Preparing pharma for healthcare’s transformational digital revolution

Discussions around foreign-direct investment (FDI) tend to focus on one of two things: Big Tech or tax – and sometimes both together. However, as crucial as information technology has been to Ireland’s development, two areas of the life sciences are also major contributors to the national economy, particularly in the West: pharmaceuticals and medical device manufacturing.

The sector’s importance cannot be overstated. 301,475 people are employed by FDI businesses that are engaged with the IDA. Of these, 100,000 are employed in the life sciences sector, according to figures published by the IDA in December.

This has not gone unnoticed, with the Financial Times last year noting employment “surged by 80 per cent to almost 100,000 over the past decade on the back of almost $15bn in capital investment”.

But what does the future hold?

Expleo’s Damian Costello, a long-term strategist in the medical technology and pharmaceutical sectors, said that while life sciences manufacturing was one of Ireland’s major success stories, and one that gets less attention than internet technology, there was no room for complacency.

“When I look at the overall story here, my primary concern is to ensure that the critical pillar of the Irish economy that is FDI manufacturing can be sustained and we can transition as it changes. There’s no guarantee with that,” he said.

Pharma and medical device manufacturing has remained relatively traditional, Costello said, and for good reason: regulation and legal liability. However, significant changes in how healthcare is delivered are expected, and this needs to be part of the plan.

“These industries were reluctant to get into serious digitalisation of their strategy. Another reason is there is a sense they’re too busy saving lives,” he said.

In addition, manufacturers in life sciences have been slow to digitally transform as they have been so successful working as they do.

“A lot of my analysis of decisions is related to S curves. Typically, when organisations are fat and happy, they become a target for competitors. My concern is that the manufacturing and supply chain is at risk of becoming obsolete,” he said.

The increasing integration of technology into healthcare – and it is hardly a sector where technology is unknown – is leading to more personalised healthcare, including not only monitoring but potentially moving pharmaceutical consumption away from ‘blockbuster’ drugs toward personalised compounds.

Technology is already having an impact on drug discovery, and while how it plays out socially is hard to predict, what we do know is that change is coming.

“AI is becoming mainstream and we’re not terribly far from quantum computing having an impact, changing our relationship to probability – which is enormous in terms of where to locate a hospital, in terms of diagnostics, and in terms of insurance,” Costello said.

These industries were reluctant to get into serious digitalisation. A reason is there is a sense they’re too busy saving lives

In addition, Big Tech has shown significant interest in muscling in on healthcare, with Alphabet, Amazon, Apple and Microsoft all dabbling in select niches.

Of course, the context for this is the increasing cost of providing healthcare to society, Costello said.

“The fundamental issue is society can’t afford healthcare the way it is provided now, it’s approaching just past 20 per cent of US GDP [gross domestic product], and the population is ageing so more people want healthcare. We have to use technology to roll out healthcare that meets people’s needs.”

However, there are advantages in being late to the party, Costello said. For example, the methodology of the European Union’s Artificial Intelligence Act (EU AI Act) is familiar to medical device companies.

“An interesting part of that is things like the EU AI Act – it turns out that the reasoning in the EU AI Act is very similar to the EU Medical Devices Regulation [MDR].”

Nevertheless, the life sciences sector needs to ensure it is ready for coming changes in how healthcare is delivered.

Indeed, how Irish manufacturing sites prepare themselves to become dynamic suppliers or dynamic supply chain contributors of more personalised care will dictate whether or not healthcare in Ireland catches the next wave.

Costello said that Ireland should be in a position to take pole position, but it will require sustained effort, including by industry leaders and policymakers.

“What is business going to look like at the end of the decade, and what are they doing now in terms of digital transformation to be ready for it? Ireland has all the ingredients where we could do what we did 30 years ago, when we read the tea leaves and became the biggest single winners in the last wave of high-tech globalisation. There is a new wave coming. I believe we have a hand of aces in this country, but if we play them badly, we are capable of snatching defeat from the jaws of victory,” he said.