On this episode of the Futurum Tech Webcast – Interview Series, host Daniel Newman welcomes Mandar Paralkar, Global VP, Life Sciences & Healthcare at SAP and Sandra Garitonandia, Industry Principal for Life Sciences at Vistex EMEA, for a conversation on digital transformation and the role of technology in navigating the future of Life Sciences and Healthcare.
Their discussion covers:
- The key areas within life sciences companies where digital transformation is a priority, and why these areas are being targeted for transformation
- Successful approaches, strategies, and best practices that Life Sciences companies are adopting to optimize their revenue streams
- The impact of the size of a company, in terms of revenue and number of employees, on the approach to digital transformation
- How technology partners, like SAP and Vistex, are supporting life sciences organizations in their digital transformation journeys
- Insights into how digital transformation is helping life sciences organizations meet sustainability goals, especially in terms of reducing environmental impact
Learn more about SAP and Vistex innovative solutions for the life science industry here.
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Transcript:
Daniel Newman: Hey everyone, welcome back to another episode of the Futurum Tech podcast. I’m Daniel Newman, your host, CEO of The Futurum Group, and excited for another great Futurum Tech podcast interview series. We have two guests today joining the show from both SAP and Vistex. I’m excited to have this conversation. We’re going to be talking about digital transformation. We’re going to be talking about software and business optimization. We’re going to get a little bit into the future and we might cross into all kinds of other topics. That’s the beauty of this show and this format. But without further ado, love to bring our guests into the show. We’ve got Mandar here. Mandar, welcome to the show.
Mandar Paralkar: Thank you. Hello everybody. My name is Mandar Paralkar. I lead the Life Sciences and Healthcare at SAP. Focusing on solution management means we work with the customers in our industry to capture requirements, take it to the development, and then deliver next generation solutions, products to meet that needs. Looking forward to the discussion today.
Daniel Newman: Thanks, Mandar. It’s a big topic and life sciences is an area that is gaining a lot of attention, has had a huge couple of years and I expect that trend to continue. Sandra, welcome to the show.
Sandra Garitonandia: Thank you. Thanks for the invite. I’m Alejandra, Sandra, which is much easier. And I am the Life Ccience Industry Principle at Vistex. Vistex is one of the SAP solution extension, and we are a solution especially for the pricing and revenue management. And guess what? Also for a topic of today, not the importance of digitalization, how companies can get bigger profit and try to go ahead to the next level. So thanks for the invite and I’m happy to be here, especially together with you both and look for what also for the discussion.
Daniel Newman: Yeah, it’s going to be a good one. Hey Mandar, I’d like to start with you. I want to talk a little bit about digital transformation priorities. We know every company right now is under tons of pressure to implement generative AI, but there’s a lot of things going on. And in the life sciences space, I’d love to understand what you’re seeing from your customer interactions in terms of priorities, what are the most important areas, what have been the biggest challenges? So give me a little bit of background on those challenges and priorities right now.
Mandar Paralkar: Certainly. When you look at life sciences industry today, it’s adapting to some outside forces. When you look at managing the data to improve patient outcomes, which is end consumer in our industry, we look at how to improvise profit margins, look at supply chain challenges, how to empower the patients and build networks to exchange the data. That is critical based on how you look at optimizing and improvising the business processes. When you look at areas for digital transformation, it all starts with manufacturing and quality in the regulated industry. It’s focusing on how to look at automation, some kind of chat box as we work with various lines of business. You look at health and environmental and safety, there is always audits and processes that needs improvements. Based on the COVID, we learned a lot about risk mitigation. And convergence in our industry is equally important when you commercialize and manage the drug distribution across the value chain entities through wholesale and retail pharmacy.
And also it’s important to close the loop, taking the input from the customers downstream and bring it back upstream to weave into the R&D and clinical. So it’s important to see how the driver for change is focusing on boosting the profits. Sustainability is an important aspect. And at the end of the day, it’s all about customer satisfaction. When you look at how to operationalize, improve efficiencies, that is critical in regulated industries. Whether you look at segments, you start with branded pharma and med devices, definitely margins are higher. But when you look at generics and biosimilars, they operate on thinner margins and there is a competitive threat. So change management is very critical in the industry where you want to boost the market share. Because at the end of the day, it’s all about top line and bottom line.
Daniel Newman: Yeah, Mandar, I like that. And I think if you really look at why businesses invest in technology, and I know we as an industry analyst and tech pundit, I love to talk about tech for the sake of tech, but companies don’t think about it that way. And in the life sciences business, they certainly aren’t thinking about it that way. Of course, they’re thinking about the innovation of their own products and services. But they’re saying, how do we deliver faster products and services? How do we improve customer experiences? How do we increase revenue and move profit margins in the right direction? These are the things they’re thinking about.
