Driving digital transformation in healthcare
Reflections on Sanofi’s digital transformation journey in China
Digital technology is driving rapid, fundamental change in almost every aspect of our daily lives. For younger generations, and the young at heart, mobile digital experiences are an integral part of consumer services, from banking and insurance, to entertainment, retail, and travel.
Healthcare is no exception. Patients, healthcare providers, and other industry stakeholders are moving to a fully digitalized offline-to-online patient journey, opening new opportunities in the research and development of medicines and delivery of healthcare services, while resolving barriers to treatment and improving patient outcomes.
Under CEO Paul Hudson, French-European pharmaceutical company Sanofi is seeking to shape this transition; pursuing global leadership in scientific innovation, and the use of digital technology and data to transform the practice of medicine.
In China, Sanofi’s second-largest market, those goals are being realized in the form of new institutions dedicated to driving digital innovation in healthcare: In early 2019, Sanofi established an Innovation Hub in Shanghai to deepen and expand its relationships with China’s dynamic digital players, before opening the Sanofi Institute for Biomedical Research in Suzhou last year.
This new global institute integrates Sanofi’s early research capabilities with China’s drug discovery ecosystem, aiming to accelerate the development of best-in-class and first-in-class medicines. It also seeks to pioneer virtual healthcare services like Amulet Health Technologies (AHT), a Sanofi subsidiary launched in 2021 to provide integrated online-to-offline care for chronic disease patients.
Borne from a partnership with the Shanghai Pudong Software Park, AHT embodies Sanofi’s collaborative approach to digital innovation, which spans partnerships with technology giants Jing Dong Health, Ping An Health, and Tencent, as well as an array of China-based start-ups.
AHT’s open-handed evolution is also characteristic of Dr. Pius S. Hornstein, Country Chair Sanofi Greater China, a company veteran who has presided over Sanofi’s China business since early 2019.
Hornstein recently spoke with Franck Le Deu, leader of McKinsey’s Asia Life Sciences practice, and Serina Tang, an associate partner in McKinsey’s Shanghai office, about the challenges of leading digital transformation across a vast pharmaceutical company.
Their conversation highlights the importance of staying relentlessly focused on milestones while measuring return on investment (ROI), the secret to attracting and retaining digital talent, and how technological advances are changing healthcare delivery in the world’s second-largest economy.
McKinsey: How did you arrive at your current role in Sanofi China?
"This journey started in Brazil in 2015, where I first experienced a digital ecosystem that was in some aspects more advanced than the U.S. or Europe in areas such as banking and healthcare. I considered how we might integrate a digital, patient-focused experience into the healthcare system, and went on to study what digital disruption means for business at the Singularity University in California. China, with its renowned digital ecosystem, was the natural place to come and apply the things I’d learned."
McKinsey: What makes China’s digital healthcare ecosystem different from other markets?
"China’s 1 billion mobile internet users, who are incredibly attuned to convenient mobile digital experiences, and vast healthcare system present a huge opportunity for digital to improve patients’ lives. China’s vibrant technology ecosystem is another point of difference; we leverage Tencent’s WeChat mini-programs to improve patient interactions, and WeCom, the enterprise version of WeChat, to liaise directly with advanced clinical practitioners (ACPs). Finally, an ultra-rapid development and iteration cycle, in which it can take as little as three months to deliver a MVP (Minimum Viable Product), makes the China market truly unique."
McKinsey: How will digital transformation affect the way Sanofi China operates five years from now?
"In the near future, healthcare will likely move to a fully digitalized offline-to-online patient journey, opening a new frontier in drug development, healthcare services, follow ups, resolving barriers to treatment, and improving patient outcomes. Today, most patients research disease and therapies via WeChat mini-programs and websites, driving the emergence of internet hospitals—virtual centers able to provide medical advice and prescribe medicines. Two years back, China only had a few hundred internet hospitals. Now, we have thousands, co-existing with physical hospitals.
As a leading healthcare company, Sanofi needs to understand where and how it can contribute to that ecosystem to offer the best standard of care. How do we interact with physicians, or help patients to find the right information, and assist both parties with adhering to clinical guidance? Meanwhile, we want to have a real understanding of patient needs, use their feedback to upgrade, and help them to improve their treatment outcomes.
