What events in UCB’s strategic context required the company to revisit its business strategy?Hint:Students should start by describing the volatile, uncertain, complex, and ambiguous nature of UCB's strategic context. Addressing this question first helps students look at UCB from an external perspective and think strategically about deploying data and analytics capabilities to compete in an industry facing digital disruption.
The case contains multiple hints to suggest differences from the past in at least four domains: (1) patient/consumer behaviour, (2) ecosystem player behaviour (for example, the behaviour of payers), (3) competition, and (4) digital technology.
Assignment 3 INF 80023 Managing IT Enabled Innovation and Transformation HT4, 2019 Assignment 3 – Exploration of Key Issues in Data Transformation Task Assignment 3 comprises a written response to the ‘UCB: Data is the New Drug’ case. Step 1: Answer the following questions: 1. What events in UCB’s strategic context required the company to revisit its business strategy? NOTE: Analyses the impact of changes in patient/ consumer behaviours, ecosystem player behaviour, competition and digital technology Required length:700 words. Relevant readings · “A Digital Revolution in Health Care Is Speeding Up,” The Economist, March 2, 2017, accessed January 5, 2018, https://www.economist.com/news/business/21717990-telemedicin-epredictive diagnostics-weraable-sensors-and-host-new-apps-will-transfonn-how. · Thomas Davenport and Jeanne Harris, "What Makes an Analytical Competitor?," in Competing on Analytics: The New Science of Winning, 2nd ed. (Boston, MA: Harvard Business Review Press, 2017). · Nicolaus Henke, Jacques Bughin, Michael Chui, James Manyika, Tamim Saleh, Bill Wiseman, and Guru Sethupathy, "Opportunities Still Uncaptured," in The Age of Analytics: Competing in a Data Driven World, McKinsey Global Institute, December 2016, accessed January 5, 2018, https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/the-age-of-analytics-competing-in-a-data-driven-world Screen Shot 2019-10-26 at 7.45.07 am Screen Shot 2019-10-26 at 7.45.25 am Microsoft Word - 9B18E002.docx 9B18E002 UCB: DATA IS THE NEW DRUG Stijn Viaene wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e)
[email protected]; www.iveycases.com. Copyright © 2018, Vlerick Business School and Richard Ivey School of Business Foundation Version: 2018-01-26 At the beginning of 2016, Herman De Prins, chief information officer (CIO) at global pharmaceutical company UCB, felt he had made good progress with his data analytics efforts, which focused on neurology and immunology. Since 2014, he had used an “Analytics as a Service” (AaaS) framework to guide his efforts, and had employed a number of projects he called “analytics sprints” to inspire the organization and demonstrate the possibilities of data analytics. Over the past five years, the CIO had worked hard to transform the company’s information technology (IT) culture from one of IT suppliers to one of IT entrepreneurs, based on his vision of the future of IT. Still, he could not help feeling a bit frustrated. The pharmaceutical industry had only begun to use real-world data to create patient value. De Prins had laid a solid foundation for accelerating IT in this direction, but the process was no longer solely in his hands. It seemed like the right time to further pull the analytics competency out of the IT domain. UCB’s chief executive officer (CEO) had invited De Prins to join the March 2016 executive meeting in Shanghai, China, to discuss the company’s strategy and especially De Prins’s views on digitalization. He pulled a piece of paper out of his desk and started jotting down possible arguments for the following: Why was this the right time for UCB to move to the next stage with analytics? Ideally, which decisions would the executive team make? PHARMA: MOVING BEYOND THE PILL Rising economic and demographic stresses on health care systems were forcing health care providers to improve their performance. Health care was considered ripe for change, and digital technologies were ready to be part of that change. New competitors such as Apple Inc., Google, Samsung Electronics Co. Ltd., and International Business Machines (IBM) were moving into health care. By 2015, patients had become much less dependent on their doctors for advice, and health had become a major search category on mobile devices. The vast amount of health information available online and in applications (apps)— more than 90,000 items in the iTunes store alone—made patients feel empowered. Governments and payers, driven by economic constraints and aging populations, were putting pressure on pharmaceutical companies to reduce costs; if they wanted to retain market access and premium pricing, companies needed to demonstrate the value of their drugs using real-world data, not only data from controlled trials. Au th or iz ed fo r us e on ly in th e co ur se M an ag in g IT e na bl ed tr an sf or m at io n at S w in bu rn e U ni ve rs ity o f T ec hn ol og y ta ug ht b y M ar k D al e fr om J ul 2 5, 2 01 9 to N ov 2 5, 2 01 9. