Examining the Life Science Industry Value Chain

In this lesson, we explore the vital aspects, market dynamics, and unique business needs of the Life Science industry.

Discover the Life Sciences Company Industry Value Chain, highlighting manufacturing, development, and customer interactions with upstream and downstream partners in the market authorization process for drugs and devices.

The life science industry comprises three main segments: pharmaceutical, biologics, and medical devices. Each segment is further divided into two or three sub-segments.

Typically, pharmas are the small molecules which make drugs with chemistry. Branded pharmas focus on research, while generics tend to use existing drugs once patents expire.

Biologics companies, such as biotechs, resemble branded pharmas but focus on large molecules and have complex manufacturing processes. Biosimilars, similar to generics, cannot exactly replicate branded drugs and are therefore called biosimilars.

Medical devices encompass diagnostics tools, including in vitro, in vivo, and external devices. Supply companies and equipment manufacturers, such as those producing MRI scan machines, are also part of this segment. Supplies can include Personal Protective Equipment (PPE), gowns, gloves, and others.

When examining customer logos, we see that companies like J&J and Roche operate across all divisions. Others, such as PMS and GSK, tend to focus on branded pharmaceuticals. Biologics companies like Amgen and App V are prominent in their segment, while device companies like Medtronic, Zimmer, Biomet, Stryker, and Abbott dominate theirs.

The three strategic priorities for global leaders in life sciences are:

• Improve Patient Outcome: Identify patient segments and service them directly for greater holistic approaches that improve quality of life.
• Enable the Digital Supply Chain and Smart Factories: Ensure patient safety and brand protection while supporting personalized medicine segments of one.
• Compete as an Ecosystem: Drive down costs and improve efficiencies through collaboration with partners from across the health sciences network.

When examining key industry requirements, innovative target therapies and personalized medicines top the list, with outcome-based reimbursement being crucial.

Industry 4.0 with a focus on shop floor automation, managing the overall supply chain and supporting the regulations in the industry. This is aligned with the digital innovation automation theme to improve the operational efficiencies.

Finally, integrating value chain entities, including suppliers, contractors, and third-party logistics providers for cold chain drugs, or using business-to-business commerce for product distribution, is essential. This requires understanding new business models that support collaboration across value chain entities.