#EXAMPLE OF PENETRATION PRICING PRODUCT FULL#

#EXAMPLE OF PENETRATION PRICING PRODUCT FULL#

Readers will find full details in the appendix of “ The economic potential of generative AI: The next productivity frontier.” Our quantification of the economic impact reflected a bottom-up approach: expert opinion, the results of McKinsey’s internal experiments, and published research helped us estimate the potential quantitative range of impact, in both cost savings and revenue uplift, for specific use cases (for instance, the percentage of time saved when generative AI tools review the clinical-research literature).įinally, we scaled the impact to the life-science industry, basing our estimates on the percentage of domain operating costs spent on tasks related to a generative AI use case (for example, the percentage of life-science R&D costs allocated to reviewing clinical research) and the percentage of industry revenues spent on a domain (such as the percentage of life-science revenue allocated to R&D). Generative AI co-pilots for sales representatives, for example, were mapped to the commercial domain.įor generative AI use cases (such as synthesizing scientific literature) that affect multiple life-science domains, we based our allocation of the economic impact on the relative size of the relevant domains, as well as expert opinion. Each of them was then mapped to a specific life-science domain-an exercise based on the typical activities performed within it. We based the potential economic impact of gen AI in different domains of the life sciences on the McKinsey Global Institute’s analysis of its impact in 63 individual use cases. These leaders used their extensive work helping clients deploy gen AI over the past year to identify the use cases most likely to spark meaningful near-term productivity gains and economic value. Those numbers in hand, we tapped the experience and knowledge of McKinsey’s leaders in each domain. So we dug deeper into MGI’s data and modeling of 63 generative AI use cases in the life sciences and calculated the potential economic impact for five industry domains: research and early discovery, clinical development, operations, commercial, and medical affairs. With compelling new gen AI use cases emerging, we were eager to understand, in a more granular way, the most promising areas of potential value (see sidebar “A guide to our methodology”). AlphaFold2, ESMFold, and MoLeR, for example, all use deep learning to help predict the structures of nearly all known proteins, transforming our understanding of their underlying diseases. Even before last year’s explosion of interest, researchers were applying complex AI models to unlock the mechanisms of disease.

Pharmaceutical companies, of course, have long been in the vanguard of artificial intelligence. This report is a collaborative effort by Chaitanya Adabala Viswa, Joachim Bleys, Eoin Leydon, Bhavik Shah, and Delphine Zurkiya, representing views from McKinsey’s Life Sciences Practice.

Example of penetration pricing product