Introduction

The healthcare landscape has been subject to significant turbulence on account of a gamut of factors including escalating costs, widespread regulatory amendments, changing business models, and evolution of the patient-centric paradigm (with mobile computing, social media platforms, and “anytime-anywhere” information access). The life sciences industry, in particular, is faced with narrowing margins, expiring patents for blockbuster drugs, dwindling drug pipeline, and rising adoption of personalized medicine as well as wearables. There has also been an uptick in M&A/restructuring activities as stakeholders make efforts to revive margins by realigning the strategic focus. This combination of disruptive and legacy factors is driving the technology appetite among life sciences firms, which is translating into increased focus on analytics, infrastructure services, data consolidation, and application modernization efforts.

The year 2014 brought some respite to life sciences firms with a record number of new drug approvals, highest in the last 18 years. This was a result of a greater number of drug approval applications, and revised policies by the FDA for speedy approval of innovative drugs. With companies emphasizing on innovation as means to survive the tapering margins, their IT investments for R&D and clinical trials are likely to witness a sizable uptick in the near future.

As life sciences firms embark on their digitization journey, there has been a spike in the demand for digital enablers and tools that cater to specific value chain elements and help achieve desired business outcomes.

However, digital initiatives have been staggered towards overhauling the fundamental consumer engagement model, while digitization of internal operations remains a pretty nascent domain. Also, stakeholders tend to struggle with digital enablement due to factors such as fragmented service provider landscape and non-standardized internal structures. Successful digital adoption would require life sciences stakeholders to transform their entire stack of services and adopt an integrated services strategy.

In this annual report, we analyze the current trends and future outlook of large, multi-year ITO relationships in the life sciences market. The report also provides specific insights into the significance of integrated services for digital enablement.

This report is structured across four key sections, each containing insights on the life sciences ITO market, with a focus on large-sized contracts:

• Healthcare IT outsourcing market overview: Analysis of the overall healthcare outsourcing market and transaction trends:
• Market size and growth
• Transaction trends for IT outsourcing in healthcare
• Segment-level analysis of healthcare outsourcing transactions, including:
• Business segments: Healthcare payer, provider, and life sciences
• Function segments: Applications Outsourcing (AO) and Infrastructure Outsourcing (IO)
• Geographic segments
• Life sciences ITO market overview: Analysis specific to the life sciences ITO segment with a focus on large transactions
• Transactions activity and growth trends
• Demand characteristics for life sciences ITO services by geography, ITO subfunctions, buyer type, and buyer size
• Delivery trends for life sciences ITO services, including offshore leverage and global delivery locations
• Renewal opportunity till 2020
• Digitization in life sciences: Significance of integrated services for true digital enablement
• Digitization across the life sciences value chain
• Customer-facing vs. internal digitization
• Key elements for digital enablement in life sciences
• Services integration strategy for effective digital enablement
• Outlook for 2015-2016: Analysis of the outlook and implications for ITO for the coming year
• Outlook for overall healthcare IT outsourcing
• Outlook for life sciences IT outsourcing