From the business perspective, scalable operational efficiencies are allowing us to truly understand the 40-50,000 healthcare practitioner (HCP) interactions we handle each day. We can measure HCP satisfaction via NPS (Net Promoter Score) surveys, leverage them to design meaningful interactions and initiatives, and better equip our staff. On the recruitment front for example, we transformed an almost entirely offline recruitment process for the roughly 3,500 people we hire each year into one where onboarding is more than 90 percent digital. Our HR teams and the candidates saved thousands of hours, and we now focus on adding value elsewhere. As a result, the average NPS among people applying to Sanofi is now 72. That great digital experience immediately positions us as an innovative company, and has a positive impact on ROI."
McKinsey: The scope of your digital transformation is now very broad, but what were your first steps?
"We started with a three-year high level vision and roadmap that was fully aligned with our global ambition. By 2020, we transitioned from our legacy and highly fragmented ITS (IT Services) organization, with dozens of reporting lines out of the country across different hardware and software systems, to one of the first in China to have a consolidated digital organization—technology infrastructure, data, digital, and innovation—all under one roof. It was a big move that united people around a common ambition, and helped us gain significant velocity and traction."
McKinsey: How did you go about measuring progress on the digital journey?
"At the start of the journey, we discovered we had more than 150 projects, not all of which were well defined or had clear success metrics. That is a classic mistake, but one that led us to understand that we need to ruthlessly prioritize and be laser-focused on creating value for patients and the company. We looked closely at delivering incremental ROI, either by improving patient care or increasing revenues or operational efficiency. Then we benchmarked ourselves against other pharmaceutical companies and non-pharma digital leaders. We quickly established our WeCom platform for HCP interaction, as well as our data lake and application hosting environment on Tencent Cloud. We benefited from that decision during the first months of the COVID-19 pandemic, when we increased or sustained our performance despite almost no in-person interactions with HCPs. According to McKinsey’s Digital Quotient Index, we have risen in digital maturity from below average in mid-2019 to among the top 10 percent of pharma companies globally, and among the top 10 percent of companies across all industries surveyed in China by the end of 2021."
McKinsey: Last year, you launched Amulet Health Technology. What was the idea behind that, and how does it resonate with plans for digital health to drive new revenue streams?
"All the great medicines in the world are meaningless if patients are not diagnosed. More than half of patients with diabetes go undiagnosed in China. Of those who are diagnosed, more than half do not receive the appropriate therapy, and many of those who receive therapy discontinue prematurely. Creating digital tools that appropriately facilitate and improve physician-patient or nurse- patient interactions is a challenge. Amulet Health Technology, a virtual approach to managing patients with chronic disease that integrates software tools and professional care, is part of a possible response.
Ultimately, we want to develop a digital patient journey solution that can be reimbursed by the healthcare system. Digital Therapeutics (DTx) products are already making inroads in the U.S., and German authorities have taken a bold step to reimburse some services. We expect that China’s regulators will follow suit, and reward appropriately— there is definitely a patient need and positive impact on treatment outcomes."
McKinsey: What was the thinking behind organizing the 2021 Dream and Go summit, which attracted almost 7,000 participants from China’s healthcare ecosystem?
"We want to leverage innovations no matter where they come from. We partner with start-ups and tech companies through our Innovation Hub, and aim to continue working openly with the ecosystem. Since 2019, Dream and Go—our annual, mainly online, event—has enabled us to meet tech companies with the potential to help us co-create and resolve pain points. We also invite venture capital and other investment firms, who introduce us to entrepreneurs with whom we can cooperate or invest. For example, we collaborated with a company that develops devices to measure tremors and other indicators in Parkinson’s patients, gathering real-world evidence on how they react to therapies over time. These efforts have elevated Sanofi’s reputation as a digital and innovation leader in the healthcare sector, making it easier to attract talent."
McKinsey: What are the key factors behind the success of Sanofi China’s digital transformation?
"Being very clear about what you want to achieve. You really want to have a strong global company strategy that is fully aligned with large markets. The enemy of any go-to-market digital transformation is fragmentation, especially in a company of Sanofi’s size. As I mentioned, you need to ruthlessly prioritize, and recognize that six months down the road, new shiny objects could creep in to dilute your initial objectives, and slow down your ability to create big wins.
Today, we invest less in aggregate than we did three years ago, yet for the chosen priority projects, we devote more resources. Our iterative agile build cycles go faster and involve users in the development process, resulting in solutions that are much more relevant and impactful. A second obstacle to success is us, the leadership, the management team. Everybody likes to have their sphere of business power, which in the past was linked to a specific, often siloed, P&L. The digital future is not like that. You need to be more open, able to empower, delegate, and collaborate. Nurturing digital capability is another factor. We had to train up a critical mass of people who could understand digital in order to attract and retain digital talent. Previously, we didn’t move fast enough and rejected innovative ways of working introduced by the new talent, which led to frustration and rapid churn."
