2015 Global life sciences sector outlook
Adapting in an era of transformation
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 is dramatically altering the health care demand and delivery landscape. It is becoming increasingly evident that the global life sciences sector is operating in an era of significant transformation.
The report outlines some of the top issues facing the global life sciences sector, provides a snapshot of activity in a number of geographic markets, and suggests considerations for companies as they seek to grow revenue and market share in 2015 and beyond.
Top life sciences sector issues for 2015
The extended nature of life sciences product development mandates that sector stakeholders adopt a long-term approach to strategic planning, portfolio management, and market expansion. However, organizations must also prepare for and react to near-term challenges and opportunities. Four major trends are expected to capture the sector’s attention in 2015: searching for innovation and growth; changing regulatory and risk environment; preserving and building shareholder value; and preparing for the “next wave.” The resulting challenges and opportunities can be both global and market-specific. Read on to learn more about these trends and suggested considerations for stakeholders.
Searching for innovation & growth
Companies in this sector continue to look at M&A as they search for innovation and growth opportunities and to offset the general decline in R&D productivity. Partnerships and informal collaborations also will comprise an important part of the picture as companies continue to grapple with a rapidly shifting landscape, look to grow distribution networks, and leverage previous investments. New insurance and payment models, rapidly changing consumer demographics, and an explosion of technology-based treatment innovations are driving both horizontal and vertical M&A activity.
Acclimating to a changing regulatory & risk environment
Regulatory challenges in today’s global life sciences sector - product safety issues, security & privacy breaches, intellectual property (IP) tangles, inappropriate marketing practices, and corruption incidents pushed to the forefront - each of which can result in government fines (which are growing in size and significance), product recalls, adverse media coverage, brand recognition damage and revenue/market share losses.
Adding to this complexity are the factors of rapid change, increased scrutiny, more sophisticated risk-monitoring techniques, and coordination across agencies and regions. 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.
Preserving & building stakeholder value
Global life sciences companies deal with pricing pressures, generics competition, margin erosion, supply chain issues, and regulatory constraints, all of which can limit their ability to grow revenues. At the same time, rising R&D expenses, marketing & sales outlays, and general operating cost increases can exert pressure on gross margins. Still, companies are expected to preserve and build shareholder value.
Fortunately, improving R&D productivity, recent increases in NME approvals, and expanding product pipelines—combined with ongoing cost containment—suggest that fundamentals are aligning to increase shareholder value. Operational transparency and addressing risks and improving processes within finance & accounting (F&A) operations can help to foster shareholder confidence. In addition, optimizing the mix of sales, marketing, and market-access expenditures at the local market level is essential to increasing shareholder value. However, a number of external and internal forces have the potential to move the needle up or down; among them, price controls & access, generics, and supply chain operations.
Preparing for the 'next wave'
Life sciences companies are also adapting their business models to take advantage of the ‘next wave’ of opportunities. Cost control efforts are leading to greater importance on value-based care (VBC). Also, comparative effectiveness research (CER) is becoming a major factor in a treatment’s market uptake. Life sciences companies will need to develop capabilities to provide real-world evidence of positive patient outcomes to avoid exclusions and sales losses.
The number and diversity of life sciences customer segments suggest that “one-size-fits-all” approaches to understanding and addressing their needs as the industry explores new engagement models with an ever-evolving set of customers. The changing roles and influence of stakeholders along the care continuum call for a more cross-functional, collaborative customer model that effectively targets all critical decision-makers
Adapting business models to account for innovations like personalized medicine, applying technology innovation to health care delivery, talent strategies, and continued expansion and presence in emerging markets will further present challenges and opportunities for companies as they adjust to and meet the needs of this increasingly changing sector.
Explore market updates and local implications for the following countries by selecting the individual country names below: