Digital deals: spotlight on life sciences

Inorganic strategies driving the digital agenda in life sciences

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EY - Tony Drabble

Tony Drabble
EY, UK

EY - Chris Wayman

Chris Wayman
EY, UK

Across the life sciences sector, and particularly in pharma, digital innovation is fueling transformation, new opportunities and new challenges. The pace of change means organic strategies alone are not sufficient to build the necessary digital capability. This impact is being felt across the entire value chain. Our recent survey showed that 70% of life sciences CFOs plan to use inorganic approaches to execute their digital strategy.

In the last two years alone, we have seen over 100 “digital deals” involving life science companies. Tony Drabble and Chris Wayman from our Life Sciences Transaction Advisory Services practice have analyzed these deals and provide their views on where and why we are seeing these deals occur in our latest report, Digital Deals: spotlight on life sciences.

One of the key findings was that digital deals are occurring mainly in one of three areas - digital therapeutics (for new or improved therapies), real-world data (for greater disease insights and patient understanding) and advanced analytics (to maximize value from data). Also, deals involving chronic diseases are experiencing the most digital deal activity, particularly diabetes and respiratory diseases, and nearly half of the deals we observed are seeking to spur innovation and new product development. Across the deals reviewed, a wide variety of deal structures are being employed – the vast majority (approximately 74%) being non-equity-based partnerships and alliances rather than traditional M&A.

Understanding the digital ecosystem, selecting the right partners and structuring deals to both protect intellectual property and extract maximum value are important to success in navigating the digital economy.

Questions companies should be asking:

  • How is digital affecting your business?
  • Have you identified the gaps in your digital portfolio?
  • Do you know who you want to partner with? Which deal types suit your current and future business model?
  • How will you measure the success of your digital strategy?
  • How will you integrate digital solutions into your organisation and be confident of delivering the business benefits as well as the adoption of a digital culture.

 

Read more from our new paper Digital Deals: spotlight on life sciences.