Identifying the Life Science Industry's Differentiating Business Processes

In this lesson, we discuss why Product Lifecycle Management (PLM) is so important for the life sciences industry and see how life sciences companies use SAP PLM.

This video illustrates the lengthy and costly drug development process, from discovery and early development through full development, launch, and postlaunch stages, highlighting key milestones and success rates.

A few years ago, as the world was emerging from the COVID-19 pandemic, people were eagerly awaiting a vaccine. However, developing a new drug is a complex, lengthy, and costly process that can take up to 15 years to receive approval for sale in specific markets and countries/regions.

In the life sciences industry, this process is known as the funnel effect, where few initially tested compounds or substances reach the market. In fact, only about one in every 10,000 drugs tested makes it to pharmacies and becomes available to patients.

The successful drug must quickly recoup the costs of all unsuccessful attempts, making the drug development process a high-stakes and high-risk endeavor.

The lengthy drug development process often consumes much of the patent's lifespan. Patents typically last for 20 years, but companies must file for them early in the lifecycle of an active pharmaceutical ingredient (API). As a result, by the time a drug is approved for the market, a pharmaceutical company may have only about five years of patent protection remaining.

Once a patent expires, generic manufacturers can produce and sell the drug at a lower price, having avoided the extensive and expensive drug development process.

The average cost of bringing a new drug to market stands at approximately $1.3 billion. Life science companies must secure a robust revenue stream or find an investment-friendly environment to finance the development and manage the risk of unsuccessful attempts.

The complexity of drug development arises from the need for modern laboratories to identify and analyze potential compounds. Also, companies must demonstrate the efficacy of the new active pharmaceutical ingredient and confirm the safety of the drug for patients.

Clinical Trials: The initial testing of drugs involves animal subjects, followed by trials on humans with varying dosages. The three phases of clinical trials are:

• Phase I: A small group of volunteers tests the drug to confirm that it causes no harm or fatalities.
• Phase II: More patients are involved to find out the drug's effectiveness against the disease.
• Phase III: The drug undergoes testing on a larger group of patients to identify any rare potential side effects.

Upon concluding these tests, if statistical evaluations prove that the drug is safe and more effective—or at least as effective with fewer side effects—than a comparative drug, the life science company can seek market approval. Regulatory agencies in each target country review the animal and clinical test results before deciding to approve or reject the drug for sale.

Sometimes regulatory agencies ask for an additional phase four test, called postmarketing studies, to capture the drug composition, medical results, and approval status per country. This phase also involves tracking and reporting any changes that occur during the drug's lifecycle, including label changes, supplier changes, manufacturing process changes, and more.

Each of these changes must be reported to regulatory agencies around the globe, but not all may approve each change, leading to numerous product variations over time. The life science company must ensure that only approved variations are distributed and sold in each country.

The success of a life science company and its revenue stream are directly related to how many new drugs they can get to market in the shortest time possible and to efficiently manage changes and variations over time.

In the past, life science companies submitted information on drug or device changes through paper documents. Currently, regulatory agencies require structured product data to better understand the medicinal products, ingredients, suppliers, and clinical details like therapeutic indications and side effects. This allows life science companies to generate reports quickly during an adverse event, rather than analyzing lengthy text documents in the submission dossiers. This shift enhances process efficiency, improves transparency, and ultimately boosts patient health by enabling faster communication about adverse events or supplier issues.

To meet these new regulatory requirements, life science companies must consider adopting PLM systems to digitize data related to drugs, substances, and recipes

What are the key strategies for successful medicinal product development in a digital economy? Compliance requirements undoubtedly drive the life science industry since noncompliance can force a company out of business. Therefore, companies must provide all mandatory regulatory information to the various regulatory agencies. Incorporating this regulatory approval information into the overall medicinal product development and supply chain processes is essential. This integration ensures jurisdictional control, allowing only the correct and approved product variations to be sold in specific countries/regions.

However, achieving success requires more than just compliance. Life science companies must collect more medical data in a structured format. This data proves the effectiveness of the drug in real-world applications and justifies its pricing. Moreover, dealing with complex diseases such as those in oncology, which demand personalized treatments based on a patient's genetics, requires gathering extensive data from various stakeholders in life science and healthcare industries. These stakeholders must collaborate more closely than ever to gain better medical insights and accelerate medicinal product development. Achieving these goals is only feasible with structured, standardized, and digitalized data that is shareable and comprehensible to all involved parties.