The document discusses how life sciences companies are facing changes in their industry that require a new emphasis on cost management to fuel growth and profitability. Specifically, it notes that traditional high drug prices may not be sustainable given increases in pricing transparency, savvier customers, and government scrutiny. It then recommends that companies obtain a clear understanding of spending, strategically reduce costs using a zero-based approach, and redistribute savings to strategic growth priorities. This could result in a typical 2% reduction in spending and $5 billion in cost savings for the top 50 life sciences companies overall.

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Fuel Growth or Miss Major
Opportunities in Life Sciences

2. Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Life Sciences companies have a choice to make.
Traditional culture has not included an emphasis on
cost. The luxury of high and easily adjustable prices
has been the primary driver of profitability and the
funding of growth.
For many reasons, this is
changing.
$$$

3. Increase in pricing behavior transparency
More price-and research-savvy customer base
Greater scrutiny from government and media outlets
Unlikely continuation of the pace of recent M&A activity
What are
the drivers
of this
change?
The industry is at a crossroads
– and a greater emphasis on
the management of costs is
increasingly important to
achieving profitability and
fueling the engine for growth.
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

4. So how do companies fuel growth and continue to
produce sizable shareholder returns when the lever
pulled in the past may not be there in the future?
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Start by obtaining a very clear understanding of spend,
then use a scalpel, not a hatchet, to strategically
redistribute costs within your P&L. We do this through
zero-based cost models.

5. Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Steps to success:
Clearly understand your growth priorities and what’s needed to
achieve
Achieve true transparency into spend across the organization that
contribute—or do not contribute—to business outcomes
Provider leadership with clear choices to strategically reduce spend
and identify clear accountability within the leadership team to sustain
value through changes to mindsets and behaviors
Redistribute savings to the identified strategic priorities to fuel your
growth agenda or improve overall profitability

6. Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Typical ZBS outcome is
a 2% reduction in SG&A.
Zero-based spend for
non-labor cost and
zero-based organization
for labor costs are
delivering unprecedented
results.

7. Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Among the Top 50 life sciences companies,
this represents a $5B cost takeout and
~$100B market capitalization opportunity
for the industry.

8. LEARN MORE
about strategic cost management
and zero-based models in our full
reports:
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@AccentureStrat
www.accenture.com/fuel-for-growth
www.accenture.com/zbb