Top risks for life sciences sector revealed | Insurance Business America
Global broker WTW has released a report on the 2023 risk outlook for the health and life sciences sector.
“The life science industry is in a period of transformation, from new clinical trial models and evolving regulatory approvals to digitalization and automation of processes,” WTW said. “Though hugely promising, these rapid advances can be difficult to adapt to in the short term. They also raise ethical and legal questions, around issues such as data privacy and consent and health equity.”
For the study, WTW polled 600 industry leaders in the health and life sciences sector. Participants were asked to rank what they felt were the top risks to business success in the next three to five years:
- Data privacy/informed consent (46%)
- Labeling and packaging (44%)
- Product safety failure/product recall (40%)
- M&A risks (39%)
- Talent acquisition and retention (38%)
- Environment/climate change/extreme weather (44%)
- Cost and availability of inputs including materials and energy (43%)
- Cyber risks (40%)
- Changing or increasing legislation (39%)
- Social inflation/rising cost of litigation (36%)
Collaborations and M&A
The study found that firms are focusing on collaboration and M&A over new products.
“Industry collaborations emerged as the sector's greatest opportunity over the next two years, named by 35% of respondents among their top five business priorities,” WTW said. Thirty percent named strategic acquisitions and industry collaborations among their top three strategic objectives.
Conversely, only 15% said launching new products was among their top priorities, while only 12% named IPOs.
“This could reflect a desire to pause and recover after a high period of activity, including the rush to develop new vaccines,” WTW said.
Data privacy and informed consent issues were top of mind for many in the sector, WTW said.
“As the sector becomes more dependent on data to inform strategy and drive innovation, firms are also more conscious not only of the opportunities but also the risks this brings,” WTW said. “With the rise of digital healthcare, life science companies are coming under increasing scrutiny from regulators, courts and the public for how they use patient data and how they obtain their consent.”
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Fifty-two percent of survey respondents said that improved data and data access were among their top five opportunities from digital transformation over the next three years. However, 46% said data privacy and informed consent were among the top internal factors posing the greatest risk to their business over the next few years, and 38% named data privacy as one of their top three ESG risks.
Health and race equity is also becoming a more pressing issue for the sector. Fifty percent of respondents said health and race equity was among the top three emerging themes that will have a positive impact on the sector over the next three to five years, and 42% said issues related to health and race equity and access to medicine were among their top three ESG social risks.
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