Positive and Negative Consequences of the Digital Transformation of the Pharmaceutical Industry

Karonsky Yeruslan Vladimirovich Postgraduate student, Institute of International Law and Economics named after A.S. Griboedov 66A Zeleny Ave., Moscow, 111396, Russia dlipezina@mail.ru

Amirkhanov Aziz Abdullaevich Postgraduate student, Institute of International Law and Economics named after A.S. Griboedov 66A Zeleny Ave., Moscow, 115533, Russia, Moscow region azizamirkhanov@gmail.com

IntroductionModern conditions of socio-economic life, of which digitalization of all processes has become an integral part, dictate the need for digital transformation of each economic entity in order to increase competitiveness, and often simple survival in the prevailing economic conditions.

In most cases, digital transformation has positive consequences for the enterprise of any industry, which is due to the reduction of enterprise costs, optimization of logistics chains, acceleration of business processes and other advantages of digital transformation. However, digital transformation also entails negative consequences due to emerging risks, including financial ones, rising unemployment and the need to redistribute the labor market due to the disappearance of some professions. Knowledge of the positive and negative consequences of the digital transformation of companies contributes to increasing the efficiency of its activities, which determines the relevance of the research topic in modern conditions.

Methods and results of the study The reliability of this study is provided by extensive empirical material and a system of its study.

The research methods include content analysis, statistical data analysis, comparison, description, generalization.

Positive consequences of the digital transformation of the pharmaceutical industryThe total digital transformation of all areas of socio-economic life in modern conditions necessitates a deeper study of not only the positive aspects and consequences of this process, but also the negative trends caused by the digital transformation of companies' business processes.

These issues are particularly relevant in the pharmaceutical industry, as the coronavirus pandemic has given a significant impetus to the digital transformation of companies in this industry in the last two years.

The most important among the positive consequences of the digital transformation of pharmaceutical companies is the increase in labor productivity. Computer systems and robots are engaged in monotonous activities that take up a lot of the employee's time. Whereas the employee is released for more important operations, which speeds up business processes, saving time resources.

Cost reduction is an important consequence of the digital transformation of pharmaceutical companies. First of all, this concerns saving on labor costs, since personnel whose functions are replaced by machines are released. Innovative, adaptable to new conditions technological solutions allow you to configure automated systems for a certain level of profitability of processes, based on the specified external conditions, providing flexibility in making managerial decisions. At the same time, digital transformation makes it possible to simplify functional interactions between employees within the company and with external contacts, speeding up the exchange of information data. This significantly affects the speed of optimization of business processes and projects. A study by PwC Finance Efficiency Benchmarking indicates that digitalization of business processes allows for a 40% reduction in time spent on financial transactions, which confirms its effectiveness ^[16].

Due to the development of the digital transformation of pharmaceutical companies, new jobs and functions are emerging, for example, for machine maintenance or coordination and control of their actions.

The development of remote trade in pharmaceuticals, albeit with restrictions and certain conditions, made it possible to simplify the processes of product promotion on the market, which was especially important in the context of the coronavirus pandemic and the associated transition to remote forms of interaction. Among other things, all this has become possible thanks to electronic money, which has been developed in recent years. Non-cash payments in pharmacies during the pandemic have become the most popular, as they are safer compared to cash ^{[5, 10]}.

Along with the digital transformation, the structure of the industry itself is changing. The main value of digital transformation for the pharmaceutical industry lies in its reversal towards a specific person, which is called the personalization of the industry. The so-called personalized medicine is the integration of diagnostics with pharmaceuticals. As a result of the application of a personalized approach, pharmaceutical products are transformed, increasing additional related services for themselves, which subsequently facilitates the integration of pharmaceutical products into the general healthcare system. Therefore, experts currently note the transition from the so–called "transactional model" in the healthcare industry to the newest model - value-oriented ^[1].

Digitalization transformation contributes to the improvement of pharmaceutical companies as a result of the availability of big data available to developers. This contributes to a clearer stratification of patients. This makes it possible to identify groups of patients for whom certain drugs or services were not effective ^[14]. After that, the company's focus becomes focused on these target groups in order to improve products.

Computer pharmaceuticals and modeling can reduce the cost of drug development by about 50% and intensify the use of existing technologies ^[1].

Also, in the context of the digital transformation of pharmaceutical companies, the possibility of increased control over the work of personnel through digital technologies is positively assessed. Tracking and control systems allow you to identify inefficient functions and employees, optimize work processes, both in time and quality of execution, identify fraud and threats of information leakage.   

