Key findings from the pharmaceuticals & life sciences industry

20th CEO Survey

Rising to the challenge of change

Pharmaceuticals and life sciences (Pharma) CEOs are faced with the challenges of a continually changing world in the New Health Economy, with ever closer scrutiny of pricing and value delivery from empowered patients and cash-conscious payers. Despite this, they’re positive about their ability to grow their companies over the short and medium terms. They’re planning a range of activities to achieve this but remain concerned about factors such as regulation and the ability to recruit the skills they need.

Thinking global

Pharma CEOs know that theirs is a global industry.  They rate the US, China and Germany most important for their short-term growth. In fact their interest in Europe has increased significantly over the last few years, with Germany seen as nearly three times more promising than in 2013 and the UK now featuring as the fifth most interesting market (11%) – a vast increase on four years ago when it barely registered.

There’s been a corresponding drop-off of interest in the growth markets. China still ranks highly but has been overtaken by the US. Brazil retains its fourth place, though with a lower score than previously, and interest in Latin America outside Brazil is now focused on Mexico. India and Russia have both dropped down the rankings.

Growth through innovation

Pharma CEOs are bullish about their own company’s growth prospects over the next year, with nearly two-thirds saying they’re very confident of growth (vs. 38% in the overall sample). And this confidence carries through to the medium term, with 61% very confident. This is higher than any other industry in the survey this year.

When asked to select just one area to strengthen in order to capitalise on new opportunities, Pharma CEOs chose innovation. They’re even more focused on this than most sectors, with over one-third selecting it, compared to just under a quarter overall. Human capital came second, picked out by nearly one-fifth. The drive to innovate has always been strong in Pharma but is even more imperative in a world where greater value has to be seen to be delivered for less cost.

Regulation reigns supreme

Looking back over the past five years, some threats stand out as rising sharply in the mind of the Pharma CEO. Over-regulation has always been one of the major perceived threats and garners even more attention now, keeping its top spot this year. With pricing pressures and uncertainty as to changes in the US market this is no surprise. Speed of technological change has almost doubled as a concern, with availability of key skills and cyber threats also gaining more focus.

Pharma CEOs are more likely than the overall sample to be concerned about protectionism, new market entrants and the future of the Eurozone. Readiness to respond to a crisis is also top of mind for 70% of Pharma CEOs this year, with the Ebola crisis fresh in their minds and the emergence of antimicrobial resistance as a global threat.

Balancing the skills equation

Nearly all of the Pharma CEOs picked out leadership as important to their organisation, giving it top spot, closely followed by problem-solving and creativity and innovation in equal second, with collaboration and adaptability in equal third.

Recognising the importance of these skills doesn’t make it any easier to find the right people, though. Leadership and creativity and innovation are the most difficult skills to find, followed by emotional intelligence. Maybe this is why Pharma CEOs are more likely than the overall sample to move their talent to where it’s most needed.

What is on the minds of China and Hong Kong CEOs for the year ahead?

The Chinese economy continues to undergo complex structural reforms to ensure balanced and steady development and growth. Business outlook for executives in China appears quite positive. To achieve this growth, numerous challenges combined with global economic uncertainty have to be overcome. Intense industry competition, the pace of technological development, changes in consumer spending and behaviour, difficulty with recruiting employees with advanced skills and lack of trust in business were cited as main threats to growth prospects.

Business leaders today have a great opportunity and responsibility to lead through the disruptions by demonstrating purpose and increasing trust. Find out more from our China report: Leading through disruption.

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Mark Gilbraith
China & Hong Kong Management Consulting Leader, Health Industries Leader and Consumer & TMT Consulting Leader
Tel: +[86] (21) 2323 2898
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