What We Learned From Global CEOs: Pharma & Life Sciences Insights From PwC’s Global CEO Survey

Wed, 06/18/2014 - 9:41am
Nicholas J. Bonny and Rafael Lander, PwC Health Industries, Pharmaceuticals and Life Sciences sector

During the last quarter of 2013, PwC surveyed more than 1,300 business leaders across 68 countries around the world, including in-depth interviews with 34 CEOs.  The pharmaceutical and life sciences sector was well represented – nearly nine percent of the sample, 119, were pharmaceutical and life sciences (PLS) CEOs. 

The results showed a number of positives for all businesses – notably a leap in CEOs’ confidence in the global economy.   But PLS leaders are cautious as to whether this will translate into better prospects for their own companies. And their search for growth is getting more and more complicated as opportunities in both developed and emerging economies become more nuanced.

The PLS CEOs we surveyed told us:

  • Innovation is a top priority
  • They  are focused maintaining a skilled workforce – but are positive about the talent challenge
  • Supply chain integrity remains a top issue for the industry

As they rise to meet these challenges, PLS CEOs believe that technology is transforming the sector and they’re using strength in innovation to make the most of it. They’re also focused on intellectual property protection and addressing the needs of more diverse – and demanding – customer segments, particularly as changing demographics and shifts in wealth radically reshape the sector.

Drilling down into some of those PLS-specific findings:

Innovation is a top priority – and protecting intellectual property is a worry
Sector CEOs are already transforming their R&D function to cope with transformation – 38% say they’ve completed or have in progress a program to change their R&D and innovation strategies, more than across the sample as a whole. And the same number believe that their R&D departments are well-prepared for the challenge.

They’re not as confident about their ability to benefit from their discoveries, though. Sixty four percent of pharmaceutical and life sciences CEOs are somewhat or extremely concerned that an inability to protect intellectual property will hamper growth, far more than across the sample as a whole.

But sector CEOs are positive about facing the talent challenge
Only around half of pharmaceuticals and life sciences CEOs are concerned about the availability of key skills this year, far fewer than their peers across the sample. Fewer are concerned about rising labor costs in high-growth markets too. That may be because many have already taken steps to revamp their talent strategy to capitalize on major trends – 43% say they’ve already begun or completed a change program, compared to 32% overall.

Supply Chain Integrity is a big issue
The industry is taking safety seriously; more pharmaceuticals and life sciences CEOs strongly agree that it’s important to them to ensure the integrity of their supply chain (76% vs 58% overall). And sectors worry about the impact of bribery and corruption. Sixty one percent believe it could slow down growth, compared to 52% of CEOs overall.

Technology, demographics, and shifts in wealth are transforming the sector
Pharmaceuticals and life sciences CEOs are even more convinced than their peers that technological advances will transform their businesses in the next five years. And they’re more conscious than other CEOs of the huge role demographics will play – 72% see it as a transformative trend, compared to 60% across the sample. More are also expecting a big impact from global shifts in economic power.

Too relaxed when it comes to cyber-security?
A surprising 57% of pharmaceuticals and life sciences CEOs are not concerned that cyber threats including lack of data security could threaten growth. That’s despite a boom in big data and data analytics – 79% agree there’s a need to change strategies in that regard, although just 23% have already started.

Regulation is not all bad
The pharmaceuticals and life sciences industry is highly regulated, and nearly four-fifths of CEOs (79%) are concerned that over-regulation could put the brakes on growth. That said, a full 72% believe that their production and/or service delivery quality standards improved over the past 12 months as a result of regulation.

Pharmaceuticals and life sciences CEOs believe technology will help more than hinder
Only around a third of sector CEOs are concerned that the speed of technological change may negatively impact growth, compared to nearly half of CEOs across the overall sample.

For executives focused on operational and process issues in the PLS space, it’s significant that PLS CEOs we spoke with are embracing innovation and technological change:

  • More pharmaceuticals and life sciences CEOs (44% vs. 35% overall) see product and service innovation as their main route to growth.
  • The sector’s CEOs are confident in their ability to keep up with a changing world. Just 32% of pharmaceuticals and life sciences CEOs are concerned about the speed of technological change – lower than across the overall sample (47%).
  • And more believe that their R&D department is ready to cope. Thirty eight percent say it’s well-prepared, compared to 28% overall. A separate PwC report “Breakthrough Innovation and Growth” found that the most successful CEOs are doing three things to ‘industrialize’ innovation – i.e., to make it repeatable, dependable and scalable. They’re focusing on breakthrough innovation in all its forms; putting disciplined innovation techniques in place; and collaborating much more actively.

And they’re preparing their organizations to adapt. The customer-focused departments of pharmaceuticals and life sciences companies are more likely than the overall sample to be well-prepared for change. Nearly half of the sales departments are up to speed in this area, with customer service and marketing/brand management following closely behind.

In this context, we at PwC think it’s vitally important for PLS executives to recognize that innovation means more than new product development. It can also help improve processes, or create new services or business models.  That’s where innovation can be transformative, and drive a step-change in revenue growth and profit.


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