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 2 9B18E002 Analysts argued that the use of real-world data would enable companies to tackle major health care challenges such as compliance and chronic disease management, and would help them create hundreds of billions of dollars in value. Digital technologies and data enabled providers to move beyond simply selling drugs to take a more holistic approach to patient health. However, the use of patient data had to comply with global regulations that protected patients and privacy. Pharmaceutical companies like UCB needed authorization from regulatory bodies to leverage the large amounts of data they would be analyzing, combining from multiple sources, and sharing with other organizations. De Prins was well aware that, when it came to their use of data, these companies were strictly regulated. He stated, “Machine learning and data solutions came with all sorts of new challenges for us. For example, cognitive computing algorithms could potentially suggest off-label therapies, although this was the prerogative of doctors. Life science and tech companies would have to tackle this.” UCB: “INSPIRED BY PATIENTS. DRIVEN BY SCIENCE” UCB, a global biopharmaceutical company headquartered in Belgium, focused on developing innovative medicines and therapies for people living with severe diseases of the immune system (for example, osteoporosis and lupus) or the central nervous system (for example, epilepsy and Parkinson’s disease). In 2015, the company generated revenue of €3.88 billion.1 Four key medicines accounted for 79 per cent of its global net sales. UCB had 7,800 employees in 40 countries and employed over 1,000 research and development (R&D) staff in its two research centres in the United Kingdom and Belgium, spending 27 per cent of its revenues on research. When Jean-Christophe Tellier became CEO in 2015, the organization introduced its patient value strategy. This transformation reflected a fundamental shift from being paid for the volume of care it delivered to being paid for patient value. Tellier summarized the strategy as “connecting the patient to the science, connecting the science to the solutions, and connecting the solutions back to the patient” (see Exhibit 1). The new business strategy reoriented UCB to strive for long-term patient value outcomes and to integrate patients’ insights throughout the operating model. Growth was centred on four patient value units—neurology, immunology, bone disorders, and new medicines—representing different patient populations. These were supported by unified practice units (centres of excellence), functional units, and global operations (see Exhibit 2). Innovation leading to differentiated medicines that secured future sustainability continued to be at the heart of UCB. However, Tellier recognized that radical changes were taking place in the health care ecosystem, as adaptive, innovative competitors made use of advanced information technologies. Tellier commented on the importance of growing digital capabilities: “The ‘average patient’ would no longer exist—and data would be the linchpin for realizing this. But we hadn’t integrated digital into the fabric of the business yet. We were just at the beginning of our patient value transformation journey.” UCB knew it could not become the patient-preferred biopharmaceutical leader by acting alone. Thus, it adopted a network approach to innovation as an important pillar of its new strategy, expanding and strengthening external connections, combining competitive strengths, and learning co-operatively. For example, UCB reinforced existing ties with universities such as Harvard, Cambridge, and University of Leuven. It partnered with companies such as Great Lakes NeuroTechnologies (to collaborate on wearables and data visualization tools), MC10 Inc. (to prototype a device that used wearable sensor patches and a patient diary app to monitor Parkinson’s symptoms), and IMS Health and Synthesio (to advance social listening capabilities to enhance patients’ experiences—for example, by identifying patient 1 € = EUR = euro; €1.00 = US$1.08 on March 31, 2015; all currency amounts are in euros unless otherwise specified. A ut ho riz ed fo r us e on ly in th e co ur se M an ag in g IT e na bl ed tr an sf or m at io n at S w in bu rn e U ni ve rs ity o f T ec hn ol og y ta ug ht b y M ar k D al e fr om J ul 2 5, 2 01 9 to N ov 2 5, 2 01 9. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n