So Sandra, I’d love to hear from you as someone who’s working closely with these life sciences companies on what are the strategies? What are the best practices that companies are adopting to be able to accomplish those things that I was talking about? I’d like to understand more about the approaches that these companies are taking where they can say, hey, we are not only delivering happier and better customer experiences, but we’re growing our top line and we’re becoming more profitable in the process.
Sandra Garitonandia: So indeed, as you mentioned, in fact profit and of course cost savings is an important driver. We should also not forget that efficiency and also increased customer satisfaction is also important. But the main driver is indeed that we see, and especially when they try to set priorities, is which initiative will help me to increase my profit, right? Either because I am able to increase my revenue or because I’m able to control my cost. Let me give you some examples. One of our customers, for example, GE Healthcare, when they started the journey of digital transformation, they started by one of the process that is the chargebacks. I mean chargebacks, the ones that are working on this industry, they know how complex it is. So for example, the case of GE Healthcare, they realized that on the first year they saved $3.5 million only because they were able to validate and of course gain efficiency under claim validation. That’s huge.
It’s also important to remark, and I am happy because I saw also this kind of observation in the survey. The return of investment was achieved in less than one year. When I was reading the survey, you’ll see that most of the companies, they expect to have a return of investment in less than two years. But especially we see that in the areas where you try to gain efficiency and reduce profit leakages, increased profit, the return of investment can be even in less as we saw, for example, in the case of GE Healthcare. Another example, this one I cannot give the name, but it’s one of the leading companies in the RNA therapeutics. They’re using our solution, especially for the cost savings in an area which is very important in this industry, rights and royalties. Rights and royalties can really make a difference in this time, especially where we see the collaboration that the companies, they cannot rely on these long periods of developing a new product and then usually need to collaborate with other companies. That rights and royalties, how you can manage this piece is super important because can help you to reduce the cost. And if you reduce the cost, it’ll also help you to increase the margin. So this company, they trusted us in the solution from Vistex, and of course it’s SAP to manage this entire lifecycle of the rights and royalties. So they gain efficiency. Of course, they were able now also to gain control of their cost and also they have this transparency of the entire process. So you see we have also examples and we also have customers that they are almost at the end of this journey of the digital transformation.
Daniel Newman: Sandra, I like that you can provide that level of granularity. I think we all love to hear about the philosophical benefits of technology, but I think when you can start to create the real measurable, quantifiable outcomes that the implementations can deliver to companies. And of course you mentioned some large companies. And Mandar, one of the things I’d like you to talk a little bit about too is are these benefits, are these transformational challenges, are these opportunities available to companies of different size? Is it companies of all sizes, just big companies? What are you seeing as SAP obviously known for being an enterprise software provider, but I still remember those mid-size run SAP ads that I saw all over the world. So talk a little bit about company size in terms of these opportunities.
Mandar Paralkar: You’re absolutely right. I mean, SAP has all the top 20 pharmas leveraging our capabilities. What is important is med devices also came on board, and now we are seeing biologics looking at deploying SAP across their enterprise and even extended enterprise. What is important is our volume business is focusing on the mid-market, especially the small and mid-sized companies. Which looks at best practices that they can learn from this bigger enterprise, how they can adapt and adjust quickly to their challenges. A lot of these startups can be in the phase three clinical trials. Some of them might be funded by venture capitalists. So it’ll be important to understand that SAP is basically addressing the needs of various segments.
And as you saw in the survey, typically from a geography point of view, US, UK, a lot of Asia Pacific companies are also in the mid-size areas which look at collaborating better with the larger enterprises. So everybody wants to ensure that the cloud is by default the standard going forward. But also we want to ensure that security and data is managed well. And we give all the right infrastructure beyond the typical shared services, what these mid-size companies look for to ensure they have their digital transformation initiatives pick up and smoothly transition how they want to collaborate with the big pharmas. They might be potential for acquisitions or they might be also looking for business growth in order to meet the latest trends we see in the industry.
Daniel Newman: So there’s so many things that these companies, and I like Mandar what you said there, but really across the continuum. And in the supply chain of life sciences, there’s big and there’s small, there’s there’s materials. And then there’s final product and assembly, and then there’s packaging. And then of course there’s the companies that actually do all the research. And then it ties into all the systems of healthcare, which I know SAP has a lot of granularity in terms of how you segment that. So I always say because of the specificity of your solutions, you have to be that granular. But the way these supply chains, like I said, the materials companies and then the packaging consumer products, these things all really do tie together. So there’s so many things that these companies are thinking about day in and day out as they’re trying to get these digital transformation initiatives done. They’re trying to deliver on the promise that technology can bring while really keeping the customer and the business in focus. Sandra, I’d like to kick this in your direction. But with so many different approaches, so many different potential investments of software technology, AI, how are you helping these companies narrow and focus so that they can get things done? One of my mentors said to me, are you moving 1,000 things an inch or centimeter or are you moving a couple of things a mile or a kilometer? And I have always found that the ladder is better despite the opportunity to do so many things at once.
