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Feature


2025 LIFE SCIENCES INDUSTRY OUTLOOK: WHAT'S NEXT?




A 2025 LIFE SCIENCES INDUSTRY OUTLOOK REPORT IDENTIFIES SEVERAL FOCUS AREAS,
INCLUDING DIGITAL TRANSFORMATION, COMPETITIVE PRESSURES, BUSINESS VOLATILITY AND
EVOLVING CUSTOMER NEEDS.

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By
 * Veronica Salib, Associate Editor

Published: 10 Dec 2024

In the coming year, the life sciences industry is expected to evolve, shape, and
transform under pressures from both internal and external forces. Industry
leaders anticipate that, despite potential disruptions and challenges, 2025 will
be a year of growth for the industry. On Dec. 10, 2024, Deloitte released its
"2025 life sciences outlook," a pulse check on what's to come in this industry
throughout the next calendar year.



The report uses data from a survey conducted by the Deloitte U.S. Center for
Health Solutions. The survey gathered data from global life sciences executives.

Although the takeaway is generally positive, with 75% of executives expressing
optimism about the coming year, Deloitte explored several components of the
industry and different factors that may drive or hinder growth, including
digital transformations, R&D, portfolio expansions, business volatility, new
U.S. leadership, changing customer expectations and innovation.


DIGITAL TRANSFORMATION

As with most industries across the globe and previous years' expectations,
digital transformation will be critical in the life sciences industry in 2025.
According to the executives responding to the survey, the following trends
regarding digital transformation will likely impact the life sciences industry
in the coming year:

 * Accelerated digital transformation.
 * Proliferation of generative AI (GenAI).
 * Increasing and escalating cyber attacks.

Deloitte anticipates that advancements in the digital space, including cloud
computing and GenAI, will be vital tools moving forward in the industry.

According to a survey conducted by the consulting firm, 60% of life sciences
executives will be monitoring GenAI or digital transformation trends as the new
year approaches and continues. A similar proportion of executives have plans to
increase their GenAI investments across the value chain, expanding behind pilot
projects and programs seen in the past.

A look at the statistics provides a clear motive for this shift in trends.
Deloitte analysts estimate that AI investments could offer medtech companies
cost savings of up to 12% of total revenue across the next couple of years.

AI investments can help address several challenges across the life sciences
landscape, with benefits ranging from lower-cost research and development to
boosted employee productivity.

To keep up with digital transformations and changing trends, life sciences
companies are prepared to take many actions, including investing in technology
platforms, investing in transformative technologies and enhancing cybersecurity
efforts.


COMPETITIVE PRESSURES

Several industry-wide trends in the competitive landscape are expected to
contribute to the evolution of the life sciences industry in the coming year,
including the following:

 * Pricing and access to drugs, therapies, and medical devices.
 * Competitive pressures from generics and biosimilars coming to market.
 * Patent cliffs or expirations on blockbuster drugs.
 * Interest in direct-to-consumer drugs.

Across the industry, challenges regarding pricing and access have consistently
been at the forefront, and that is expected to persist in 2025. Approximately
47% of C-suite executives anticipate that pricing and access will significantly
affect strategies in the coming year. Most of the remaining respondents, 49%,
expect these factors to have a moderate impact.

Beyond those challenges, roughly one-third of executives surveyed are concerned
about competition from generics and biosimilars. Another third is concerned
about the looming patent cliffs and how they may impact revenue.

Industry leaders and executives must focus on continued innovation to address
these challenges and persistent competitive pressures. By looking at existing
gaps and profitable disease areas, life sciences companies can determine the
ideal areas to focus on. However, innovation can be slow and expensive.

To prepare for these challenges and evolving trends, life science executives are
taking many actions, including investing in improved R&D productivity, improving
clinical trial diversity, strengthening real-world evidence and multimodal data
capabilities, aligning mergers and acquisitions with corporate strategies and
rethinking portfolio strategies.


BUSINESS VOLATILITY

In addition to challenges from competitive pressures, the report mentioned that
life sciences companies are bracing for business volatility in 2025. They looked
at known challenges as well as unpredictable risks. Among known challenges,
Deloitte acknowledges that regulatory changes in the U.S., the impact of the
presidential on the life sciences industry, and global regulatory changes might
contribute to business volatility. Other trends that might contribute are more
unpredictable risks, such as manufacturing and supply chain risk, inflation and
a potential economic recession.

In anticipation of business volatility, life sciences leaders are focusing on
multiple actions to combat the potential challenges, including performance
improvement efforts, which might require cost-cutting, optimizing operating
models, focusing on geographic market expansion, building supply change
resiliency and adaptability, and building proactive global risk mitigation
strategies.


EVOLVING CUSTOMER NEEDS

As patient needs continue to evolve, the industry will need to adapt to keep up
with the changing landscape. Beyond their changing needs and preferences,
customers have also continued to adopt digital tools. Going hand-in-hand with
digital transformation initiatives, companies have to acknowledge how customer
adoption might impact their strategies and the success of those strategies.

In response to evolving consumer needs, life science companies have adopted
strategies intended to improve customer experience, engagement and trust.
Additionally, they are investing in customer engagement strategies and enabling
technologies.

Overall, the report anticipates significant and dynamic growth in the upcoming
year for the life sciences industry. Although several challenges might pose
barriers to growth, most executives surveyed in the report are optimistic about
the industry's future.

"We are full of expectations for personalized medicine," a senior vice president
of a small German pharma company explained to Deloitte analysts in the survey.
"With advances in genomics and biomarkers, we can provide patients with more
precise treatment options. This not only improves efficacy but also
significantly reduces side-effects, allowing patients to have a better treatment
experience."

As innovations continue, it will be critical to watch the industry as it evolves
and analyze how outside pressures might impact these developments.

Veronica Salib has covered news related to the pharmaceutical and life sciences
industry since 2022.



DIG DEEPER ON MEDICAL RESEARCH AND DEVELOPMENT

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