As the phenomenon of mega-mergers starts to take hold, another report, this time from Deloitte Touche Tohmatsu, claims that firms in the life sciences industry need to institute significant changes across the board “to survive the next decade”.
Developed in collaboration with The Economist Intelligence Unit, the DTT report, reveals that 41% of 360 executives surveyed believe that between now and 2015 sales forces will “need to become more versed in economic issues”. They will also have to become more adept at “selling the economic virtues of products to patients, physicians and payers, reflecting the impact of the current economic downturn”.
The study also notes that 26% of executives – 39% in Western Europe – say the risks associated with R&D “are set to rise sharply through the next decade”. While some companies do not anticipate changes to their approach to that area, more than one-third of respondents indicate that they will “mitigate risks attached to R&D by simply spending more money”.
Robert Go, DTT Life Sciences and Health Care Industry group leader, noted that “mounting pricing pressures, expiring patents, high cost of R&D and in some cases, plummeting stock prices, have plagued the industry for the past decade”. He added that this is forcing life sciences companies to “dramatically rethink their business models to survive in the next decade”.
Mr Go goes on to say that “to thrive in the long run, companies cannot simply depend on future returns from new products in their pipelines. As they wake up to new market realities, they must tackle their challenges and address risk in a fundamentally different way, frequently requiring significant transformation”.
According to the survey results, 30% of executives surveyed from pharmaceutical R&D companies say their firms will have to change completely to face future risk, while 82% of executives from biotechnology firms say that “major changes will be needed in some or all parts of their company to address future risk”.
John Rhodes, DTT Life Sciences leader, noted that “most creative industries have encountered challenges when facing disruptive technologies. In the case of life sciences, these companies will survive and prosper by addressing new customer needs, whether economic, health or both”.
He concluded by saying that companies have to be willing to move away in some cases “from past things that made them great to the new realities of delivering innovative medicines and devices within the economic realities of today’s markets.”
