Posted: 06 Dec. 2022 6 min. read

2023 Outlook for Life Sciences

Inflation, talent, AI are top issues for biopharma and medtech

By Pete Lyons, National Life Sciences sector leader, Deloitte Consulting LLP

Artificial intelligence (AI), machine learning (ML), analytics, and business intelligence could have a significant impact on medical device manufacturers and biopharmaceutical companies in 2023, according to a survey of C-suite executives conducted by the Deloitte Center for Health Solutions. At the same time, those executives expect inflation, a choppy economy, on-going supply chain disruptions, and competition for top talent will shape their strategy. (Click here to see our complete survey results.)

The survey results are based on responses from 131 C-suite executives representing US biopharmaceutical companies, medical device manufacturers, health systems, and health plans.

Life sciences respondents agreed that inflation is likely to have a major impact on their organizations in 2023. While inflation appears to be stabilizing, the higher cost of consumer goods is making it difficult for some people to pay for medical services, therapies, and devices. As a result, health care consumers might put off buying prescriptions or medical devices that can help them treat or monitor a condition. I see this as a potential challenge for our medtech and biopharma clients in 2023. But it could also be an opportunity. Companies that can make their products more accessible and affordable to patients could drive more volume. This could also help companies build trust with their consumers.

Based on our survey findings, and conversations with our life sciences clients, here’s what I expect for biopharmaceutical companies and medical device manufacturers in 2023. (Next week, Tina Wheeler will offer her 2023 Outlook for the health care sector).

What can medtech expect?

Like many industries, medtech has gone through some pretty challenging times since the start of the COVID-19 pandemic. From an industry perspective, I see tremendous opportunity for medtech companies across the board as they continue to reorient themselves for a post-pandemic future. The medtech sector grew in 2022 and I expect that growth will continue, and possibly accelerate in the year ahead. Here are three trends to watch:

  • Technology companies: The lines between medical devices and consumer-targeted health devices are blurring. I expect technology companies from outside the sector will continue to make inroads into the medtech space—particularly in digital health and data. Some technology companies might be more experienced than traditional medtech players when it comes to the use of AI, ML, and other digital technologies. But tech companies generally don’t know the ins and outs of the health care space like medtech companies. And that could be an opportunity for medtech. According to Deloitte’s latest survey of health care consumers, people are using fitness trackers and health-monitoring devices more than ever. Nearly half of the 4,545 people we surveyed (49%) use wearables, digital assistants, or smart devices to measure fitness/health improvement. About one-third of those consumers said they use a wearable device to monitor health issues (e.g., blood sugar, blood pressure, breathing function, mood), up from 28% in 2020 and 24% in 2015. Data generated by a wearable device could eventually provide care teams with a more holistic view of their patients, particularly when that information is integrated with traditional clinical data. It also could encourage consumers to modify their behavior by providing feedback in real-time (see Left to our own devices: Can wearables keep us healthy?) However, wearables are vulnerable to patient compliance. That might be where traditional medtech has an edge over technology companies. Medtech companies can design/build implantable devices that don’t suffer the same patient compliance challenges. I am convinced the future will be robust for both types of organizations. 
  • Research and development (R&D): About 80% of surveyed medtech executives said the development of innovative products would be a top priority in 2023; and 75% intend to focus more on their R&D investments. Respondents also indicated they intend to invest more in digital innovations in the year ahead and will try to build more resiliency into the supply chain.
  • Talent: Medtech respondents said they are looking to recruit people who have expertise in digital technologies. Until about five years ago, I don't think I had ever heard of a chief digital officer in a life sciences company. Today, many companies have one. In some cases, the chief information officer has become the chief digital officer or chief digital information officer. Given the increased importance of technology and digital capabilities, many of these executives report directly to the CEO. Recent layoffs that have been reported at some large technology companies could be good news for life sciences organizations that are trying to recruit data scientists and other professionals who have expertise in digital technology.

What can biopharma expect?

