Next-Gen Pharma Global Business Services: PwC

Pharmaceutical and life sciences (PLS) companies continue to face shareholder value pressure because great science has not translated into great returns, and the headwinds persist. The path ahead needs to bring as much innovation to the operating model as has been brought to science.

In 2022, the top 20 global pharmaceutical companies spent nearly $128 billion on research and development (R&D) and around $167 billion on selling, general and administrative expenses to develop and commercialize new medicines. With a 1% improvement in operating margin (worth approximately $100 million operating profit for typical big pharma companies), reimagining this cost base, while also accelerating the delivery of outcomes, is a high-value opportunity. Executives should look for opportunities to bend their cost curves without undermining their mission or cutting into critical capabilities.

Reinventing how work is done across the value chain

Capitalizing on the opportunity means creating new tech-enabled global operations and talent centers or Next-Gen Global Business Services (GBS) that go well beyond the traditional role of shared service centers. GBS has long been used to centralize, standardize and move transactional work into lower-cost locations. Next-Gen GBS takes this further by creating centers of lower-cost, high-skilled talent, enabled with industry leading process, functional, data and digital capabilities to reimagine work and deliver more advanced business outcomes at lower costs and more quickly.

The growing sophistication of digital solutions and the rise of global talent pools provide a wealth of opportunity for life sciences companies to derive transformative results from Next-Gen GBS centers. They operate as global process owners accountable for delivering world-class capability, going well beyond the standardization benefits of a traditional GBS organization.

Next-Gen GBS has the potential to reinvent how work is done across the value chain, including Operations, R&D, Sales, Marketing and Medical Affairs. Executives in leading companies are revisiting conventional GBS thinking by challenging their organization to develop new answers to the following fundamental operating model questions:

What work is done? – eliminating or reducing outdated or legacy activities
How is work done? – matching the right technology and non-technology solutions to the right problem with the goal of transforming (not just incrementally improving) the work
Who does the work where? – accelerating the capability build of critical areas, with a truly global talent base and new collaboration paradigms, (e.g., fully integrated global teams or AI human-equivalents)

Next-Gen GBS has the potential to reinvent how work is done across the value chain, including Operations, R&D, Sales, Marketing and Medical Affairs.

From

Service organization focused on low-cost delivery
Transactional back-office processes and lower-level operations
Apply workflow technologies and robotic process automation (RPA)

To

Global capability center focused on state-of-the-art, end-to-end, tech-enabled processes
Value-added analysis, problem-solving and execution
Leader in using AI, process mining, machine learning and other emerging tech

Reimagining processes and organizations

This model is not science fiction. Companies across industries have already started down the path of Next-Gen GBS. They are achieving dramatic results through radically re-imagining processes and organizations across their value chain.

For example, a leading global insurance company moved more than 60% of its headcount to GBS, distributing work across the value chain, including advanced risk modeling, actuarial analysis, account management, digital customer engagement, risk and regulatory management processes, client support processes and financial management enablement. This move resulted in dramatic cost improvements, more efficient investments in data analysis and technology enablement, and a faster pace of product innovation at global scale.

Rethinking the way your business runs and leveraging a Next-Gen GBS model can enable meaningful benefits and accelerate reinvention of how your enterprise works.

Unleashed productivity: GBS can help significantly transform how your people and processes work by bringing together central teams that can integrate functional knowledge, process transformation expertise and technology savvy. For example, automating data collection and entry for clinical trial results enhances the accuracy and productivity of trials.
Access to global talent pools for growth at scale: By providing access to specialized skills — including technology, R&D, scientific and operations skills in lower-cost, high-talent locations — GBS can help support the growth of the business in key areas at better scale and lower total cost.
Improved return on investments for technology investments along the life cycle: Bringing together data and technology capabilities into lower-cost talent centers enables more cost-effective investments in scaling technologies, such as generative AI and predictive supply chain planning, which are essential for competitiveness and growth.
Accelerated insights and effectiveness: Streamlined capabilities enable faster and more accessible insights, consistency in leveraging industry leading practices and providing resources to support effective local market execution at scale.
Dramatic cost improvements: Savings beyond traditional labor arbitrage (30%+), with a further (20% to 30%) reduction of the cost base through automation, artificial intelligence, advanced analytics and improved efficiency.

What Next-Gen GBS means for pharma and life sciences

The evolution toward Next-Gen GBS is reshaping traditional models, emphasizing speed, efficiency and global collaboration. Next-Gen GBS will include more advanced predictive analytics, AI technologies and machine learning algorithms. These capabilities will help identify patterns, trends and customer preferences to develop innovative products and services — and enhance the customer experience. It will also utilize robotic process automation to automate repetitive tasks and eliminate transactional steps to power higher-quality outcomes and machine learning techniques to drive automation of safety and pharmacovigilance activities (e.g., case processing, patient narrative generation).

