Deloitte: Life science companies preparing for next wave

25 March 2015

In an attempt to boost competitiveness, life science companies are trying to gain competitive advantage by preparing for the ‘next wave’ of opportunities in the industry, research by Deloitte shows. To prepare well, science companies should adopt a ‘digital agenda’ and use technology to advance their products and care. As part of the ‘new wave’, Deloitte sees a shift from volume-based to value-based care.

Professional services firm Deloitte recently released its '2015 Global Life Sciences Outlook' report, titled ‘Adapting in an era of transformation’, in which it examines the current state of the life sciences sector; describes trends impacting markets and organisations; and suggests considerations for stakeholders as they seek to grow revenue and market share.

Deloitte - 2015 Global life sciences outlook

Deloitte foresees an increase in global annual spending on healthcare as a result of aging populations, chronic/lifestyle diseases, emerging-market expansion, and treatment and technology advances. According to the research, global healthcare spending is expected to grow at an annual rate of 5.2% between 2014 and 2018, as a result of the recovering global economy. However, as a percentage of GDP, spending is expected to decrease from 10.6% to 10.3% by 2018.

Sector growth

The Middle East and Africa are forecasted to see the biggest growth, with an annual average increase of 8.7% over 2014-2018, this is, according to Deloitte, partly due to the population growth and efforts to expand access to care. Asia and Australasia will see the second biggest increase (8.1%) as a result of the rollout of public health care programs combined with growing consumer wealth. The Americas follow with 4.9% for North America, partly due to expanded access for consumers to health care, and 4.6% for Latin America, where several governments are trying to improve public health care systems. The slowest growth is expected in Western Europe, where countries try to fight the Eurozone crisis and will see an annual increase of 2.4%.

Growth per region

This year’s edition of the life sciences outlook report shows that four trends are expected to influence the healthcare industry in 2015: searching for innovation and growth; changing regulatory and risk environment; preserving and building shareholder value; and preparing for the ‘next wave.’ 

Preparing for the ‘next wave’
Life sciences companies are adapting their business models to take advantage of the ‘next wave’ of opportunities in the industry, with the ability to rapidly adopt and commercialise new technological and clinical discoveries becoming increasingly essential to gain a competitive advantage in a transforming marketplace. The researchers see opportunities for life sciences companies that embrace the ‘digital agenda’ and use technology, big data, and analytics to advance product development, such as personalised medicine, and care delivery. Other opportunities lie in expanding to emerging markets and in the development of talent strategies that focus on the future. By building integrated, global HR and talent operating models, companies will be able to quickly respond to opportunities in new, expanding markets.

Preparing for the next wave

As part of this ‘new wave’, healthcare is transitioning from volume-based to value-based care. According to the report, this follows from governments, providers, and payers trying to control health care spending, reduce variations in care, and engage consumers in self-care, with life science companies expected to provide real-world evidence of positive patient outcomes, potential, products, manufacturing capabilities, value-based pricing and contracting, reimbursement. As a result of this transition, comparative effectiveness research* (CER) is becoming a major factor in a treatment’s market uptake, with products not proved to be comparatively effective expected to struggle to generate demand or attain reimbursement.

Deloitte concludes by saying that life science companies will need to develop CER capabilities to avoid exclusions and sales losses, and to gain the advantages of the ‘new wave’ opportunities.

* Comparative effectiveness research compares different interventions for a health condition based on real-world effectiveness rather than controlled efficacy.