The State of Digital Excellence in the Global Pharmaceutical Industry, 2017: Capabilities
Companies mentioned in this report: Astellas Pharma, AstraZeneca, Bayer, Biogen, Boehringer-Ingelheim, Bristol-Myers Squibb, Eisai Co., Ferring, GlaxoSmithKline Janssen, Lilly, Merck, Novartis Novo Nordisk, Pfizer, Roche, Sanofi, Shire, Takeda Pharmaceutical Company, Teva Pharmaceuticals Industry, ViiV Healthcare.
Pharma is Failing to Accelerate Toward Digital Excellence
In an age where digital technology is rapidly changing pharma’s channels, customers, and competition, an uncoordinated response causes firms to miss tremendous business opportunities. While the digital transformation effort is a colossal, never-ending challenge prone to frustration, confusion, and delusions, a disciplined approach unlocks new profits, higher market shares, and lower operating costs. To understand how well pharmaceutical firms are making digital transformation progress, we applied our Digital Excellence Maturity Assessment to responses from twenty-one pharma firms’ “chief digital officers” (CDOs) and benchmarked a key component of digital transformation: digital capability for customer engagement (see Figure 1).1 The data shows that:
- Digital capability is maturing slowly. Amidst a global momentum of digital transformation in many industries, pharma has increased its digital capability by an average of just ten percentage points in two years—barely into the “good” range (see Figure 2).2 The industry has one clear leader, with seven other companies closing in. Worryingly, one in three firms has yet to reach a “good” level of maturity. And of the twelve firms we could trend, seven have improved by five percentage points or less in the past two years, signaling that their digital transformation is disoriented and in disarray.
- Behind-the-scenes capabilities still give CDOs headaches every day. Led by email and tablet detailing, on-stage capabilities achieved an average capability score of sixty-two percent. This is thirteen percentage points higher than any behind-the-scenes capability (e.g., analytics, content, CRM) and has increased by sixteen percentage points since 2015 (see Figure 3). Firms’ slower progress in building up their behindthe-scenes capabilities is a warning that additional challenges in capability integration await them in the years to come. Content management is the least mature capability: fourteen of the twenty-one firms lack an effective capability to strategize, create, and manage digital content.
- Core practices are well-followed, but that’s where it stops. We also assessed how consistently and intentionally firms apply specific core, developed, or advanced practices in each digital capability. Firms follow nearly two-thirds of all core digital practices consistently, but the more advanced the practice—such as using an iterative approach in web development—the fewer firms that have the capability (see Figure 4).
Capability-related Challenges Are Slowing Progress
Large-scale adoption of digital capabilities won’t happen unless the organization is ready for it. Clear leadership commitment, a common vision of the future across the organization, and appropriate investment budgets create a culture in which pharma’s commercial teams want to become excellent at digital customer engagement.3 But even if a firm’s culture embraces innovative approaches to customer engagement, the progress of digital transformation is at risk when practicing a digital capability becomes a frustrating experience for commercial teams. We see that:
- The importance of a capability links to its adoption. Firms consider all behind the-scenes capabilities more important than on-stage capabilities, especially customer experience (CX) and analytics (see Figure 5). The more important a digital capability is to a firm’s ability to succeed with customers, the more likely it is to be well-adopted there. For pharma’s digital leaders, it’s not enough to just raise the importance of digital capabilities. Instead, they need to be able to spot teams that vastly underrate certain capabilities—because a team that underrates a capability is unlikely to adopt it.
- Expertise regarding digital capabilities drives digital excellence (DX). The gap between the firm that knows the most about digital and the one that knows the least is a hefty sixty-four points. Firms know the most about email and tablet detailing and the least about CX, mobile, and analytics (see Figure 6). The more a firm knows about a given capability, the more it consistently follows practices associated with that capability. This has led many firms to implement company-wide training programs, or “digital academies”, to boost digital maturity.
- Complex processes or access to the digital factory hurt digital maturity. While teams might be very knowledgeable, and capabilities might be available (mostly through a digital factory), those capabilities must also be easy to access.4 But easy access is far from reality at many firms (see Figure 7). Firms struggle mightily to make capabilities like content creation and management and mobile app maintenance less complex and easily accessible. The most complex capability? CX design and management.
