GCC healthcare spend to hit $69 billion by 2020
The face of innovation is changing because of a significant shift toward service and software offerings and away from product-based offerings.
By 2020, companies will have shifted the majority of their R&D spending to service and software offerings according to the 2016 Global Innovation 1000 Study from Strategy&, formerly Booz & Company, part of the PwC network.
The top reason for changing the focus of R&D budgets is to stay competitive according to companies cited. Indeed, according to our study companies which allocated 25 per cent more of their R&D budgets to software offerings than their competitors reported faster revenue growth.
“Many of the world’s major innovators are in the midst of a transformational journey mostly driven by changing — and rising — customer expectations,” says Per-Ola Karlsson, Partner with Strategy&.
“The shift is also being driven by the supercharged pace of improvement in what software can do, including the increasing use of embedded software and sensors in products, the ability to reliably and inexpensively connect products, customers and manufacturers via the Internet of Things, and the availability of cloudbased data storage”.
To support the development of software and services offerings, fewer companies will focus their R&D spending on the electrical and mechanical field.
By 2020, the number of companies reporting that electrical engineers are their top employed engineering specialty will fall by 35 per cent and the proportion of companies who expect that data engineers will represent their largest group of employed engineers will double from 8 per cent to 16 per cent.
Karlsson added, “An increase in software and services, even in more traditional industries, has created a shift towards hiring talent that can develop software and provide platforms to collect and analyse product-related data.
The shift is already changing the way business schools think about their course offerings, and will have profound effects both on education and, more generally, on the future of employment.”
The stress on software is leading to important technological advances across different sectors including the healthcare sector. In particular, digital technology is greatly expanding the reach and efficacy of so-called telemedicine, in which medical professionals can monitor patients and deliver services without having to be physically present.
Connecting medical devices through digital technology, the so-called Internet of Things, is also having a growing impact as it allows for distance monitoring and the collection of data that can lead to efficiency gains and improved diagnostics.
In line with this growth, the study highlights that R&D spending in the global healthcare sector is expected to reach $165 billion by 2018. Surpassing computing and electronics, it is set to become the largest R&D spending industry globally.
Rising R&D spending in healthcare is in line with the growth of the GCC healthcare sector. Total GCC healthcare spending is expected to hit $69 billion by 2020. GCC governments and private companies are making significant investments in the sector to improve the range of medical offerings and services available.