February 7, 2024, India: – Model N, Inc. (NYSE: MODN), the leader in revenue optimization and compliance, published its sixth annual State of Revenue Report, revealing life sciences and high-tech executives’ top business priorities and challenges. The company’s 2024 report named process efficiency and cost-saving measures as priorities for executives, with greater emphasis placed on advanced analytics and artificial intelligence (AI) to achieve these priorities. For a second year in a row, supply chain disruption emerged as one of the top obstacles to innovation across all industries.
Other innovation hurdles include changing and unpredictable customer demand, fluctuating materials availability, constant regulatory changes, and staffing challenges. In terms of process efficiencies, three-quarters of executives say their current approach to revenue optimization needs improvement, and survey responses showed plans to bolster revenue operations by incorporating advanced analytics (68%), AI (59%), and robotic process automation (46%).
“AI and analytics are ushering in a new era of revenue optimization and compliance across the life sciences and high-tech industries,” said Rehmann Rayani, Model N Chief Strategy and Marketing Officer. “Outdated, manual, and/or patchwork sales and revenue processes can undermine profitability for even the most innovative companies, and new technologies will unlock data-driven insights that manufacturers need to maximize revenue and remain compliant.”
Sixty percent of executives do not consider their organizations very data-driven today, yet nearly every executive surveyed uses external data resources from a variety of sources to inform business decisions. To augment these data sources, 94% of executives are open to anonymously contributing data to create industry benchmarks that can help inform revenue strategy.
Life Sciences Executives Identify Compliance and Communications Challenges
Beyond persistent macroeconomic headwinds, 2024 survey results highlighted several industry-specific challenges. Among pharmaceutical manufacturers, most executives are worried about the influence of regulations on future revenue. Half of the leaders surveyed are bracing for a significant revenue impact from price negotiations with Medicare under the Inflation Reduction Act, more than double the results from the 2023 survey.
In addition, 94% of pharmaceutical executives reported challenges with formulary validation – the process by which manufacturers verify that payers are meeting contractual agreements with respect to formulary placement. Manual audits (49%) and limited access to formulary data (48%) were cited as top challenges to assuring compliance.
From revenue loss to government penalties, the consequences of poor customer and membership data are many. Yet, only half of executives characterize their membership management process as highly effective.
For medical technology executives, communication between field sales and operations teams is a top concern, with just 38% reporting excellent communication. Improvements in this area can immediately streamline deal execution and boost profitability. The MedTech industry continues to adjust to new financing and subscription models for capital equipment and software, evolving from one-time to recurring revenue. Nearly 60% of executives reported difficulties with managing such models.
Channel Data Remains an Untapped Opportunity for High-Tech Manufacturers
While channel sales data can give manufacturers valuable insights into changing market conditions, only 27% of companies consistently use this data to inform pricing decisions. Greater insight into channel data helps execute more strategic sales pivots faster in response to changing market conditions. In addition, channel data helps manufacturers guard against gray market sales. These unauthorized sales put manufacturers at risk with regulators and law enforcement agencies, and most executives surveyed reported concerns ranging from brand reputation damage to financial and legal liability.
“Life sciences and high-tech manufacturers rely on complex, multi-stage revenue processes. Failing to consistently monitor, analyze, and optimize these processes is a recipe for increased risk,” said Suresh Kannan, Model N Chief Product Officer. “This year’s State of Revenue Report underscores how existing business practices must evolve and harness the power of data and advanced analytics to overcome industry challenges, optimize revenue, and meet critical business needs.”
For more industry-specific statistics and commentary about revenue optimization in life sciences and high tech, download the full 2024 State of Revenue Report.