Improving Digital Capability Maturity Starts With Monitoring
Pharma CDOs create digital transformation plans that consist of multiple workstreams to build new capabilities, activate new ways of operating in markets, change related processes, and develop expertise. However, few plans monitor and tackle organizational and capability-related holdups in digital transformation—a key differentiator between disciplined and undisciplined approaches to transformation.5 Specifically, such a monitoring workstream should:
- Set company-wide DX standards. Undertaking a monitoring workstream as part of the wider transformation charter encourages senior management to agree on DX standards. While this exercise itself is valuable to align senior managers to the digital opportunity, the standards act as a performance benchmark of specific teams, therapy area business units, or even entire affiliates. CDOs who add a competitive component to the benchmark have even more data to substantiate the customer engagement opportunity and create a sense of urgency behind it.
- Identify blind spots. Assessing teams on digital maturity and its adoption drivers shows which teams are struggling and whether their challenges are organizational or functional in nature. Leading firms make incremental progress solving functional issues by, for example, opening capability-related service desks. But organizational challenges are different: digital transformation leaders quickly find that those have a common cause, such as a lack of commitment, conflicting business goals, or differences in priorities. CDOs require business acumen to solve organizational challenges—but once they solve these problems, they find that the growth of their organization’s digital maturity accelerates.
- Provide input for the next-generation capability road map. A digital capability road map and local activation programs resonate better with the wider business if they are based on actual insights into what capability is used, by whom, for what reason, and where the challenges lie. Before getting any commitment to improve digital capability, CDOs need commercial teams to realize, accept, and understand the current state of their digital capability and any deviation from the standard. More commitment from commercial teams means that they will more actively engage in the planning of digital capabilities, making “demand plans” more accurate and giving road maps a long shelf life.
- Show the team’s value. Digital transformation leaders don’t own any of their firm’s P&Ls—so defining, measuring, and acknowledging their success is a complex process. Metrics like digital capability adoption, technology maturity, and overall digital expertise embedded in the firm all demonstrate the team’s value. Knowing the progress a team makes can unlock more resources, increase its scope, and ensure that digital transformation has representation on more senior committees.
Pharma Firms Will Widen The Scope of Digital Excellence
Technology advancement and digital health innovation will push pharma’s DX target forward, like a carrot dangling in front of a donkey. But firms will catch up, see their commercial teams commit to operational transformation, and eventually reap the rewards of their investments in digital capabilities. Consequently, within the next two years, the most forward-looking pharmaceutical companies will synchronize their digital transformation throughout the core of the business. We see that:
- Digital excellence will close in on commercial excellence. The ultimate DX output is a team’s ability to design interactions that customers find useful, simple, and enjoyable. A firm’s assessment of its own capability will complement voice of the customer data, mainly interaction analytics and customer feedback surveys. CDOs who can link capability scores with this data will be the first to prove a key hypothesis: digitally capable teams design better interactions, which results in higher-impact engagement with patients and prescribers (see Figure 8). .
- Medical Affairs will come on board. When great CX becomes a cornerstone of brand management, customer preferences will drive pharma’s interaction design. And because customers want easy, relevant, and enjoyable experiences, firms need to coordinate which function sends what content through which channel. This should no longer be limited to marketing and sales functions; Medical Affairs must be added to the mix. Developing a strong digital capability in Medical Affairs teams is therefore the right strategy.
- Digital capability will extend to R&D. Firms should extend the effort of building digital capability to R&D teams.6 While the nature of the opportunity is different, the path from low to high digital-infused R&D maturity will come with organizational and capability-related challenges similar to those that commercial teams have experienced. Applying a similar approach of monitoring, prioritizing, and planning digital transformation activities will give firms an immediate head start as well as a complete view of digital maturity along pharma’s entire value chain.
DT Consulting fielded its Q1 2017 The State of Digital Excellence in the Pharmaceutical Industry survey to 124 managers who work in digital, multichannel, or digital customer engagement teams inside a pharmaceutical firm. The final sample used for analysis in this report consists of twenty-one “chief digital officers” and their equivalents (VPs or heads of digital or multichannel marketing and senior digital directors) who own their firm’s digital transformation efforts and have significant responsibility for, budget for, or oversight of current digital capabilities. For this report, we used two of the three elements of DT’s Digital Excellence Maturity Assessment model to benchmark the firms’ digital capability and adoption drivers. Respondents receive 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.
Tim van Tongeren
Dennis van Rooij