Consultant Report Summary: Life Sciences Outlook
While previous research identified eight items, the "2020 Global Life Sciences Outlook" was the only in-depth report published by consultants in the past month. The report provides an insight into the life sciences sector, focusing on biopharma and medtech companies. The topics covered include drug and medtech trends, measuring the human experience, and shifts in therapeutic focus.
- The life science sector’s focus is shifting to disease prevention. With an increase in medical grade wearables, virtual trials, and technology like telemedicine there is more data being collected.
- Deloitte notes that in 2020 biopharma, and medtech organizations are looking for ways to make sense of all the readily available data. The data is now leading operational approaches and helping to build personalized health care.
- From 2019 to 2024 the CAGR for prescription drugs is expected to be 6.9%. The key drivers are accelerated and increased drug approvals, orphan drug sales, and oncology therapies.
- Drug pricing in the United States will be dependent on administration policies in 2020.
Medtech Sales Trends
- The medtech market is growing quickly in emerging markets, while the US holds the market share. The impact of the US-China trade war is yet to be seen and may impact the sector.
- With competition from technology companies and pressure from downstream sources to reduce prices, companies will be looking for cost reducing strategies.
- The rise of ambulatory service centers may require companies to look at different business models to be affordable in these environments.
Measuring the Human Experience
- Biopharma and medtech organizations can learn to measure the human experience to create more value and gain a greater insight into the ecosystem and the role it plays.
- By understanding a patients experience from diagnosis through to maintenance, data can play a role in discovering touchpoints in each patient’s journey. One way to do this is to create a patient hub that connects the patients to their caregivers.
- Medication adherence tools can be used to discover any gaps in care, and wearables can enable early interventions.
- Measuring the human experience creates a better understanding of the consumers' needs and in turn can help develop better technology and devices. This brings value to all stakeholders.
Inclusive Clinical Trials
- Researchers have been asking for more inclusive clinical trials for years. There is increasing demand to expand the number of participants in trials, and to focus on demographic groups that will receive the treatments.
- The biopharma sector has found it challenging recruiting participants for clinical trials. A study found that in two-thirds of studies the participants used were younger than the average age of those who would eventually need the treatment.
- One of the factors that plays a part in participants in trials is where and how trials take place. Moving to virtual trials using telemedicine can increase inclusion.
- The largest millennial survey concluded that the next generation of talent is looking for companies that take meaningful action and have a purpose.
- In order to create an environment that appeals to millennials, companies need to invest in new technologies, meaningful work and a flexible work schedule. This will also help to create value and attract customers.
Deals and Valuations
- The end of 2019 saw a slow down of mergers and acquisitions in the life science sector compared to the first part of the year. The value of deals closed in 2019 were significantly higher than in 2018.
- In 2020, biopharma and medtech companies will need to continue focusing on acquiring and taking chances on cell and gene therapy companies, especially those that focus on oncology and rare diseases.
- An increase in private equity and venture capital funding may mean smaller companies are able to take a larger market share and not be bought up by the larger pharma companies.
Technology Acquisitions and Trends
- The majority of life science acquisitions in 2019 were technology companies, out of 37 deals, 18 were for software companies.
- In 2019, a number of health based technology companies received unicorn status, including Hims, and Calm.
Software Licensing Trends and Cloud Investments
- In 2020, compliance, risk management, and product life cycle management (PLM) software applications will continue to be important in the life science sector.
- Investments will continue in new technologies for drug discoveries. From 2018 to 2023 the market for computational medicine and drug discoveries is expected to grow at a CAGR of 5.1%.
- Cloud investments became increasingly important in 2019 and will continue to be necessary in 2020. Cloud migration and data protection will be a key trend going forward.
Return on Capital
- Return on Capital may become a key metric in 2020. In recent years ROC in life science companies has dropped and high profits have been a key indicator.
- Specializations can help with Return on Capital. Real time data and new technologies will help develop more personalized solutions and increase value.
Grants and Academic Research Trends
- The proposed NIH appropriation for biomedical research in 2020 is $34.4 billion. However, the budget can be significantly impacted by fiscal conditions. Grants and awards continue to decrease and may limit innovation.
Shifts in Therapeutic Focus
- In 2020, pharma activity is expected to focus on rare diseases and treatments for unmet needs.
- Cell, and gene therapies will continue to be explored but are hindered by high costs. For these treatments to continue more investments will be needed and reimbursement models may need to be reviewed.
- Antibiotics are another area of exploration, but low profitability means that many pharma companies are choosing to focus attention elsewhere.
New and Expanded Manufacturing Facilities
- In 2020, cell and gene therapy manufacturing facilities are expected to be adding capacity. Either by contract manufacturing organizations, the building of facilities, or by acquiring smaller facilities.
AI in Drug Discovery
- The AI market in drug discovery is expected to grow at a rate of 52.9% CAGR from 2018 to 2025. Collaborations between big pharma and AI startups will continue to be a trend in 2020.
Trends in Approvals
- A 2018 study found that almost 14% of clinical trials receive drug approval with the US FDA. 83% of approvals were for the treatment of rare diseases.
- The demand for small volume, personalized medicines means a move away from large manufacturing facilities and operations to multipurpose facilities.
- Medtech companies can potentially drive innovation with IoT, machine learning, and augmented reality.
- Data-driven manufacturing will be a trend in 2020. Digital innovation allows companies to focus on quality and compliance.
Digital Transformation in Biopharma and Medtech
- Digital transformation may exist in the supply chain for biopharma companies looking for innovation in the process. Companies may benefit from DSNs that create better product visibility.
Medtech and Consumer Tech
- Medtech companies face continued competition from consumer technology companies. Companies can look to collaborate with each other to drive innovation.
- Big pharma is continuing to share data, with 95% of all clinical trial data now publicly available within six months. In 2020, experts expect the debate about who owns patient data to continue
Corporate Social Responsibility
- Corporate social responsibility is critical in today’s competitive environment and is being placed higher than value at most companies.