Cost of new drug development is key concern for life science as focus shifts to repurposing

Rhea-AI Summary

According to the Global Life Science Risk Report 2024 by WTW (NASDAQ: WTW), 63% of life science companies view the high cost of new drug development as a significant challenge impacting the sector over the next 3-5 years. Consequently, 66% of companies are focusing on repurposing existing drugs to launch new products and expand globally. The survey, involving 400 senior decision-makers in pharmaceuticals and biotech, also highlighted increasing regulatory and reputational risks as major concerns. Regulations post-Covid, U.S. drug pricing controls, data privacy, ESG reporting, and product contamination are key issues. Smart manufacturing is the top digital transformation opportunity, while supply chain risks include stockpiling and panic buying. Talent retention and internal culture alignment are significant obstacles, and intellectual property management is notably weak. Environmental concerns, particularly natural disasters and water scarcity, are also prominent risks for the industry.

Positive

• 66% of life science companies see repurposing existing drugs as a positive opportunity for product launches and global expansion.
• Smart manufacturing identified as the leading digital transformation opportunity by 47% of respondents.

Negative

• 63% of companies highlight the high cost of new drug development as a major challenge.
• 53% of respondents cite changing or increasing regulation as a top external risk.
• 41% name product contamination as a significant internal risk.
• Intellectual property management is weak, with 44% rating their processes as ineffective or inconsistent.
• 58% of companies are concerned about the lack of natural resources, including water scarcity and contaminants like PFAS.

LONDON, June 27, 2024 (GLOBE NEWSWIRE) -- 63% of life science companies believe the high cost of new drug development is among the emerging themes that will have the greatest negative impact on the sector in the next 3-5 years, according to Global life science risk report 2024 published today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company. This is leading to an increased focus on finding novel use cases for existing drugs, named by 66% as having a positive impact, as firms seek to launch new products and expand their international footprint.

The 2^nd life science global survey asked 400 senior decision makers belonging to pharmaceutical, biotech and other life science sector companies how they manage emerging risks and how they are preparing for the future.

The survey also revealed that regulation and reputation risk have risen to the top of the life science agenda as companies feel pressure on a range of issues such as increasing regulatory activity post-Covid, U.S. drug price controls, rising data privacy concerns, ESG reporting requirements and product contamination. Changing or increasing regulation was named by 53% among their top external risks, up from 39% since the 2022 survey, while reputation was cited as a top risk both internally (47%) and externally (41%).

Other key findings include:

• Smart manufacturing (increased technology/automation in production) is seen as the sector’s leading digital transformation opportunity, with 47% of respondents including it among their top 5.
• Stockpiling and panic buying named biggest supply chain risk by 61% as more firms seek to bring operations in house.
• Difficulties attracting and retaining talent and aligning internal culture with strategic goals ranked as top obstacles to success.
• Intellectual property is the weakest area for risk management, with 44% declaring they have ineffective, inconsistent or non-existent processes.

Life science companies are also increasingly concerned about physical climate risks. Almost half of respondents (48%) said natural disasters were among their biggest supply chain risks, while 58% named lack of natural resources as main environmental concern. As well as water scarcity, this result may reflect the difficulty of sourcing water that is free of per- and polyfluoroalkyl substances, commonly known as PFAS.

Manufacturers are having to test for new contaminants to comply with a changing regulatory environment, including in active ingredients supplied by third countries, which adds a layer of complexity to risk management. A rise in litigation and claims related to contaminants adds to this concern, with 41% naming product contamination as a top internal risk factor.

“After the turbulence of the last few years, the sector is returning to traditional business priorities with companies looking to launch products and expand into new markets,” said Edward Hunter, Life Science Broking Leader (part of the Direct and Facultative GLoB), WTW John Connolly, Life Sciences Leader for North America at WTW added: “But, as they do so, the risk profile of the sector is changing. New smart technologies, while increasing production efficiency, are creating more exposure to risks like data breaches and intellectual property infringements. Global instability and supply chain changes, coupled with increasing regulatory and reporting requirements, are adding to the complex risk landscape. Firms need to be aware of weak points in their risk management processes and remember that these new risks and liabilities might require bespoke cover.”

The complete report can be downloaded here.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

Learn more at wtwco.com.

Media contact

Sarah Booker:
Sarah.Booker@wtwco.com / +44 7917 722040

FAQ

What is the primary concern for life science companies according to the WTW report?

63% of life science companies identify the high cost of new drug development as a major concern.

How are life science companies responding to the high cost of new drug development?

66% of companies are focusing on repurposing existing drugs to launch new products and expand globally.

What regulatory risks are life science companies facing as per the WTW report 2024?

Companies are facing increased regulatory activity post-Covid, U.S. drug price controls, rising data privacy concerns, and ESG reporting requirements.

Which digital transformation opportunity is considered the most promising in the life science sector?

Smart manufacturing, involving increased technology and automation in production, is seen as the leading opportunity, highlighted by 47% of respondents.

What are the main supply chain risks for life science companies?

Stockpiling, panic buying, and natural disasters are among the biggest supply chain risks.

How are environmental concerns impacting life science companies?

Environmental concerns include natural disasters and water scarcity, with 58% of companies worried about the lack of natural resources and contaminants like PFAS.

What internal challenges are life science companies facing?

Challenges include difficulties in attracting and retaining talent, aligning internal culture with strategic goals, and managing intellectual property risks.

Why is intellectual property management a concern for life science companies?

44% of companies report ineffective, inconsistent, or non-existent processes for managing intellectual property.