Sandra Garitonandia: Indeed, I mean, it’s not easy. Especially because as you see, there are so many different examples, variety of programs, things that you can do as part of the umbrella of digital transformation, that there is a moment that you need to set up some kind of priority. So what we see especially, and I think it’s on the page number six of the survey where you see different areas, supply chain, R&D, quality and also the commercialization piece, and you see which are the main drivers. As you can imagine, everything that at the end, the first return will be hitting revenue, profit and also cost savings. That’s a trend that within the companies, they give higher priority. Why? Because it’s an investment. And it’s true that this is not a project. I’m always saying to our customers, digital is not a project, it’s a transformation. It’s a journey. So you start, and of course at the beginning you need to set up some kind of priorities.
So especially everything that is related not to be able to gain efficiency and increase revenue and cost savings, you will give a higher priority. Of course later on if you can achieve customer satisfaction, and of course that’s a plus. But especially in the customers that we have, we see that right now they give the focus on the things that they can see the immediate effect. Why it’s important of this is because the things are changing. And we see also some of the companies, especially on the medical device, that they are in some kind of marching the squeeze trap. All these changes, like in Mandar, we have in this industry for many years. And in the past everything was very relaxed. It was one of my reasons why I decided to move many years ago to this industry because it was relaxed. But we don’t have the relaxed anymore and we see these changes. And we also see that what in the past, we had a very well-defined world and silos and pharma and doing generics and medical device. These silos are now moving, and we see digital therapeutics. Now we see pharmaceutical companies also with digital software, and the things are changing. And of course at the end, the companies, they need to be ready. They need to have something that is able to adapt them to these challenges. And I think that this digital first mindset will help them to achieve this.
Daniel Newman: Yeah, I think that is a very important. Sandra, the digital first, and what I can tell you is I’ve written seven books on digital transformation, and I started writing them a decade ago, and I’m always enjoying the fact that we’re still doing this. And probably the most important thing for the companies, and it is life science specific, but it’s actually more general than that, is that they understand there is no beginning and end. And so if you think back to a decade ago when we started this thing, you all probably remember the big data conundrum. Every company had big data problems. And we’ve been trying to solve it for a decade, how do you normalize? How do you streamline? How do you access unstructured data? How do you bring systems together? How do you deal with things in the cloud and on-prem and all these things happening and coexisting at the same time?
And then just as you start to be able to make sense of it all, then generative AI hits the market and then all of a sudden it’s like, oh, this is the new digital transformation. No, no, no. It’s just the continuation. I always decide which way is up and to the right. It’s digital transformation. It’s just a continuation. It’s the next thing. And by the way, as soon as we get this, something new will appear. So in the end, Mandar, it becomes this not just a tech problem, not just a business problem, but it becomes this very continuous journey, whether it’s Vistex, whether it’s SAP, whether it’s us as a research firm, we’re continually working side by side with a endless requirement to keep customers at the front edge of implementing. And I’d love to get your take. I’d like to hear from both of you. So Mandar, I’ll start with you, but I’ll run this past Sandra too. But talk about how this whole ecosystem, Mandar, you, Vistex, the broader SAP ecosystem, the developers, these cloud migration companies, these AI partners are actually enabling the success of this endless journey of digital transformation.
Mandar Paralkar: That’s a great question. When you look at traditional SAP focusing on developing products to meet industry needs, now we see we’re involving more customers to capture inputs, share in a scrum model, how we are delivering the next generation industry cloud solutions. That’s an important way to meet market expectations. Involving partners in these kind of customer consortiums, user groups, it’s an important part of bringing the ecosystem alongside to deliver the value to the customers. Whether it is independent software vendors that publish applications on the store, or it can be bigger system integrators that can connect to areas third party solutions, it’s important to ensure that we give end-to-end solution to meet that challenge from the customer. If you look at the survey, page five, we talked about various drivers. And I think sustainability also is important aspect, which looks at how the organizations in our industry are looking at current regulatory needs and focusing on certain challenges around packaging issues with plastic implications, carbon emission and waste. It’s important that we need to take the holistic perspective when we release the batches from a product quality and patient safety perspective. So apart from visibility for meeting sustainability goals, these are important because the future is clearly towards personalized medicine. And it’s important that we not just maintain batches, but also batch size of one to ensure patient proximity is key and we are ready for future with our partners in the ecosystem.
