Health, pharma and life sciences

How would you describe the impact of COVID-19 on your business?

Survey highlights

Seventy-two percent of respondents in this industry were from North America or EMEA, and 19% were from LATAM. More health/pharma/life sciences organizations are in the react phase (34%) compared with the overall industry benchmark. This is a highly regulated industry, so organizations within it often show higher levels of risk maturity. The combination of risk maturity and pandemic response is aligned to the industry itself, meaning a higher proportion of organizations in this industry identified pandemic as a key risk prior to the COVID-19 outbreak (26% compared with the average of 18%). In addition, 45% of respondents had a pandemic plan in place prior to the 2020 event — higher than the benchmark. More than half (55%) of respondents agreed that COVID-19 had impacted their businesses but felt that they had remained resilient. Forty-seven percent agreed that their businesses remained stable during the pandemic. This further demonstrates the risk and resiliency maturity of this industry, as only 3% reported significant impact to their businesses, compared with 8% for all organizations. All respondents agreed that their risk management response efforts were sufficient, but even so, 30% suggested that more planning would have been beneficial.

Industry insights

Forty-three percent of respondents said they did not see an impact on their supply chain. However, 27% faced supply issues and difficulties in sourcing materials — 11% higher than the overall industry benchmark. The priority for this sector was protecting people and assets and retaining key employees and supporting their overall wellbeing. The need to review the supply chain was the third highest priority for asset protection; while most large pharma companies were sufficiently equipped during COVID-19 to keep their labs open, there have been shortages of certain drugs during the same period. For innovative pharma companies with a heavy reliance on outsourcing, the supply chain challenge will be more profound. Also, key in the protection of people and assets was reputation risk. This has been a focus for life sciences companies since well before the current pandemic as they work to reposition the industry as providing solutions and promoting science. Cost management is the second most significant priority for the sector, while expense rationalization is the key strategy for ongoing balance sheet protection. This may seem surprising given that life sciences companies typically operate at high margins, much of which is reinvested in R&D as a central part of their strategy. However, throughout COVID-19 clinical trials have been re-prioritized and all companies in the health life cycle have played a role in the pandemic response, whether providing vaccines, plasma or testing kits. In many ways, then, cost management is inextricably linked to revisiting business strategy, where the industry has more appetite for M&A to support its reshaping strategy.

Proportion of organizations facing supply chain issues

Economic disruption, a mainstay in many industry responses, was ranked the No. 1 future shock by health/pharma/life sciences organizations, followed by geopolitical tension. Changes in the U.S. administration could change healthcare financing and insurance, which could in turn impact available funding and access to medication. In Europe, Brexit will likely create accelerated risk around the movement and costs of medication across borders. This industry ranked another health crisis as the third most significant potential shock. The definition of “another health crisis” likely extends well beyond another pandemic to include new or accelerated lifestyle diseases, such as diabetes. Technological disruption and the associated increased exposure to cyber risk also feature prominently in the top five. The sector is going through a massive change to its business model and the digitalization of its workforce. In the near-term future, physicians’ decision-making will be underpinned by data and analytics, changing the way in which therapies are delivered.

Future shocks

  1. Economic disruption
  2. Geopolitical tension
  3. Another health crisis/pandemic
  4. Technological disruption
  5. A major cyber event