During our inaugural industrial transformation (IX) event, The IX Event, principal analyst Tom Comstock led a roundtable discussion about IX in regulated industries, focusing on aerospace and defense and life sciences (pharmaceuticals/biotech, medical device, etc.). These industries provide an interesting contrast in approaches to IX, with one leading the way and one trailing.

The aerospace and defense industry, for example, has been moving ahead more quickly than others with IX initiatives, with 59% currently implemented or in pilot stages. Life sciences companies, however, are right on target with broader industry averages at 47%. Aerospace and defense companies have a three-year timeline, while life sciences firms have a three to five-year focus.

Additionally, the scope of programs in each of these sectors is markedly different. Aerospace and defense firms have a very broad scope with a primarily technically oriented program definition. Life sciences, on the other hand, show a lack of focus on manufacturing and instead focus on finance, HR, regulatory, and quality issues.

Perhaps most importantly, the funding models in these industries are polar opposites. Life science companies reallocate budgets or provide incremental budgeting only, while aerospace and defense organizations have already formed conclusions about IX programs: 28% are investing seriously while 31% expect not to invest at all.

These differences lead to the possibility that life sciences may be leading to stagnation in IX initiatives:

• Life science companies are not staffing teams according to best practices our research shows as having the greatest impact.
• Improving operational technology (OT) systems could be a critical transformative opportunity for most manufacturers in life sciences, yet it is not a priority in the functional scope of most programs. (Our recent data shows that nine out of ten of the IX use cases that offer the highest return for effort are in manufacturing where life sciences companies are 33% less likely to focus compared to IX Followers, and 51% less likely than IX Leaders.
• Life sciences companies may be overly focused on IIoT and other technologies at this stage of the IX journey.

Sanofi's Transformation Journey: Bucking the Trends in Life Sciences

Paul Logue, VP and Head of Digital Transformation at Sanofi Biologics, gave a presentation on Sanofi’s IX initiatives. The company has focused on three areas for IX: biologics, industrial performance, and digitalization. (Already you can see that the organization’s focus on industrial performance is fundamentally different than the trends we’ve identified in the broader life sciences industry.)

Sanofi has made significant investments in production over the past five years — again, already past the IX timeline for most companies in this sector. The company has pursued investments in integrated industrialization, connected plant, connected teams, smart quality, and real-time supply chain. These investments align very well with priorities established in an upcoming LNS Research report on IX use case priorities and ROI.

Building on the successes of the last five years, Sanofi is now focused on scaling past lighthouse plants to its legacy network, and on implementing change management in different environments and cultures.

Key Takeaways

• Industrial Transformation (IX) in regulated industries appears to be driven more by each company's IX profile rather than the nature of the regulations they face.
• Life sciences companies are missing an opportunity for real transformation in industrial operations, where nine of the top ten use cases exist.
• Aerospace and defense companies are among the leaders in IX and are taking a pragmatic approach to investments in IIoT technologies.