Moreover, the maturation of global talent pools in low-cost countries with highly educated staff (e.g., physicians, PhDs) is enabling the relocation of core R&D activities, core activities like clinical trial analytics and management, safety signal detection, risk-based trial monitoring and medical writing. In addition, sourcing trends will move away from clinical research organizations in favor of centralized trial operation activities (e.g., study startup activities, site monitoring and management) with closer partnership between global leadership teams in Medical and Development. Medical Affairs, riding on R&D infrastructure improvements, can leverage Next-Gen GBS for content management, key opinion leaders (KOL) analytics, and medical information call centers, especially with the rise of AI.

GBS is evolving to provide end-to-end solutions. Design and delivery of end-to-end patient or physician support programs is one example of a complex capability that can be powered by Next-Gen GBS. From patient analytics to content creation and omnichannel experiences, Next-Gen GBS is expected to play a pivotal role in driving marketing and sales in the future. It will play critical roles in the areas of advanced analytics (e.g., market research, competitive intelligence, forecasting, pricing), reporting & dashboarding, sales operations (e.g., sales training, compliance), marketing operations (e.g., content management), and market access (e.g., tender enablement). Some companies are also creating internal offshore agencies of record for use by their lower growth, mature brands, including end-to-end services, from creative content creation through language translation, all embedded in their omnichannel capabilities. Companies that take full advantage of this model will be in a better position to support sales acceleration in local markets while also reducing the cost to acquire new patients (in turn, driving a higher return on investment, which is essential due to downward price pressure).

GBS continues to centralize transactional activities for cost savings and improved efficiency. However, Next-Gen GBS introduces a strategic shift, emphasizing digital performance visualization, streamlined change documentation and centralized procurement. Leveraging data analytics tools, organizations can gain real-time insights into inventory, order fulfillment and supplier performance. Improved change documentation processes enable better collaboration and compliance adherence. Next-Gen GBS in procurement can handle strategic sourcing, contract management and peer-to-peer (P2P) processes, fostering stronger supplier relationships and better economic terms. This transformative approach positions GBS to play a critical role enabling the reliability of supply in a cost-effective manner.

Finance, Human Resources, Information Technology and other enabling functions have the potential for a change in basic assumptions with Next-Gen GBS. While transactionally oriented functions have a long history in GBS, the opportunity ahead is to leverage GBS for an expanded set of business partnering activities. One example is Financial Planning and Analysis, where centralized, tech-enabled capabilities can provide real-time financial insights, predictive analytics, and industry leading-practice planning and budgeting support at a lower cost. Forecasting approaches can be harmonized and standardized, reducing the significant organizational cost and complexity associated with typical bottom-up, country-by-country projections.

Business intelligence services to support all enabling functions (e.g., employee analytics to support the Learning and Development agenda, pipeline analytics to support the Recruiting team) are already part of many GBS organizations, with the next-generation opportunity coming from placing bigger and bigger pieces of core processes (e.g., hire to retire) into the GBS. The intent of these moves is to allow the front-line business owners to focus on strategic decision-making, while relying on the GBS as a fully integrated business partner for essential insights and operational support.

Making Next-Gen GBS work

The state of GBS maturity in PLS varies greatly. Some companies have well-established traditional GBS centers, while others are just starting to consider the possibilities offered by GBS. Regardless of where your organization falls, the headwinds facing the industry mean every company needs to consider how a Next-Gen GBS organization can support the type of business reinvention needed to drive financial returns.

Key path and next steps, depending on GBS maturity

Companies with established ‘traditional’ GBS evolve to ‘Next-Gen'

Redefine the work supported by GBS in light of new possibilities (“right to left” thinking, i.e., what is the outcome that needs to be supported).
Articulate changes to existing functional work already in GBS, e.g., enhanced predictive AI in forecasting for finance, shifting additional strategic work into GBS.
Identify additional functions and processes that may benefit from GBS setup, e.g., R&D, analytics, commercial operations.
Assess need for any additional GBS locations; if applicable, select location (or scale requirements for existing GBS).
Review and decide operating model changes.
Detail blueprint to future-state GBS and start to execute.

Companies that have not yet adopted GBS leapfrog ahead to ‘Next-Gen’

Holistically consider the enterprise body of work for GBS improvement opportunities.
Articulate future-state GBS vision.
Translate GBS vision into process and function implications.
Review and decide operating model options in support of GBS.
Capture GBS requirements and consider model / location based on requirements.
Detail blueprint to future-state GBS and start to execute.