Pharmaceutical and life sciences

Pharmaceutical, biotech, and medical device companies face a challenging, competitive health landscape

The pharmaceutical and life sciences landscape

Pharmaceutical, biotech, and medical device companies face a challenging, competitive health landscape. Pricing pressures, scientific breakthroughs, expanding demand for health care access, and emerging digital and analytic capabilities push companies to explore unconventional business models and build value-based customer relationships.

Underpinning all of this is the uncertainty created by Brexit negotiations. The implications of leaving the EU will be far-reaching for pharma and will impact across the life science ecosystem. Whilst companies need to be aware of the risks to their organisation the UK’s Life Sciences Industrial Strategy offers opportunities for the UK to become more competitive as an environment and channel investment towards the pharma and life sciences industry. 

Challenges in the pharmaceutical and life sciences industry


How we can help

Grow and create a competitive advantage

The environment in which pharmaceutical and life sciences companies operate is being driven by a more and more demanding healthcare agenda. The global need for innovative, cost effective medicines continues to rise while payers, healthcare providers and patients are demanding greater value for money. Through a capabilities driven approach to strategy we are supporting companies to align their strategic direction to the few capabilities that make them unique. From breakthrough innovation to disciplined portfolio management we are working with our clients to optimise their R&D models, form alliances and partnerships for sources of innovation, add value with beyond the pill services and develop new commercial models fit for today’s value driven environment.

A critical makeover for pharmaceutical companies: Overcoming industry obstacles with a cross-functional strategy

This is a difficult time for global pharmaceutical companies — so difficult, in fact, that many are reconsidering their business models. The litany of concerns that pharmaceutical companies face includes payors tightening up on cost management, strained government healthcare budgets, the need to understand and adopt new technologies, and challenges to their traditional pricing mechanisms by empowered stakeholders, from patients to payors. Moreover, the regulatory maze in many parts of the world is tough to navigate, with unique rules and varied outcomes depending on national policies, issues, and bureaucratic processes.

Compounding the external obstacles, however, is the internal culture of most pharma companies. This is an industry that has long operated through disparate components — silos that separated R&D, commercial, production, and supply chain. And, in turn, these walled-off parts of the organization have been disconnected from the external-facing parts, which are responsible for managing relationships with regulators, policymakers, the medical community, and the rest of the industry. These silos can obstruct patient access and breed inefficiency and waste. They affect drug approval time and pricing, influence support for specific drugs by the medical community, and seriously hinder financial performance.

It is time for pharmaceutical companies to restructure their operating models in a way that brings all of these interdependent functions together.

Read more here on our ideas for a critical makeover of pharmaceutical companies

Antimicrobial resistance: The state of the nation report on UK R&D

Antimicrobial resistance (AMR) is one of the most important issues facing the global healthcare community. The failure to find a solution threatens the very heart of modern medicine. Without concerted and coordinated international action we could be faced with a situation where common infections are once again fatal.

Here in the UK, we have a real chance to lead the way in combating AMR. We have a commitment and passion that has already forced the pace of international action. But we will have to do more if we are to make any real impact on this global issue.

This report is a snapshot of the current state of the nation of R&D in the UK, focused on tackling the global challenge of antimicrobial resistance.

Contacts

Jo Pisani
Kate Moss
Myrto Lee

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Align costs with business strategy

The environment in which pharmaceutical and life sciences companies operate is being driven by a more and more demanding healthcare agenda. The global need for innovative, cost effective medicines continues to rise while regulators, payers, healthcare providers and patients are demanding greater value for money, proven effectiveness of products, more transparency and access to information. To meet these demands, companies are seeking ways to improve R&D productivity, increase the efficiency of its’ operations, rationalise spending on commercial operations and enhance financial performance.

