Nearly Two-Thirds of Life Sciences and High-Tech Executives Set Sights on Advanced Analytics and AI to Improve Revenue Optimization and Profitability in 2024

Rhea-AI Summary

Model N, Inc. (NYSE: MODN) published its sixth annual State of Revenue Report, revealing top business priorities and challenges for life sciences and high-tech executives. The report emphasizes the importance of advanced analytics and artificial intelligence in achieving process efficiency and cost-saving measures. Supply chain disruption, changing customer demand, and regulatory changes are identified as top obstacles to innovation. Executives plan to incorporate advanced analytics, AI, and robotic process automation to bolster revenue operations. Model N Chief Strategy and Marketing Officer, Rehmann Rayani, emphasizes the importance of data-driven insights to maximize revenue and remain compliant. The report also highlights industry-specific challenges for pharmaceutical manufacturers, including compliance and communications issues.

Insights

Market Research Analyst

Model N's report on revenue optimization and compliance highlights a significant trend towards the adoption of advanced analytics and AI across the life sciences and high-tech industries. This shift is driven by the need to improve process efficiency and manage costs effectively, which is crucial for maintaining competitive advantage. The emphasis on technology adoption suggests that companies in these sectors are actively seeking solutions to overcome innovation barriers, such as supply chain disruptions, regulatory changes and staffing challenges.

From a market research perspective, the report indicates a potential increase in demand for AI and analytics solutions, which could influence the strategies of companies providing these technologies. As organizations aim to become more data-driven, there is an opportunity for growth in the market for data analytics and process automation tools. The willingness of executives to contribute to industry benchmarks also reflects a collaborative approach to tackling common challenges and could lead to the development of standardized best practices, benefiting the industry as a whole.

Financial Analyst

The revelation that a majority of executives consider their current revenue optimization approaches inadequate suggests impending investments to enhance these processes. This could have financial implications for the companies involved, potentially leading to short-term increases in operational expenses due to the implementation of new technologies. However, the long-term benefits of such investments, including improved profitability and compliance, could outweigh the initial costs.

Investors should monitor the adoption rates of AI and analytics within these industries closely, as they could significantly impact the financial performance of the companies that successfully integrate these technologies. Furthermore, the focus on becoming more data-driven and the use of external data resources could lead to more informed decision-making and potentially better financial outcomes for these companies.

Legal Expert

Compliance remains a critical concern for executives in life sciences and high-tech manufacturing, as constant regulatory changes pose a challenge to maintaining compliance. The deployment of AI and analytics to enhance compliance processes indicates a proactive approach to address these legal complexities. As companies strive to remain compliant, there is an increased need for legal expertise to navigate the evolving regulatory landscape.

Additionally, the interest in contributing to industry benchmarks reflects a move towards transparency and collective improvement. However, it is important to ensure that such data sharing complies with antitrust laws and does not lead to the exchange of competitively sensitive information. Legal professionals will play a crucial role in guiding these initiatives to ensure they are within legal boundaries.

Model N’s 2024 State of Revenue Report uncovers how pharmaceutical, medical technology, and high-tech manufacturing executives solve for revenue optimization and compliance.

SAN MATEO, Calif., Feb. 06, 2024 (GLOBE NEWSWIRE) -- 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.

More About the 2024 State of Revenue Report
This report, commissioned by Model N with research conducted by Dimensional Research, is based on the results of a survey of more than 300 C-suite executives directly responsible for revenue management at large pharmaceutical, medical technology, high-tech manufacturing, or semiconductor companies. Certain questions were repeated from similar studies in 2020-2023 to enable trend analysis.

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About Model N
Model N is the leader in revenue optimization and compliance for pharmaceutical, medtech, and high-tech innovators. Our intelligent platform powers your digital transformation with integrated technology, data, analytics, and expert services that deliver deep insight and control.

Our integrated cloud solution is proven to automate pricing, incentive, and contract decisions to scale business profitably and grow revenue. Model N is trusted across more than 120 countries by the world’s leading pharmaceutical, medical technology, semiconductor, and high-tech companies, including Johnson & Johnson, AstraZeneca, Stryker, Seagate Technology, Broadcom, and Microchip Technology. For more information, visit www.modeln.com. 

About Dimensional Research
Dimensional Research provides practical market research for technology companies. We partner with our clients to deliver actionable information that reduces risks, increases customer satisfaction, and grows the business. Our researchers are experts in the applications, devices, and infrastructure used by modern businesses and their customers.

Attachment

• Model N State of Revenue Report 2024

FAQ

What is the ticker symbol for Model N, Inc.?

The ticker symbol for Model N, Inc. is MODN.

What are the top business priorities and challenges revealed in Model N's State of Revenue Report?

The report emphasizes the importance of advanced analytics and artificial intelligence in achieving process efficiency and cost-saving measures. Supply chain disruption, changing customer demand, and regulatory changes are identified as top obstacles to innovation. Executives plan to incorporate advanced analytics, AI, and robotic process automation to bolster revenue operations.

What are the industry-specific challenges highlighted in the report?

The report highlights industry-specific challenges for pharmaceutical manufacturers, including compliance and communications issues.

What percentage of executives plan to incorporate advanced analytics for revenue optimization?

Survey responses showed plans to bolster revenue operations by incorporating advanced analytics (68%), AI (59%), and robotic process automation (46%).