Digital Excellence in the Global Pharmaceutical Industry in 2016: Organizational Readiness
Executive Summary
Every pharma digital team wants their company to be the industry’s digital leader, and they’re all searching for the multi-channel management (MCM) or customer engagement model that will help them win the race by 2020. But of the fourteen firms that we evaluated, only two are actually contending for this title, having outflanked their industry peers by managing digital transformation differently. These industry leaders work with commercial teams that truly buy into digital excellence, show commitment by taking the lead in shaping digital requirements, optimize basic technology before tackling advanced capabilities, and measure their initiatives against customer experience benchmarks from outside of the pharmaceutical industry.
Is Pharma becoming More Digitally Mature?
Pharmaceutical firms turn to digital media and technologies to monetize a whole array of business opportunities that can increase annual revenues by millions of dollars (see Figure 1). But a firm’s readiness to transform itself, as embodied in its knowledge, willingness to change, appetite for risk, and sense of importance, strongly influences its ability to seize opportunities. These factors are all manageable—and firms that break through find themselves accelerating towards digital excellence, which is the foundation of a company-wide MCM or customer engagement model. To understand how the industry is coping with digital transformation and whether it has improved over the past two years, we repeated the Organizational Readiness for Digital Excellence study we first ran in 2014. Specifically, we:
- Applied our Digital Excellence Maturity Model. Our Digital Excellence Maturity Model includes a framework of twelve competencies that an organization needs to be ready for digital transformation (see Figure 2). We assess each competency by looking at two specific and related best practices to not only paint a clear picture of which of the four stages of organizational readiness—assess, plan, accelerate, or optimize—a firm is in, but also pinpoint what its next challenges will likely be. For example, when a senior sponsor champions a key digital initiative like a new healthcare partner portal, we also see the broader organization buy in, cooperate, and start doing things differently—factors inherent to a successful digital transformation.
- Asked selected digital managers to assess their teams’ digital readiness. We fielded an online survey to eighty-one digital managers at eighteen global pharma firms with annual revenues between $13 billion and $50 billion. We then selected sixty-three who have sufficient levels of responsibility for digital and a broad overview of their company’s capabilities. We also selected a subgroup of twenty executives who head up their firms’ digital operations globally or for a major geographic region. Our company ranking is based upon these execs’ assessments, as they have the most detailed view of their state of digital excellence above the country level.2 We then asked these digital managers to apply our model and assess their firm’s digital transformation readiness.
- Ranked companies and found specific drivers of organizational readiness. Respondents rated how their organizations fulfill each of the twenty-four best practices on a five-point scale. We converted these ratings to percentages and averaged them to arrive at an overall digital maturity score ranging from 0% (poor) to 100% (excellent). The clear differences between the characteristics of the most and least mature firms allow us to pinpoint the success imperatives behind digital transformation.
Fresh Strategies Boost Digital Excellence Maturity
Pharma’s digital maturity has risen only slightly in the past two years (see Figure 3). Even so, only two pharma firms—one large and one midsize company—received an overall score of 76% or higher, which we consider to be excellent (see Figure 4). Perceptions of digital maturity vary depending on whom you ask: while digital execs are no more positive about the state of digital excellence than their direct reports, there’s considerable variation at the country level or within the wider digital organization (see Figure 5). In Italy, for example, Firm D reported 79% maturity, while its direct competitor Firm H reported just 48% maturity. All in all, the massive gap between the highest- and lowest-ranked firm and the wide variation in individual capability scores indicate that there’s a lot of improvisation involved in these firms’ digital transformation. The most notable trends:
- Digital teams have worked hard on their strategic plans… Digital teams are reacting to rising customer expectations, maturing health technology, and more digital platform standardization options by investing lots of energy in revitalizing their digital vision and strategy (see Figure 6). The firms we surveyed in 2016 report that their maturity in terms of the clarity of digital objectives and their alignment to the overall company strategy is 15% higher than two years ago. Similarly, they report that their maturity in terms of the plan that specifies what the company wants to achieve with digital is 13% higher than in 2014. The most notable trend: the recognition that digital must be fully integrated into existing market practices and not bolted on is finally gaining traction at pharma firms. The embodiment of this is the tendency for digital teams to give their teams new names like “MCM”, “integrated MCM”, and “customer engagement”.