The Pharma and Biotech industry is under severe pressure. R&D costs are spiralling, development timelines are growing, payer push back is increasing and consumers are becoming more knowledgeable about care options. The industry is reducing development time and becoming smart about stopping projects early in the development cycle, and increasing efficiency through rationalisation or outsourcing of non-core activities. As scientific advances enable the industry to move from a one-size-fits-all approach to care, to one of segmentation, personalisation and wellness, so the supply chain will need to evolve. The supply chain of the future will be built around flexibility, responsiveness and reliability shifting the supply paradigm from a stock-based model to an order based model.

Contact

Jo Pisani

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Accelerate digital and technology impact

With the cost of genome sequencing beating Moore’s law since 2008, the amount of Big Data is exploding and enabling disruptive technologies including machine learning, artificial intelligence and cognitive analytics to deliver new insights into human and pathogen biology. The pharmaceutical and life sciences industry is now taking personalised medicine seriously and companies are using digital technologies to connect genetic information with real world data. Understandably, many people are ultra‑cautious about sharing their medical data, and worried about privacy and security. The introduction of blockchain technology enables pharma companies to provide immutable proof of provenance, with less risk of counterfeiting – helping pharmaceutical companies protect both their brand and patients.

Finally, all of this data is helping pharma companies better understand the patient and their unmet needs enabling them to better engage with patients and healthcare practitioners. Multi channel marketing campaigns are replacing the old sales rep model.

We are helping pharma and life science organisations:

  • Understand the opportunity of nascent digital and genomic technologies
  • Implement digital solutions from blockchain to beyond the pill ideas like wearables
  • Integrate RWE into their development plans and commercial strategies to better develop and market treatments that address the real unmet need of patients

Contacts

Jo Pisani
Johnathon Marshall

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Navigating risk and regulatory complexity

Pharma, Biotech and medical device companies are facing unprecedented compliance challenges, as closer regular scrutiny is unlikely to abate any time soon. Companies cannot afford to ignore corporate reputational and personal risks attaching to their business activities. Everything from; commercial operations practices, transparency of company spend on healthcare professionals and organisations. Clinical trial activity, patients safety to issues of privacy of patient and consumer information have been under the regulatory microscope.  Highly visible investigations and aggressive prosecution have resulted in significant financial judgements against leading companies. Squeezed on all sides by business, economic and regulatory pressures, companies need a new approach to meet the challenges of integrating new governance compliance practices at a global level.

We help pharma companies:

  • Assess the impact and implementation strategies for new accounting methodologies, such as revenue recognition
  • Strategize complex merger or sales transactions
  • Perform due diligence on potential target companies
  • Analyze the impact of the changing regulatory landscape on the integrity and accuracy of financial reporting
  • Review the accounting and tax implications of a transaction

Contact

David Andersen

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Optimise deals

Uncover and deliver on opportunities that build lasting value

Competitive forces and changing market dynamics makes navigating deals in the pharmaceutical and life sciences complex. But for those organisations that can manage through the complexity the potential value is compelling. We can bring a global perspective to help pharmaceutical and life sciences companies align strategy and capabilities and we can work with you to adapt your company culture and build your long-term performance.

Our teams have capabilities in valuation, deal structuring, implementation, and post-deal integration. More here about our deals strategy and operations.

Contact

Lucy Stapleton

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Managing the effective tax rate

One area of focus for Pharma companies is the overall effective tax rate. Increasingly, taxing authorities are focusing on companies with extensive worldwide operations trying to challenge their business models and often to tax additional income originally allocated and taxed in another jurisdiction. Many offer tax incentives to companies making investments to encourage local growth. But to qualify for these there are more compliance requirements. Also licensing deals and acquisitions may create other unintended tax costs that adversely impact the effective tax rate. Carefully structuring such deals is essential to ensure alignment of a company’s business goals with optimal tax treatment.

