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Health care reform and life sciences: Threat, opportunity or both?

Changing innovation processes and sales models crucial for companies to get ahead


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Enhancing innovation, reducing costs, widening market access, and changing sales models are seen as major impacts from health care reforms around the world, according to a new report released by Deloitte Touche Tohmatsu Limited Global Life Sciences and Health Care industry group, Health care reform and life sciences: Threat, opportunity or both?

View an infographic highlighting the survey findings.

Developed in collaboration with The Economist Intelligence Unit, the paper is based on an online survey of 295 senior life sciences industry executives to assess the common elements of the recent wave of global reforms and how life sciences companies are reacting. The paper also explores national differences through case studies of China, Brazil, and Germany.

Sixty-one percent of respondents describe health care reforms in major markets as representing a high or very high risk to their business, and only 8% see the risk as low. While industry executives say that adjusting to health care reform needs to be one of their leading priorities (77%), they also admit that their firms are responding reactively rather than strategically. However, if life sciences companies are able to understand and adapt to reform-driven changes, they may reap resulting benefits.

Among key survey findings:

  • Cost reduction and increased market access seem to be common themes of health care reform; yet countries are also eager to increase medical and life sciences product innovation. This offers opportunities for life sciences companies via value-based pricing systems, government R&D incentives, and other practices.
  • Respondents expect the main impact of reform eventually will be on innovation and sales models. How companies are dealing with new government agencies is seen as a key challenge. Also, 65% of respondents say they have changed or will change their innovation processes in three years, and 58% will adapt their sales models in light of legislative reforms.
  • Specific elements of reform vary by country. Pricing pressures, government drug expenditures, and cost cutting, among other issues, are requiring companies to have national approaches to reform.
  • Leading companies are remodeling their innovation and sales activities in the face of reforms. Respondents who benchmark their company’s financial performance most highly compared with peers are more likely to see opportunities arising from reforms (61% of this group do, compared to a survey average of 47%), have been more active in responding to them, and are more likely to believe that these responses have positively affected profits (56% compared to 35% on average).

Despite the inherent challenges, nearly half (47%) of survey respondents say that health care reforms represent a great opportunity. Some of this potential lies in developing products that meet the goals of reformed systems, such as more patient-focused care (cited as a reform objective by 39%). More than a third (36%) of pharmaceutical respondents cite expanded market access as the leading reform-related opportunity. This study suggests that action on two levels is needed: First, life sciences firms need to take a strategic, global approach rather than reacting to change market by market. Second, firms need to look at the particular opportunities that specific national reforms can bring.

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