![]() This article outlines how life-sciences companies can create value from cloud, explores the challenges of making the shift, and draws lessons from successful cloud migrations. With so much value at stake, technology and cloud strategy is no longer a matter for the chief information officer alone but a critical topic for the entire leadership team. the estimated potential value amounted to $20 billion to $40 billion, an improvement of 9 to 19 percent. For the pharma companies in the sample, 5 The average EBITDA expected in 2030 is approximately $17.5 billion. When analyzing cloud migrations in Fortune 500 pharma and medtech companies, McKinsey found that, on average, companies stood to gain about $10 billion to $15 billion in improved 2030 EBITDA run rates from the rejuvenation of IT, but roughly twice as much-about $25 billion to $30 billion-from business innovation. This may be a conservative estimate, since emerging cloud-enabled technologies such as augmented reality and automatic machine learning are likely to offer additional opportunities for value capture. Our estimates suggest that the potential value creation for Fortune 500 companies could reach $1 trillion in run-rate earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2030. McKinsey research indicates that businesses can capture enormous value from cloud through both cost optimization and value-oriented business use cases. In fact, analysis shows that the greatest benefits derive from enabling business innovation through improvements in automation, scalability, resilience, and data analytics. One common assumption is that cloud’s primary value comes from upgrading IT and reducing technology costs. 4 “Takeda accelerates digital transformation with Accenture and AWS,” Takeda, October 13, 2020, .Īlthough belief in the value of cloud is widespread, a clear understanding of precisely where that value resides-and how to capture it-is often lacking, leading to misguided strategies and faulty implementation. “My vision is … to deliver transformative therapies and better experiences to patients, physicians, and payers faster than previously possible,” said Takeda CEO Christophe Weber in a press announcement of the company’s strategic partnership with a cloud provider. ![]() The applications they mention span the value chain, with research and early development, market access, commercial, and medical applications dominating mentions. ![]() 3 Investor reports, press releases, and company websites of top 20 pharma companies by revenue in 20. He is not alone: in recent company reports and press releases, 16 of the top 20 pharmaceutical companies refer to cloud technology. Or, more broadly, as Johnson & Johnson’s enterprise chief information officer Jim Swanson put it, “Ubiquitous data, together with elastic, scalable cloud and edge computing, is part of what’s enabling us to innovate and scale in such unprecedented ways.” 2 “‘Drive incredible outcomes, do transformative things’: Data science insights from our Enterprise CIO,” Johnson & Johnson,. You just fly.” 1 Tyler Clifford, “How Moderna is using Amazon cloud to produce personalized cancer vaccines,” CNBC, January 15, 2020,. Why? Said Stéphane Bancel, Moderna CEO, “Because you don’t have to reinvent anything. Moderna, for example, was able to deliver its first clinical batch of its COVID-19 vaccine candidate to the US National Institutes of Health for Phase I trial only 42 days after the initial sequencing of the virus by using cloud technology. Industry leaders are increasingly aware of the transformative nature of cloud technology. This article was a collaborative effort by Andrea Del Miglio, Tobias Hlavka, Jeffrey Lewis, Manuel Möller, and Pablo Prieto-Munoz, representing views from McKinsey’s Life Sciences Practice.
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