Talent is also expected to be a top issue for biopharma companies heading into the new year. About 90% of surveyed biopharma executives intend to invest in workforce development and retention—including a focus on diversity, equity, and inclusion (DEI). Attracting the best and brightest (and retaining them) is expected be an important issue in 2023. Here are three other trends to watch:

  • Growth in next-gen therapies: The continued development of next-generation therapies and other innovative products topped the list of actions that biopharma executives said they intend to take in the year ahead. Nearly all (95%) of survey respondents cited this as an “important” or “very important” strategy. About 20 gene therapies and 10 CAR-T treatments are expected to be approved in 2023, and even more specialty therapies are on the horizon. The US Food & Drug Administration (FDA) has received more than 3,000 Investigational New Drug (IND) applications to study CGT in clinical trials.1 Determining how to pay for high-cost CGTs is likely to be quite different than financing oncology drugs and other expensive therapies. Case in point: In 2022, the FDA approved two therapies that are priced at $2.8 million and $3.0 million, respectively. Other similarly priced products are likely on the way (see Multi-million-dollar therapies may alter payment models). Growth in specialty therapies will likely require companies to focus on the consumer experience in a much different way.
  • New regulations: Every pharma executive we polled said they expected regulatory changes (e.g., the Inflation Reduction Act, price transparency, interoperability) would have an impact on their organization’s strategy in 2023. Drug pricing is often a top issue for lawmakers in Washington, D.C. The Inflation Reduction Act of 2022, for example, includes several provisions intended to reduce the price of prescription drugs for Medicare beneficiaries, as well as for the federal government. Among other provisions, the law caps out-of-pocket drug spending under Medicare Part D, which could substantially reduce costs for beneficiaries who rely on high-cost specialty therapies.2 As more of specialty therapies come online in 2023 and subsequent years, biopharma companies may need to justify the cost to health plans as well as to government agencies inside and outside of the US.
  • Trust: While many people trust the drugs they take, the pharmaceutical sector has historically been among the country’s least trusted industries.3 More than 70% of biopharma executives surveyed said that improving trust will be important in 2023. R&D is a complex, multiyear endeavor with many failures and learnings. How R&D shapes investments and financial returns can be difficult to explain to the public. Pricing can also be complicated and poorly understood by the public, which could add to distrust (see Overcoming biopharma's trust deficit). Some companies have recently opted to promote their brand rather than just the therapies they produce. If this strategy is successful, we could see more pharmaceutical companies promoting themselves as they look to build their own brand and earn trust among the public

I have been focused on life sciences for nearly 20 years and have never experienced a period that has been as challenging or transformative to the industry as the last three years. While I expect life sciences organizations will continue to face (and overcome) challenges in 2023, I also anticipate we will see many new innovations and more triumphs that will help to improve our health and well-being for the year and years ahead.

Happy New Year!


1 Gene therapy pipeline 1Q2022-2Q 2025, CVS Health, February 2, 2022; Approved cellular and gene therapy products, FDA, September 19, 2022; The state of the industry, Alliance for Regenerative Medicine, January 26, 2021

2 Explaining the prescription drug provisions in the Inflation Reduction Act, Kaiser Family Foundation, September 22, 2022

3 The trust crisis, Harvard Business Review, July 23, 2019

Watch our 2023 Life Sciences and Health Care Outlook Dbriefs webcast on-demand.

Latest news from @DeloitteHealth

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Return to the Health Forward home page to discover more insights from our leaders.

Subscribe to the Health Forward blog via email

Get in touch

Pete Lyons

Pete Lyons

National sector leader for Deloitte’s Life Sciences practice

Pete, a principal in Deloitte Consulting LLP, is the national sector leader for Deloitte’s Life Sciences practice. In this role, he leads a multi-disciplinary team who serves clients in the pharmaceutical, biotechnology, medical technology, and consumer health care segments through consulting, advisory, audit, and tax services. Pete is responsible for the overall strategic direction of the Life Sciences practice as well as its go-to-market strategies and resources. He also serves in the role as Life Sciences Consulting Leader. His past roles include US Consulting Client Excellence leader where he led the group of Consulting Account Leaders across our 400+ Advantages Client Portfolio clients and focused on how we more effectively bring our services to market through our client leaders. Pete has 25 years of consulting experience focused primarily on helping Life Sciences drive significant transformations across the strategy, operations, and technology spectrum. In addition, Pete also has an extensive background in finance, project, and resource management. Pete earned a B.S. in Economics and Information Systems from Boston College and an MBA from the Kellogg School of Management at Northwestern University.