Global Life Sciences Industry Outlook 2023

1. Constantly adjusting portfolio and value creation

In the life sciences, key portfolio decisions that companies are considering today were born at a time of financial disparity. Multiple models and portfolio options are emerging, including the development of potential "blockbuster" drugs, the search for a new generation of therapies, and a focus on diversification. Companies manage to put their capital to work through mergers and acquisitions, which in turn drive these choices. In addition, as interest rates rise and valuations fall, medtech companies are reducing uncertainty within the industry by divesting low-growth and low-margin assets. In doing so, medtech companies can free up capital and improve their financial position in hopes of making them more attractive to strategic acquirers.

Expectations for a recovery in mergers and acquisitions (M&A) have increased, with the majority of M&A activity slowing in 2022, with the number of life sciences deals above $1 billion down 60% from 2021. Still, drug companies with a lot of money at their disposal seem ready to unleash pent-up demand. One of the potential areas of interest for acquirers is multi-indication drugs with potential applications across therapeutic areas, which have the potential to deliver higher returns. However, potential acquirers would need to pay a premium for the drug's versatility.

Life science companies are actively exploring new ways to generate revenue. And a series of developments driving pharmaceutical portfolio realignment involve the emergence of mRNA technology. The anticipation of mRNA technology and the next generation of therapies such as cell and gene therapies will create opportunities for life science companies to increase revenue streams.

Exploring therapeutic innovations, including research into a new generation of therapies, including gene editing, is another area of portfolio expansion for life sciences companies. However, significant challenges remain, particularly the exorbitant upfront costs of developing a CGT and the need for customized manufacturing processes. In addition, due to the ongoing impact of the epidemic, CGT companies are still facing a shortage of raw materials. Life sciences companies may need to consider alternative funding and payment models to accelerate the widespread adoption of their CGT.

In the current environment, companies are rationalizing their underlying assets by divesting non-core assets (assets that do not fit into the overall portfolio, or restructuring and realigning portfolios). Adverse economic conditions have made many deals more attractive.

Ii. Research and Development

According to a Deloitte survey, R&D innovation is one of the top actions that 91% of life sciences companies plan to increase investment in 2023. Life sciences companies will continue to make advances in research and development areas such as translational medicine, big data analytics, and digital innovation. More advanced technologies will also emerge. Given changes in market, regulatory and reimbursement practices, life sciences R&D organizations are under increasing pressure to generate sustainable returns on investment, and companies need to reshape and adapt traditional R&D models.

The growing benefits of Real-world evidence (RWE) help life science businesses better understand disease progression, monitor patient safety, and evaluate clinical and cost effectiveness. While life sciences companies have lagged behind other industries in adopting RWE, RWE is now an increasingly important part of their decision-making process. Businesses are also collecting and analyzing RWE faster.

Traditional clinical development methods have a long process and a success rate of only 10%. Life sciences companies are actively reshaping clinical trials through digital clinical trials, clinical trial simulations, retail clinics, and smart clinical trials to collect data and analyze results digitally. It not only advances the development and regulatory evaluation of new drugs, but also reduces the time and cost of clinical trial cycles, improves patient safety, and solves the issue of medical equity to a certain extent.

AI is becoming increasingly important to drug development, and through AI technology, life science companies can accelerate drug development and time to market, and more accurately predict development costs.

The outbreak has seen an unprecedented level of cooperation and shared services among global regulators, and these collaborations are likely to continue in the coming years. At the same time, life sciences companies are turning to outside suppliers to reduce the time it takes to develop new drugs.

Supply chain is back on the CEO agenda

With repeated outbreaks, geopolitical turmoil affecting shipping and logistics, and inflation at its highest level in 40 years, biotech and pharmaceutical companies are moving away from well-designed, accurate planning in favor of agile supply chains that can be flexible and quickly adapt to changing environments and diverse scenarios. To better understand vulnerabilities in the supply chain, life sciences businesses are exploring a range of practices to enable forward-looking scenario planning and risk mitigation.