Negative consequences of the digital transformation of the pharmaceutical industry

With all the variety of positive aspects of the digital transformation of pharmaceutical companies, difficulties and negative consequences have arisen. The most important of them is the growth of cybercrime as a result of the digitalization of data.

Over the past three years, the number of leaks of information transmitted electronically in the world totals tens of billions, and the estimated damage reaches $ 2.5 trillion each year. Companies are strengthening information security measures, the costs for this reach $ 170 billion annually ^{[6, p. 14]}. In the last five years, the number of cyberattacks in Russia has increased 25 times. It should also be noted that cybercrime in our country is characterized by a rather low detection rate (one solved crime out of ten) ^{[11, p. 186]}.

However, a small number of Russian companies pay attention to cybersecurity. Most companies prefer not to spend extra money on this until this situation has affected them. Statistics show that over the past year, the proportion of companies with their own cyberattack monitoring center has increased to only 7% from 1%, which is a very low indicator. And the share of companies that have special cyber defense programs has increased from 9% to 14%, which is also small. However, the share of companies that do not use such programs at all is decreasing – from 23% to 17%, which is a positive trend ^{[2, 8]}.

The problem of the widespread use of not only big data in a generalized form, but also personal data in the conditions of total digitalization, changes the boundaries of confidentiality, both in the professional and private sphere, which threatens the complete disappearance of privacy. In these conditions, many people cannot fully control how their personal data is used, often unaware of what is included in their characteristics when compiling a so-called "digital portrait". This is also a negative consequence of the digital transformation of companies' business processes.

In addition, among the negative consequences of the digital transformation of pharmaceutical companies, it is also necessary to note a significant release of personnel. Computers and robots take over routine work or simplify it. As a result, the human factor is only necessary to control the machines. This entails such a negative consequence as unemployment and the need to redistribute professions in the labor market. People who have lost their jobs as a result of digital transformation may remain unclaimed as a result of the disappearance of some professions, replaced by automated systems and robots. This, in turn, causes the need for retraining and a change of profession ^[9]. Thus, Mckinsey experts predict that by 2030 from 75 to 375 million workers, which is from 3% to 14% of the working-age population in the world, will have to retrain, while others will have to adapt, due to the fact that their professions should develop in parallel with the development of automation ^[15].

The other side of this issue is due to the fact that with too active redistribution of professions in the labor market, educational institutions do not keep up with these rates, since the period of education lasts on average 5 years, while the processes of digitalization have accelerated in the last 2-3 years. The result of this was a shortage of specialists in the field of digitalization of a particular industry, especially industries with their own specific features, such as pharmaceuticals, where a specialist will not be able to independently adapt to innovative technologies ^{[7, p. 63]}. 

The undoubted negative consequence of the digital transformation of pharmaceutical companies is the result of its inefficient and incorrect implementation, when a lack of knowledge and competencies is not allowed to competently take advantage of digital transformation ^{[4, 6]}. The shortage of personnel in the field of digital transformation remains an acute problem that slows down the processes of digitalization of the pharmaceutical industry.

Pharmaceutical companies have moved into the digital environment with a rather sharp leap, which revealed their unavailability, primarily in the field of availability and efficiency of infrastructure, as well as insufficient content and often a low level of competence of specialists ^[13]. This caused problems in building communications with consumers and doctors based on digital communication channels. In addition, at the moment pharmaceutical companies do not have enough competencies in the field of drug development, as such competencies as biotechnology, information technology, data analysis, diagnostics and other innovative technologies are being added.

In this regard, it is also necessary to note the problem of age lag. It is harder for older workers to understand and retrain for new technologies, which creates an additional burden at the same level of responsibility, increases the psychological stress of employees, increasing the degree of dissatisfaction ^{[3, 12]}. All this negatively affects the financial results of the organization.

Conclusion Thus, the processes of digital transformation of pharmaceutical companies undoubtedly entail positive consequences in the form of labor productivity growth, cost reduction and optimization of business processes, acceleration of product promotion on the market, etc.

However, digital transformation can also have a negative impact on companies and society as a whole, primarily in terms of ensuring privacy and cybersecurity, both for consumers and companies. In addition, the social consequences of digital transformation, such as unemployment and the need to retrain workers, have a negative impact on society and cause the need to redistribute the labor market.   In order to overcome the identified negative consequences of digital transformation on the pharmaceutical industry in Russia, it is necessary to address issues of strengthening cybersecurity, as well as the issue of retraining of employees and the redistribution of the labor market.