Pharma/biotech organizations are focused on implementing human-centric changes to address sources of volatility
According to a new study, supply chain disruptions, regulation and taxation, and ESG and decarbonization are top of mind for executives
CHICAGO (May 1, 2023) – Like other industries, pharmaceutical and biotechnology organizations are feeling the effects of market disruptions and business volatility, but 69% of executives in the field feel they are well equipped to handle growing pressures, according to the Crowe Executive Outlook Study, a joint research project from Crowe LLP and Forbes. In its debut report, “The Unlikely New Frontier of Enterprise Growth: Why Innovation Leaders Pull Ahead in Times of Volatility,” executives across industries weighed in on current and future challenges they are facing and what their organizations are doing to address them. Of the 125 leaders surveyed across the pharmaceutical and biotechnology industry, 82% of which identify as primary decision-makers, many were particularly focused on engaging their employees to address volatility, with 68% actively increasing investments in change management.
"This response showcases that executives in this field are committed to creating sustainable change within their organizations with buy-in at various levels to ensure they are all working toward the same goal,” said Mindy Herman, managing principal of the Crowe life sciences group. “The industry is about improving health and wellness, so it makes sense for life sciences organizations to take a human-centered approach to change management to build trust among stakeholders and adapt to challenges in the market."
Pharmaceutical and biotechnology companies are also looking to address volatility through mergers and acquisitions (M&A) with 67% stating that they are using M&A to access talent and/or innovation. The sector has long relied on M&A to spur innovation and growth. Only 26% of respondents believe they will conduct a significant acquisition in the next 12 months and 56% state they will conduct an M&A transaction by 2025.
In the study, leaders were asked to rate the level of volatility their organizations are currently facing across several areas. Pharmaceutical and biotech executives identified their supply chain (39%), financial risk (38%), ESG and decarbonization (38%), and regulation and taxation (37%) as the most volatile. “This response makes sense with the current challenges in the market, regulatory and tax trends, and stakeholder expectations,” said Herman.
When looking ahead to 2025, their concern about supply chain volatility increased to 58%, the highest percentage in that category across all industries. Herman adds that geopolitical tensions, global demand, sourcing and talent shortages are likely factoring into the continued concern around supply chains.
Executives in pharma and biotech also were asked to rate the current level of volatility across areas specific to their industry, including:
| Source of volatility
|
Volatile
|
Extremely volatile
|
Total
|
|---|---|---|---|
| Pricing pressures | 35% | 22% | 57% |
| Talent costs/shortages | 41% | 16% | 57% |
| Meeting global demand and sourcing | 27% | 26% | 53% |
| Product safety & quality | 32% | 19% | 51% |
| Capital need for R&D | 34% | 16% | 50% |
By 2025, 55% of executives believe there will be an increase in capital needed for research and development (R&D), and 52% believe there will be an increase in volatility in both clinical trial diversity and recruitment and in pricing pressures. “Pricing pressures are top of mind to pharmaceutical companies as patients and payors, especially Medicare and Medicaid, continue to add pressure,” said Herman. “An increased focus on clinical trial diversity and recruitment continues to be a top priority to companies in this space to ensure the safety and efficacy of new treatments, build trust with patients, and improve health equity.”
For more detailed findings or more information about the Crowe Executive Outlook Study, view the report, “The Unlikely New Frontier of Enterprise Growth: Why Innovation Leaders Pull Ahead in Times of Volatility."
About the Crowe Executive Outlook Study
In partnership with Crowe LLP, Forbes surveyed 1,001 executives from organizations with at least $500 million in annual revenues. Respondents represent companies across eight industry sectors – banking, government, healthcare, insurance, manufacturing, pharma/biotech, private equity, and technology, media and telecommunications. Most respondents, 71%, are C-suite executives, board members, or partners. Three-quarters (75%) of respondents are primary decision-makers.
About Crowe
Crowe LLP is a leading public accounting, consulting and technology firm with offices around the world. Crowe uses its deep industry expertise to provide audit services to public and private entities. The firm and its subsidiaries also help clients make smart decisions that lead to lasting value with its tax, advisory and consulting services. Crowe is recognized by many organizations as one of the best places to work in the U.S. As an independent member of Crowe Global, one of the largest global accounting networks in the world, Crowe serves clients worldwide. The network consists of more than 200 independent accounting and advisory services firms in more than 130 countries around the world.