Daniel Newman: Sandra?
Sandra Garitonandia: Yeah, just what more on that sense. What we see especially for the customers that we are serving, what they’re looking for is something that helps them to be more agile and gain visibility, especially in this industry and it’s interesting in this case now. Mandar is based in the US, I’m based in Europe. The requirements, the game rules sometimes are completely different. But think that most of our customers, the life science companies in general, doesn’t matter if you are pharma or you are in medical device, most of the times you operate internationally or in more than one country. So it’s very important for them to be able to have a solution that is like a Swiss knife, an army knife, that with one solution you are able to cover multiple requirements in the different geographies. And also, there is also a change in the organization is not only, now you mentioned this artificial intelligence, everybody’s talking about this. We also see a change in the organization. We are breaking down the silos. And also, we try to collaborate more also internally in the companies. So the fact that they can have one single point of view for all these information, and that’s the beauty of all this SAP solution. The end, you have everything in one place. It gives visibility and also it allows you the possibility to react fast because the changes are coming. We see new legislation, and especially in this industry, we are very tied to the regulation changes.
If now in, for example, in Spain where I’m based suddenly by law we have a new regulation that I need to apply a specific condition for the hospitals. I need to do it fast, I cannot wait. And that’s what the companies are looking for, things that helps them to move and face the challenges, but also to act quickly to these challenges. And ideally, in one solution that is like a Swiss knife, army knife. That I can manage, my fiscal in Brazil, I can manage my government pricing in the US, but also the outcome-based agreements, the tenders and all these things that we see in Europe. So I think that that’s one of the main assets. And also SAP is one of the leading solutions also in this exciting industry.
Daniel Newman: Yeah, you covered a lot there, both of you. We have a couple of minutes left, and so I want to give you both an opportunity to sort of wrap up, give us your final thoughts to the industry and to the adjacent audience of technologists that are out there. Maybe what do you see in terms of future trends? What were the most important things you want those listeners and viewers to walk away with? And Sandra, I’ll start with you.
Sandra Garitonandia: Yeah, again, it’s all these changes that we see right now in the industry. We see how the importance of real world evidence, being able to capture. The margins are becoming more tight and tight and tight every time. And then the companies, they need to be more innovative. But what’s the risk of being innovative is then you have, well, not the risk, the challenge is that then you need to have a solution. In this case, an IT solution that is able to cover all these innovative pricing solutions that you have. So that’s the trend that we see. And as I said, also, we don’t see these bubbles anymore. We see now medical device moving to the pharma or the other way around with the digital therapeutics, the software. In Europe, for example, has been approved. Also the first software just for treating a disease. So we see really a change. And I look now at the industry, all the changes we see, it’s incredible. The changes I have seen in the last five years comparing the last 15.
Daniel Newman: Mandar?
Mandar Paralkar: I look at the life sciences industry as a whole. It’s important to see beyond supply chain, we see collaboration with R&D organization, tech transfer, critical aspects. We need to also manage jurisdiction, control and distribute right products to the right markets at the right time. So it’s important to see a closed loop within the various departments and not operating as silos. Whereas if you look at lines between industries blurring and how we can collaborate across wholesale retail hospitals. Because at the end of the day, patient proximity is important and the relevant data with respect to certain parameters around which you need to produce the drugs and the devices to meet the expectations of the end consumer. I think that’s the key, how we will be successful in the ecosystem. I’m very excited to work with our customers and meet the industry needs.
Daniel Newman: Well, I want to thank you both so much for taking the time to join me here. I think the industry that you’re focused on is one of the most important, as has so much complexity as it is contributive to the world’s health and wellness. And of course we’ve seen over the past several years how much that can be influenced by everything from world events to the economy to the continued globalization of enterprise and business. I would love to have you back soon. I’d love to hear how some of these opportunities pan out. And I would like to chat again with both of you as we see generative AI. I’ve had the chance to talk to Christian Klein just recently about all of the SAP ambitions. I’d love to see how that filters through, Mandar to your practice and of course Sandra, to your business as well. So let’s have you back soon, okay?
Mandar Paralkar: Thank you very much for having us.
Sandra Garitonandia: Thank you.
Daniel Newman: And if you’re out there and you enjoyed what you saw here, hit that subscribe button, we would love to have you for all of our Futurum Tech podcasts and all the interview series. We talk to some of the most prolific companies and executives, as well as practitioners about all things happening across the tech landscape. But for this episode, I’ve got to say goodbye for now, but we’ll see you all soon.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