Contact

Charlotte Richardson

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Accelerate R&D

Innovating for the future

Pharmaceutical and life sciences companies are under intense pressure to introduce new products in an environment of escalating R&D costs, complex science, heightened regulatory scrutiny, and increased competition. The industry's traditional strategy of placing big bets on a few molecules, promoting them heavily and turning them into blockbusters worked well for shareholders for many years. However, productivity in the lab has decreased significantly, as companies have shifted their attention from diseases that are relatively common and easy to treat to those that are much more complex or unusual. Ultimately, pharmaceutical and device manufacturers must develop innovative products that offer increased benefits and value relative to existing therapies while streamlining their processes for efficiency. At PwC we work with pharmaceutical organisations to ensure that they have the right strategy and capabilities to deliver medicines that offer measurable value in today’s evolving health systems.

Contact

Lucy Stapleton

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Stimulate commercial innovation

Commercial leaders in the pharmaceutical and life sciences industry face a rapidly changing healthcare landscape. There are significant concerns about patent expirations, consolidating customers and the increased use of generics as well as other hurdles such as new regulations, greater scrutiny of pricing and value, healthcare cost trends and advancing technology. We can work with you to effectively manage these obstacles to ensure your organisation remains stable and profitable. We help you to identify and frame the issues most relevant to your business and we partner with you to resolve those challenges. Our expertise in commercial strategy, operations and compliance creates high-impact recommendations that work in the real world.

Contact

Lucy Stapleton

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Brexit

As the UK prepares for the negotiation of our exit from the European Union, UK businesses will be considering how the new political landscape will affect their ability to trade in Europe and globally. For the pharmaceutical and life sciences sector there are some key considerations:

Regulation

  • UK may have to adhere to European regulations without having a say in their development
  • loss of single marketing authorization through the EMA could slow access to the UK market
  • the MHRA’s influence and global reputation may diminish and EMA offices may move out of the UK
  • the UK should continue with implementation of the Clinical Trials Regulation, Medical Device Regulations, Falsified Medicines Directive and others

Trade

  • UK would seek to negotiate a Free Trade Agreement with the EU, which would provide for reciprocal duty-free treatment of goods
  • added costs and cashflow impacts could arise if trade with the EU became subject to duties (for component parts and other goods outside finished pharmaceuticals), import VAT or border controls
  • UK may lose access to FTAs negotiated by the EU

Fiscal

  • companies operating across the UK and EU may face double taxation of dividends and withholding taxes on interests and royalties if the current EU directives cease to apply to the UK
  • the UK government could lower the corporation tax to ensure the UK remains competitive
  • ‘Patent Box’ could be extended to encourage R&D investment back to the UK, but this is unlikely

Investment

  • the UK may lose access to EU funds including the EIB and EIF, ultimately reducing funding access and venture capital investments
  • this would have a knock-on impact on the UK’s research reputation and talent pool
  • the UK may become less useful as a platform from which to access Europe, impacting European investment decisions made by international companies

Talent

  • visa processes and costs could be burdensome
  • rights after Brexit for those living in the UK for less than 5 years are as yet unclear
  • UK nationals living in the EU will also be impacted
  • clarity needed on the recognition of professional qualifications from other EU countries as part of the Visa/access rule

Intellectual Property

  • UK will have to grant continued protection in the UK for all rights accrued here under EU regulations
  • new UK IP regulations will be needed to replace those from the EU
  • the UK may not be covered by Unitary Patent and might be denied access to the EU Unified Patent Court (UPC), leading to lengthier and more costly patent disputes

Article 50 - click here for our timeline and what happens next

To find out more about Beyond Brexit click here.

Contact

Jo Pisani

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Insights

Pharmaceutical sector shows steady deal flow

With our latest analysis of Pharmaceutical (Pharma) merger and acquisition (M&A) deals our specialists, Michelle Ritchie, Steve Aherne, Lucy Stapleton, Andrew McKechnie and Jo Pisani talk about what current trends and future opportunities we are seeing in the market. Our analysis is based on the deal tracking done by Dealogic and we have found that Pharma is not immune to the economic downturn, and this has clearly impacted the number of deals that have happened this year.

Contact us

Lucy Stapleton
Pharma & Life Sciences Deals Leader
Tel: +44 (0)20 7804 2629
Email

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