- …but have largely ignored strategic measurement for digital optimization. Disappointingly, renewed visions and strategies haven’t led to better, clearer strategic measurement frameworks that demonstrate the value of digital. On the contrary: pleading a lack of time and resources, firms still fail to properly measure their digital excellence improvement, starting with assessing internal and external benchmarks of digital capabilities. Few firms regularly compare their customer interactions with those offered by their competitors—and just as few examine the strengths and weaknesses around the access and use of their internal digital capabilities, including email, CRM, and content management.
- Digital transformation efforts remain disjointed. Digital teams are still going it alone: just as in 2014, they struggle to get the entire business to support the digital transformation effort. Firms report only 53% maturity in getting support for their digital road map from leaders in other parts of the firm, 56% maturity in gaining consensus across the organization on the value of digital, and 57% maturity in cross-functional governance of digital capabilities (see Figure 7). Without a firm commitment from commercial teams to take ownership of essential elements of digital transformation, pharma’s digital teams remain ineffective—and the new names of digital teams, which are meant to reflect the company’s intended business model, instead look like efforts to expose the shortcomings of commercial organizations.
What it means
Five Imperatives to becoming a Digital Leader by 2020
To support firms in their race to take digital leadership by 2020, we took a closer look at the practices that differentiate today’s digital leaders from the industry’s digital laggards (see Figure 8). To be a digital leader, we found that companies need to:
- Have a strong business team that provides clear leadership. Pharma firms are moving towards digital maturity at one of two speeds: a normal track and a fast track. What separates the leaders from the followers in terms of digital excellence? At leading firms, senior management acknowledges the current state of disruption in the industry and requires the organization to consider structural changes to the firm’s commercial business model. For example, the CEO of Novartis has publicly stated that technology will be front and center in disease management, which is a good first step—but firms must also walk the walk.3 With senior management on board, digital leaders set up task forces to design an updated business model. There are several aspects to this process, but we think the most important are new job specs for brand teams, an overhaul of the brand planning process, and cross-functional collaboration to shorten approval times.
- Go beyond pharma to create a vision for the customer experience. Digital excellence front-runners are eagerly awaiting the next wave of analytics. That’s not only because they understand the importance of customer experience and have a natural desire to improve it, but also because they genuinely care about their customers’ interests. One pharmaceutical firm told us that its industry peers are no longer either a threat or a source of inspiration. As a result, it replaced its customer experience targets with benchmarks on mastering interaction design from outside of pharma.
- Design internal digital services that are easy to use and access. Brand teams in different geographies face variations in culture, legacy technology, and legal and compliance requirements. This makes it difficult for central digital or business services teams to build a digital services catalogue that is easy for all brand teams to access and use. Digital excellence leaders, however, know that improving both central performance and local adoption comes down to service design. Also, developing strong partnerships with external vendors that know how to craft business and technology requirements will eliminate a lot of frustration in brand teams.
- Govern the digital services catalogue cross-functionally. Most pharmaceutical firms have a digital factory, but almost half of these companies are not satisfied with its performance, criticizing delivery timelines, service accessibility, and the maturity of the digital capabilities. The root cause: weak governance. Successful digital factories are created with strong joint governance from IT and commercial leadership and executed by experts in digital operations.
- Create advanced capabilities only after the successful adoption of core capabilities. The central digital team at one large pharma firm rolled out its new content compliance capability with a dedicated help desk and ticketing system in a way that its functions were both simple and relevant to countries throughout Europe. Having the respect of the broader organization gave the digital team the chance to take responsibility for riskier programs that will prove even more transformative for the firm.
Methodology
DT Associates fielded its Q1 2016 The State of Digital Excellence in the Pharmaceutical Industry survey to eighty-one managers who work in digital, multichannel, or digital customer engagement teams inside a pharmaceutical organization. The final sample used for analysis consisted of sixty-three of these managers who we determined to have sufficient levels of responsibility for digital and oversight of their organization’s capabilities. We fielded the survey from January 2016 to February 2016. Respondents received a copy of this report containing the collected survey data prior to publication. Our sample is not guaranteed to be representative of the population. Responses do not
convert directly into precise maturity scores for respondents’ respective companies. Unless otherwise noted, data is intended for descriptive purposes.
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Authors
Tim van Tongeren
Managing Partner
Dennis van Rooij
Managing Partner
