KPMG Releases Life Sciences CEO Outlook Report
KPMG Life Sciences CEO Outlook has highlighted a range of challenges predicted by CEOs in the life sciences sector. Factors such as pricing pressures and patent expirations may affect the sector's growth, with many CEOs expecting subdued growth rates. However, the survey reveals a strong focus on leveraging AI, digitalization, and M&A to navigate future uncertainties and improve profitability, with supply chain disruptions and regulatory concerns remaining an ongoing significant risk.
Facing pricing pressures, patent expirations and rising R&D costs, life sciences CEOs expect slower growth over the next three years. Based on research from KPMG, this article finds that sector CEOs are exploring opportunities to boost their trajectory using new technologies such as generative AI – supported by a stronger digital foundation. At the same time, appetite for M&A remains strong with many CEOs saying they will make strategic deals when markets stabilize.
As pricing pressures mount and the cost of delivering novel medicines increases, life sciences CEOs are dealing with a growing list of complex challenges. Yet there are also significant opportunities on the horizon – AI, precision medicine, digitalization and more. The big question is whether life sciences organizations are prepared to take advantage.
To find out, we surveyed 118 life sciences CEOs globally to ask them about the risks and challenges they face, their expectations for the next three years and the opportunities driving their businesses forward. Here are the key highlights that emerged:
The majority of life sciences CEOs expect anemic growth over the next three years. Fifty-six percent say they expect to achieve growth of less than 2.5 percent per annum. Pricing pressures and patent expirations are likely influencing expectations, along with a recognition that the high cost of promising new gene therapies and other precision medicines may limit adoption in certain markets.
Life sciences CEOs are worried about supply chain disruption and trade regulation. Supply chain disruption emerged as the top risk as ranked by life sciences CEOs. And more than three quarters expect trade regulation to have a major impact on their organization within the next three years. Life sciences CEOs are increasingly worried about supply chain concentration risks as geopolitical tension rises.
They are looking to AI and emerging technologies to improve profitability and agility. Sixty-two percent of life sciences CEOs say that generative AI is a top investment priority for their organization, with profitability improvements cited as the top benefit. Yet 53 percent say they are worried about the ethical considerations of the new technology.
Future growth will be driven by digitalization and connectivity across the business. Life sciences CEOs say they will be placing more capital investment into new technologies versus developing workforce capabilities. M&A will continue to be a major factor, but CEOs would like to see market conditions stabilize and the cost of financing fall.
Public trust remains a key priority and CEOs are seeking to improve their capabilities. Life sciences organizations have a long history of investing into health, social and community programs. Yet just 70 percent are confident they have the right reporting capabilities and only 67 percent say that ESG has been fully embedded into the business as a means of value creation.
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