The Future of Biosciences: Four Scenarios for 2020 and Beyond…

By Jim Austin
Director of Life Sciences, DSI

No one can reliably predict if emerging life science technologies will be wildly successful or fall short of expectations—or even if the public will accept or reject these new scientific techniques. What we do know for certain is that multiple futures are possible. So how do we describe, anticipate and plan for these possible futures?

Paul Schoemaker, in his book, Profiting from Uncertainty, writes:

Uncertainty is ultimately the only source of superior profits, yet it entails a highly dangerous game. This game is where tremendous value is created—and destroyed. How can you profit from the upside of uncertainty while managing the downside?^{[ 1 ]}

The problem, as Dr. Schoemaker explains, is that most companies suffer from three “blind-spots” in trying to lead through uncertain times—

1. While many companies focus on internal operations and choices, external and industry effects drive nearly 50% of the return on assets for the majority of businesses^{[ 2 ]};
2. The level of uncertainty in most businesses has significantly increased; and,
3. Human beings are inherently limited in dealing with uncertainty, often missing “weak signals” for patterns and perceptions that worked in the past.

The life sciences are entering ever more uncertain times. Between increasing government scrutiny, declining favorability ratings among the public, diminishing pipelines of true “breakthrough” products, and rising tides of generic substitutes—often manufactured in countries with relatively lax intellectual property and regulatory safety frameworks—the bioscience industry is certainly facing an unsettling future. One indicator is stock market valuations. While the S&P Health Sector Index dropped 1.79% over the past three years, the S&P 500 Index rose 5.6%.

A key tool in charting a course through choppy, uncertain times is Scenario Planning. At DSI, scenario planning is not about trying to predict the future. Rather, it focuses on tracking and monitoring continuities and discontinuities so that leaders can recognize change ahead of the curve and profit from uncertain times before the competition.

Figure 1. Scenario Planning Process Summary

The scenario planning approach developed by DSI enabled the Biosciences Project Team to identify the most important uncertainties and use those to describe possible scenarios that can be monitored and planned for. Before outlining the outcomes and likely impacts of this effort, what is the Biosciences Project?

About the Research...

Over three years in its gestation, the Biosciences report was developed from a wide range of research activities as a joint venture between the Mack Center for Technological Innovation at Wharton and DSI. Based on interviews with industry leaders, an industry survey and various scenario-building workshops, the Biosciences Project aimed to identify key factors that are likely to influence the commercialization of new life science technologies to 2020 and beyond. Supported by grants from Accenture, Akzo/Organon, Deloitte Consulting, GlaxoSmithKline, H-P, Infosys Technologies, P&G, Quest Diagnostics and SDG, the research is aimed at giving company and government decision-makers the insights needed to develop winning strategies in biosciences.

This research is benefiting from insights developed during more than 10 years of management research by the Emerging Technologies Management Research program at Wharton, much of which is summarized in the book, Wharton on Managing Emerging Technologies edited by Profs. George Day and Paul Schoemaker with contributions by 17 Wharton faculty authors.^{[ 3 ]}

Four Scenarios

The BioSciences Project team identified “technological success” and “public support” as two critical variables/drivers, and these became the parameters for the 2x2 matrix used to create the four scenarios. Technological success factors were developed across the range of bioscience opportunities from genomics to artificial organs. Public support included qualitative estimates of changing government regulations, reimbursement budgets, public acceptance of new cloning or stem cell research and insurance coverage of new therapies.

Figure 2. BioSciences 2020 Scenario Matrix

Scenario A:
Where's the Beef?

The View From 2020:
The world is becoming increasingly hazardous to your health.
Medical science has been unable to cure many common diseases, despite strong public pressure and ambitious corporate and government research initiatives. The promises of biomedicine and gene therapy in particular have not fulfilled their early promise after decades of research.

Scenario B:
New Age of Medicine

The View From 2020:
The new age of medicine envisioned in the 1990s has finally come to pass.
Medical technology has provided effective treatments or alternatives for many previously fatal diseases. Breakthroughs in regenerative medicine have extended the life expectancy of people in developed countries, exacerbating the pressures caused by aging populations. Millions of people in developing nations have benefited from novel cures for malaria and many other diseases.

Scenario C:
Much Ado About Nothing

The View From 2020:
The long delay in delivery of molecular science solutions has led people in many nations to settle into a “status quo” mentality, where medical miracles exist in theory, but not in real life.
Patients suffering from debilitating diseases have lost hope in the power of technology to save them. Disease advocacy groups are frustrated after decades of lobbying for research funding, given the lack of results and a climate of stalemates regarding ethical and social policies.

Scenario D:
BioSciences Held Hostage

The View From 2020:
Successful life science treatments and cures cannot break through the obstacles posed by negative public sentiment, legal barriers and lack of funding.
This opposition comes from lack of education or understanding of how life science technologies work, as well as legitimate safety and ethical concerns. The greatest obstacles entail moral or ethical conundra involving the manipulation of human genes, proteins and other molecular structures.

So What?

Decision makers can use these meta-scenarios as a starting-point to craft micro-scenarios and strategies for their organization, industry and environment. Our report identifies the broader trends, uncertainties and strategic factors that will influence commercialization of life science technologies and the evolution of health care in the coming decades. But this needs to be customized for each organization.

For the biosciences industry, several general conclusions appear to be relevant—

1. The balance between developed and developing markets and supply sources could radically change
2. The public is unlikely to be a passive recipient of bioscience pipeline products
3. The “promise” of bioscience is by no means a given
4. Companies need to monitor for convergence and key developments

According to the lessons from Wharton on Managing Emerging Technologies, companies often miss critical signals of future industry change when they--

• Postpone Participation
• Pursue the Wrong Technology
• Refuse to Fully Commit
• Lack Persistence

As a result, companies who hope to succeed in bioscience today and tomorrow, should ask themselves:

• Are we monitoring our external environment for subtle signals of what could be major changes?
• Are we regularly challenging our key strategic assumptions about the future?
• Are we seeking input for new ideas, opportunities and challenges from all levels in our organization?
• Are we enabling groups within the company to “test” new ideas or growth options?
• Are we sharing best practices and new approaches throughout the company?
• Are we bringing together cross-functional groups, especially R&D and Sales/Marketing, to share insights, ideas and potential opportunities?

Maintaining a watch on critical external environmental changes, developing a flexible strategic orientation, and providing organizational autonomy for market “tests” of emerging opportunities will enable bioscience firms to prosper in the years to come.

The Future of Biosciences: Four Scenarios for 2020 and Beyond… will be available in the Fall 2005 for purchase or subscription (visit our biosciences website: www.thinkdsi.com/biosciences for more information).

NOTES

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