According to KPMG LLP’s U.S. CEO Outlook 2016, CEOs of life science companies are confident about their prospects for growth in the pharmaceutical, biotech, and medical device sector over the next three years. These next three years are considered critical and according to the report, two-thirds of CEOs believe that the next three years will be more critical for their industry than the previous fifty years.
In general, it is projected that one of the biggest driving factors will be technological change, second only to economic factors. Specific to the life sciences industry, new customers were seen as the biggest driver of growth (according to 37% of CEOs surveyed), while new products were not far behind (29% of CEOs surveyed).
In part because of the high hopes and prospects (life sciences CEOs were more optimistic about their own sector than their peers in other industries and plan investments over the next three years), approximately 84% of life sciences CEOs plan to hire in the next twelve months. Only 16% of life sciences CEOs said they plan to keep their workforce unchanged during the next twelve months, compared with 31% across all industries.
During the next three years, over three-fourths of life sciences CEOs plan to expand headcount between six and ten percent. None of the life sciences CEOs surveyed anticipate having to cut jobs in the next three years, and 11% believe that they are likely to expand headcount by more than 10%.
The top three areas where life sciences CEOs plan to “devote significant investment/resources” over the course of the next three years are: expanding facilities (32%), advertising and marketing (32%) and measurement and analysis of the customer (26%).
According to Liam Walsh, National Advisory Leader, Healthcare and Life Sciences, KPMG LLP, “improved data and analytic tools are having a role in helping to build drug pipelines and target patient groups for medicines. Questions remain about the industry’s ability and willingness to transform to make the most of their product portfolios.”
Alison Little, advisory leader for life sciences at KPMG, noted that “Most of the opportunities appear to be aimed at the sales, technical and scientific positions. Many administrative and back office functions have been through wrenching changes to become more efficient, leaving fewer opportunities than those in research and development, manufacturing, IT and customer facing positions, such as sales.”
Little also stated, via a press statement, “CEOs by their very nature tend to be optimistic people and the industry is coming to terms with its challenges. Drug makers are much better positioned than they were five-to-eight years ago when sales of many blockbuster medications were evaporating from cheaper, generic versions entering the market. Product pipelines are much stronger now and many of the drug makers have merged or focused their product portfolios.”
However, it wasn’t all positive, with CEOs expressing concerns over competition, an inability to increase market share; and the inability to stay on top of new products/services and technologies.
With such an optimistic outlook for the industry, many life sciences organizations are expecting transforming businesses. Only 45% of CEOs estimated that their companies “will be largely the same firm we are today,” compared with 61% of the CEOs surveyed overall.