Reflections on the J.P. Morgan Healthcare Conference and the year ahead for pharma and life sciences

The J.P. Morgan Healthcare Conference is always a great opportunity to take stock of what’s happening in the life sciences industry and share perspectives on what’s ahead. This year was no exception and, with the turn of the decade, an especially opportune moment to reflect.

What a difference a decade makes. Ten years ago, the pharmaceuticals sector was one of America’s leaders in job loss, as drug-makers prepared for the upcoming patent cliff.  Many companies were focused on shifting their portfolios to focus on unmet medical needs in smaller, but hopefully less competitive, therapeutic areas. Some were looking more fundamentally at diversifying their exposure to branded pharmaceuticals by entering other lines of business (e.g., biosimilars, diagnostics).  The number of FDA drug approvals dropped in 2010 versus 2008 and 2009 levels and some industry pundits were wondering about the future of innovation.

Since then, we have seen remarkable breakthroughs in science, exciting new treatments for a variety of tough-to-treat diseases, and a new generation of support programs to help physicians, patients and care-givers navigate the treatment journey.  Improving real-world results, such as the decline in cancer mortality reported last week by the American Cancer Society, are very exciting and remind us of the essential role biopharmaceutical companies play in society.

With these advances, we now see intensely competitive specialty drug categories – the very same categories that were once perceived as relative “safe havens.”  Societal demands to demonstrate value and respond to affordability concerns are acute, even in light of reduced growth rates on list prices of drugs and bigger rebates in many therapeutic areas.  And, investors appear to be looking for stronger growth prospects and better equity returns from the sector, after a year of relative under-performance vs the broader S&P index.

What will it take for biopharma to tackle this new set of challenges and to be Fit for Growth entering the new decade? 

1. Pave a clear growth path. Opportunities abound, raising questions like how far and fast to shift to new technologies like gene therapy, whether to extend beyond classic product revenue streams into monetizing solutions, where to place bets in the ‘white space’ therapeutic areas, and which acquisitions can best accelerate the strategy.  Ongoing uncertainty about policy, trade, the presidential election, and disruptive new competitors means dynamic growth planning and adaptive execution are at a premium.   
2. Differentiate, differentiate, differentiate. Competitive intensity in individual product markets will challenge product developers and brand leaders to find new avenues for creating competitive edge. And, at the enterprise level, differentiation means clear-eyed choices about the 3-5 essential capabilities that ensure the whole is worth more than the sum of the parts.
3. Unlock the next round of productivity gains. Classic levers – e.g., spans and layers, efficient process designs – will continue to be important sources of saving, but what’s really exciting is the opportunity to transform functions with automation, artificial intelligence and data & analytics.  Possibilities to leverage digital technology seem to be endless, but as reported in PwC’s top health industry issues report, new approaches are needed to generate ROI.

Regardless of growth path, differentiation choices, and productivity agenda, protecting the enterprise remains an enduring priority. Cyber threats, compliance requirements, regulatory scrutiny, ethical standards, and demands for quality are growing. Meeting these expectations is compounded by the very nature of the biopharma industry, which is characterized by complex footprints that span jurisdictions and global operations that are enabled by a wide range of 3rd party partners.  Delivering quality and securing the enterprise amid the threats and complexity will play a critical role in trust-building. Excellence in risk and resilience is a must.

At PwC, we are very much looking forward to what’s ahead in 2020 for the pharmaceuticals and life sciences sector. For more information about our view on the defining issues across healthcare, checkout our Top Issues report.