• Almost 75 per cent of senior life science executives believe the pace of innovation in science and IT will drive their companies’ revenues by 2015.
• Over 50 per cent of senior life science executives expect half of their revenues to come from products and services not yet found within their portfolios.
• Ireland risks losing ground in attracting life sciences companies.

Ireland risks being left behind in the development of the growing life sciences sector because of a lack of crucial R&D supports to encourage innovation, according to Deloitte.

According to a new Deloitte report, the global life sciences industry seems poised for an innovation ‘explosion’. However, in order for this to come to fruition, certain impediments must first be overcome.

In a survey of nearly 200 senior life sciences executives, 74 per cent of respondents indicated that the pace of innovation in science and IT would be a key driver of their companies’ revenues by 2015. In addition, over 50 per cent expect at least half of their 2015 revenues to come from products and services not yet found within their portfolios.

The report outlines that some of the major impediments currently include rising R&D costs, increasing regulatory requirements, funding issues, and intellectual property protection. Additionally, the policies affecting market access as well as pricing and reimbursement can be significant barriers to innovation.

Commenting on the report, Joan O’Connor, Tax Partner, Deloitte, said: “What this report shows is that clearly the potential is there for the life sciences industry to really expand and grow over the next 10 years and innovation will be a key driver in that growth.

“The worrying aspect from an Irish point of view is whether enough is being done to either encourage life sciences companies to Ireland or reduce the impediments to this innovation. In particular, with regard to R&D, the recent budget and Finance Act provided the government with an opportunity to incentivise inward investment to Ireland, but bar the changes to the R&D credit regime, there was no other announcements facilitating innovation. The new provisions allowing companies to sub-contract R&D to third parties up to a limit of 10 per cent of qualifying R&D is to be welcomed, but is unlikely to be sufficient to cover expenditure incurred by pharmaceutical companies on clinical trials which work is outsourced to third parties, which is fundamental to new drug development.

“This report certainly re-iterates the findings of the recent ‘Retuning the Growth Engine’ report by the American Chamber of Commerce, which outlined that the development of an innovation base in Ireland is critical for Ireland's future sustainable growth. Both reports are saying that the potential is there – the task now is to develop a framework that will see this potential come to fruition.”

In light of the key barriers influencing innovation today, Deloitte’s ‘Innovation in the Life Sciences Industry’ report identifies several areas as targets for action to help accelerate innovation in the life sciences industry over the next three to five years:

• Interfaces between the industry, governments, and payers need to be strengthened through greater collaboration. Concerns about R&D, funding and financing, inefficiencies and variations in regulatory review processes, uncertainties related to insurance coverage and reimbursement, and threats to intellectual property could be reduced through improvements to the policies and processes through which the industry interacts with governments and payers.
• Scientific and business approaches must become more interdisciplinary. Given the complexity of disease mechanisms, an interdisciplinary scientific approach seems increasingly necessary to discover and develop breakthrough products. Companies may need to take a more interdisciplinary view in defining their business strategy, as well, if they are to realise the promise of expanded product portfolios and the potential of convergence among core technologies for business growth.
• Relationships with consumers must become more interactive. More than 80% of the senior life sciences executives who responded to the survey expect the increase in health consumerism will have a positive impact on their company’s revenue by 2015. Increased engagement with consumers will therefore be necessary as consumers demand more information from companies and similarly, more information will be needed from them by companies.

“Competing countries, such as The Netherlands, are reacting and implementing strategies that maintain its attractiveness as a location for management of intellectual property. Ireland now needs to take these findings on board and plan accordingly,” concluded O’Connor.

ENDS

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