McKinsey: Are the majority of Sanofi employees following agile principles at this point?
"Our first priority was to instill an agile mindset and ways of working within the digital organization. As most were from our legacy ITS organization, with waterfall-like, project-based principles, this was no easy task. We paired digital teams with business teams to co-build key products. Then, we refocused on commercial operations, and especially medical and marketing, because we wanted to make a more positive impact on patients. That meant recruiting more agile coaches, driving agile awareness, rolling out training, and adapting our office space to support agile pod work. We have certified Scrum Masters and Product Owners, and are training up the next generation of agile coaches. The agile mindset is also about learning by doing; it’s a continuous learning journey for our employees. I’d say we are halfway along that process. Over the next two years, we aspire to achieve agile at-scale. However, we don’t intend to work agile everywhere; there are still areas where it is better to work in the classic waterfall method. Finding the right balance is key."
McKinsey: What are the major barriers to scaling up agile and digital ways of working?
"The first step is to ensure your technology and data foundation is fit for purpose. Having systems which are not fragmented, and data in one cloud, is essential if you want to move at scale. Sanofi’s heritage of mergers and acquisitions made this an acute challenge. For Sanofi China, we resolved two-and-a-half years ago that we would have a one-cloud data approach. We also decided our front-end for customers and employees would be on mobile first, leveraging WeCom. Then we started to tackle the bigger issue of agile-digital knowledge. We have already rolled out agile and digital capability training to much of our corporate workforce, but much still needs to be done to upgrade the mindset and culture—although we are also making good progress here, too."
McKinsey: How do you go about attracting and retaining digital talent?
"China’s healthcare market has an average attrition rate of 25-30 percent; every year, 30 out of 100 employees decide to move on. Digital talent is clearly in high demand. Our response was to move from a focus on retention to being permanently attractive for existing and prospective staff. We try to empower the people we hire, create interesting career growth opportunities, including across functions and potentially to global roles, and do our best to recognize achievements.
We also encourage our talent, who have an average age of 28, to pursue the ambitions they have in their private lives. The digital transformation helped raise employee satisfaction. As a result, our attrition rate is falling slightly even as China’s economic recovery is pushing the market level higher, especially in healthcare. Also, Sanofi is the only pharma company ever to rank as China’s leading employer, an accolade we achieved two years running in 2020 and 2021."
McKinsey: People often say that while China has a vast supply of data, much of it is poor quality. Can you improve data quality and make it more reliable?
"Saying that China’s data is unreliable is too often used as an excuse not to look at the data. That is a profound mistake. Look at your data, whatever the quality, as it helps you benchmark customer behavior and derive insights. Simply by looking, standardizing, and curating data, the quality will improve rapidly. Then install a proper data governance process with accountable data owners, and give them digital monitoring tools to keep incoming data high quality. Creating digital touchpoints, for example using WeCom to interact with healthcare professionals (HCPs), also allows us to generate our own data, and improve quickly by measuring customer satisfaction and other variables."
McKinsey: What role does advanced analytics play in digital transformation?
"While it has become a bit of a buzzword, like artificial intelligence, advanced analytics is fundamental as it facilitates a data-driven approach to our decision making across the board, rather than relying on subjectivity. For instance, we already have a smart engine that analyzes data from 50,000 touchpoints a day, allowing us to map correlations and then tailor improved customer interactions. This in turn yields higher efficiency and productivity for our field force and marketers. Eventually, we want to connect interactions—physical and digital—and medication delivery together for the best patient experience. This will require advanced analytics."
McKinsey: Three years from now, looking back at what the digital transformation has achieved, how would you define success?
"We aim to be the leader in China’s healthcare medical education ecosystem. We want to be recognized by patients and the healthcare community for how we improve patients’ lives, not only in terms of our best-in-class drug portfolio, but also how we interact with them and address their needs. We will contribute to a patient journey that is largely digitalized, be meaningfully embedded in the digital healthcare ecosystem, and generate new revenues by doing so. We will also have transformed into the most efficient company possible—operating lean, agile, and with an extremely high innovation index."
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(Forrás: McKinsey & Company)