Deloitte 2015 Global Life Sciences Outlook
2015 prescription for life sciences sector in SEA
SINGAPORE, 11 February 2015 — Aging populations, chronic/lifestyle diseases, emerging-market expansion, and treatment and technology advances are expected to spur life sciences sector growth in 2015. However, efforts by governments, health care providers, and health plans to reduce costs, improve outcomes, and demonstrate value are dramatically altering the health care demand and delivery landscape. This is according to the report, 2015 Global life sciences outlook: Adapting in an era of transformation, released by Deloitte Touche Tohmatsu Limited’s Life Sciences & Health Care industry practice.
A dynamically changing clinical, regulatory, and business landscape is requiring that pharmaceutical, biotechnology, and medical technology companies adapt traditional research and development (R&D), pricing, supply chain, and commercial models to:
- Support value-based markets – Many countries’ public and private health care systems are moving from volume-based to value-based care.
- Contain costs – Governments and other payors are instituting price controls and increasing their use of generics and biosimilars to contain drug and device costs.
- Focus on emerging markets – Slowing revenue growth in developed countries is prompting entry and expansion in new, up-and-coming markets.
- Maintain regulatory compliance – A growing list of regulatory requirements and expectations are imposing new challenges on the sector.
Indeed, government, provider, and payor efforts to control health care spending, reduce variations in care, and engage consumers in self-care are among the driving forces behind the health care industry’s transition from volume-based to value-based care. For life sciences companies, these trends represent a paradigm shift in the market structure and call for innovative approaches to commercialisation and pricing. In a new value-driven health care system, life sciences companies will need to provide pharmaceuticals that demonstrate real, measurable value to stakeholders.
Furthermore, as growth in developed markets slows, life sciences companies are expected to continue expanding their presence in emerging markets through acquisitions and joint ventures. Leading organisations have already begun looking beyond the “traditional” emerging markets of Brazil, China, India and Russia for opportunities to establish or increase their presence in “next” emerging markets.
“Innovation is becoming the spearhead for life sciences companies looking to enter, grow and thrive in today’s market,” commented Mohit Grover, Life Sciences & Health Care Leader for Deloitte Southeast Asia. “In the past, Southeast Asia is generally viewed by life sciences companies as secondary to traditional mainstay markets due to lower purchasing power and overall health care system maturity. But it is increasingly gaining importance given how its population growth rates are expected to outstrip those of other geographies and the epidemiological shift from infectious diseases to chronic diseases that mirrors western markets. For example, Indonesia, the largest pharmaceuticals market in this region, with its growing population and healthcare reforms, is likely to witness a greater foreign presence in its pharmaceutical sector with the relaxation of foreign ownership and drug distribution policies.”
“With the transition to value-based care, an increasing number of players are also looking at Southeast Asia as a promising springboard to make bold moves in business model innovation, for instance, by creating a second brand, forging long-term strategic partnerships, and upgrading supply chains to support near-sourcing of raw materials and finished products to nearby high-growth markets. Singapore, for instance, has a substantial and expanding pharmaceuticals production base, and is a major re-exporter of pharmaceuticals,” added Mohit.
Moving forward, infrastructure improvements and foreign investment are also expected to jump-start local innovation in the sector in numerous forms, including locally based clinical trials to improve market access, shorten licensing approval periods, or produce a genuine pioneering product.
Looking at the regulatory landscape globally and in the region, while the primary driver is patient health, safety and privacy, authorities’ approaches to protecting patients can vary widely from market to market. Adding to this complexity are the factors of rapid change, increased scrutiny, more sophisticated risk-monitoring techniques, and coordination across agencies and regions.
“Today’s life sciences sector has been likened to the financial services industry of five to 10 years ago, with product safety issues, privacy breaches, intellectual property tangles, inappropriate marketing practices, and corruption incidents pushed to the forefront. Each of these has the potential to result in product recalls, adverse media coverage, brand recognition damage, revenue or market share losses, as well as regulatory fines which are growing in size and significance,” said Mohit.
As regulators and regulations continue to “grow teeth”, life sciences companies will need to demonstrate that they have active and comprehensive compliance programs across their business and clinical operations, including commercial, R&D, and supply chain.