COVID-19 has functioned as a fast-forward button throughout many industries, accelerating existing trends. It could be said that pharmaceutical and medical companies were already in fast-forward, and COVID-19 has acted more like a rocket booster to existing changes.
BDO’s 2021 Healthcare CFO Outlook Survey shows that digital transformation, product or service expansions and geographic expansion are the three top strategic priorities for 2021. Simultaneously, companies are integrating and optimising the impact of technologies like AI, big data analytics, CRISPR, and bioinformatics. Other key industry drivers and risk factors include shorter time-to-market windows and lifespans for solutions and services, increased competition, and evolving legislative frameworks.
In an evolving business environment, and with the many changes in mind, expanding solution portfolios and upgrading capabilities may well involve M&A. However, deal-making will be affected by COVID-19, as investment strategies, target identification, along with due diligence, and deal structuring, have all been influenced by market uncertainties and a changing risk landscape. For companies across the pharmaceutical and medical fields, identifying what changes are likely to become permanent and which are likely to disappear will be a top priority across all business operations.
Finding ways to accurately gauge industry developments and how peers view developments can be vital to formulating optimal responses to the ongoing changes.
In a dynamically developing industry, benchmarks and best practices like those found through BDO’s 7P model can help inform your decision-making processes. Through the model, companies gain insights and understand industry benchmarks while simultaneously gaining access to a framework for working with changes and operationalising strategy.
One of the areas where pharmaceutical and medical companies are seeing huge shifts is concerning People. The talent pool and desired employee skills for companies in the 2020s are fundamentally different to ten years ago – or even five. Maintaining access to people with the relevant skillsets is challenging - doubly so due to changes to processes and the ongoing need to integrate new technologies. Work-from-home and cross-company global collaborations will likely become part of the new normal, meaning that upgrading everything from HR over collaboration setups to cybersecurity systems will be critical for long-term success.
Those new technologies and ways of working are also core to the changes companies experience in relation to Process. Regulatory and market changes, including data protection laws, like GDPR, and likely new drug development timelines will impact development structures and processes for new medicines and solutions, as will the combinations of drug and telemedical therapeutic concepts and personalised medications.
All of which influences financial projections and Profit. The medical companies may need to adjust business models and find ways of accessing relevant talent. Such strategic initiatives may include M&A that can affect short-term profit forecasts. Simultaneously, companies must address the changes to revenue streams that have arisen due to 2020 and 2021 and realign project and revenue projections.
This is by no means a process with a clear end in sight. Instead, continued development and upgrades to business processes and strategies will be needed.
Furthermore, the influence of the dynamics described above is asymmetrical. When looking at profits, for example, some companies have seen direct, negative impacts on revenue, disrupted supply chains and increased costs. Others have seen rapidly changing customer needs, while others have grappled with unprecedented growth and customer acquisition opportunities.
Tailoring your response to the changes to match your unique situation and growth potential is core to the work of BDO’s worldwide expert healthcare and financial services teams. We advise medical and pharmaceutical companies on all aspects of their businesses and operations. Thanks to our presence in more than 160 countries, we have unique on-the-ground expertise to assist you wherever you are – or want to be – active.