What will 2015 bring for Life Sciences?
With 2014 almost over and most Christmas parties done and gone, I would love to have a crystal ball to predict next year’s Life Sciences trends.
Reflecting back on this year, one of the major trends we have seen are the global Pharmaceutical M&A deals which hit an unprecedented $317.4bn in the first half of 2014, with the biggest being AbbVie’s acquisition of Shire for £32bn. We’ve seen further collaboration between government, universities and Life Sciences businesses, specifically the smaller to medium sized ones (see my recent blog on MedCity). There has also been the threat of a global pandemic, the rise of big data, and the promise of better returns from R&D.
Looking back on my own practice, I have been working with smaller Medical Devices and Biotech companies as well as large international Pharmaceuticals. The interim roles I recruited for varied from an Operational Excellence Manager, to a Serialisation expert, to a Business Unit Manager and a Transition Director.
What will the new year bring for the Life Sciences sector globally?
There are presently massive shifts occurring in the competitive global landscape of Health and, particularly, in the Life Sciences: unparalleled connectivity, evolving demographics, impressive growth in patent applications in emerging markets and pharmaceutical demand changes worldwide. As we rapidly approach 2015, it is vital that the leaders in this sphere understand the trends and shifts happening around them on a global scale.
Here are the top 5 trends you need to know for a successful 2015, inspired by Forbes:
- An ageing population and workforce: In the last 20 years, the percentage of the scientific and engineering workforce over the age of 50 increased from 20% to 33%. Further, before 2020 it is estimated that 2 million engineering and life science jobs will become open, mostly due to retirement. Per the 2014 ManpowerGroup’s annual global survey involving 38,000 employers in 42 countries, 35% of employers report difficulty in filling jobs. For example, in China, the one-child policy has made the current health care workforce unable to manage its aging population. The ageing labour force means that employers need to think about flexible work hours, new technology, new training programs and varied skill sets. While STEM (science, tech, engineering and math) programs targeting women have become increasingly popular, females are still greatly under-represented in this area and could possibly help meet health and tech demands.
- Regulation and taxation: Not surprisingly, Japan and the United States have the highest corporate statutory tax burdens (39.5% and 39.1%, respectively). While many argue this drives down innovation, others claim it merely keeps companies from having investments in the US. For example, Medtronic recently committed to purchasing Covidien, with speculation that the move is to keep funds in Ireland, with its low tax rate. According to Roger Humphrey, Executive Director of JLL’s Life Sciences group, “Federal policy, such as corporate tax structures and regulatory frameworks, directly impacts life sciences companies’ ability to establish roots and flourish over time.”
- Shift in education: Because of the rapid expansion of tertiary education both in the industrialized world and in emerging economies, the US is fast losing its advantage of having the highest percentage of working population (25 – 64 year old) with Bachelor’s degrees. However, that can no longer be said for younger generations. For example, the percentage of 25-34-year-olds with bachelor’s degree is higher in Korea (39%), The Netherlands (38%), the United Kingdom (38%) and Australia (34%) than in the US (33%).
- R&D concentration: Currently 10 countries account for 80% of global R&D. Because businesses are the biggest source of R&D funds, investor confidence and broader economies can have major impacts on funds appropriated for both research and development. However confidence in biotech seems to have returned, with 2013 being a banner year for life science IPO activity in the US with 52 deals resulting in $7 billion, compared to $1 billion for 16 deals in 2012. However, by the early 2020’s, China’s R&D spending could be the highest in the world.
- Decrease in barriers for entrepreneurs: Barriers to entry in entrepreneurship have declined in most countries, especially among the more developed global cities. This is in contrast to the emerging life sciences clusters. Mr. Humphrey notes, “We are consistently seeing that the countries with the lowest barriers to entrepreneurship are the UK and The Netherlands, while China and India presently have the highest barriers to entry.” He claims this is due to difficulties with collaboration and the shared risk models in these emerging markets.
As the trends above are global trends I am curious to hear your thoughts on how this will affect the Life Sciences industry in Great Britain. Please share your thoughts below or contact me on 02078227436 for a personal discussion.
Norma Warwick-Smith is the Senior Consultant of Industry at Interim Partners.