contact us to

get started

Contact Sales

Top 3 Things Keeping Life Science CEOs Awake at Night

September 5, 2019

By Judy Hanover, Senior Director Product Marketing

2019 has been a year of uncertainty amidst growth and consolidation for the life science industry. With global spending on life science software up by 8% according to IDC, for a value of $4.67B, growth is strong; IDC also identified Model N as a top 10 life science vendor in the same report.  Additionally, PwC’s recently published annual healthcare and pharmaceutic CEO survey provides insight into key drivers for growth as well as what actions life science companies are taking to counter growing economic pessimism.

CEO Pessimism Grows

Concerns about an economic slowdown are growing across industries, and healthcare and life science CEOs are concerned as well.  The number of pharma CEOs who said they were optimistic about global economic growth prospects in the PwC study dropped 10%, from 51% in 2018, to 41% in 2019.  Hiring is also slowing down;  the percentage of healthcare and life science CEOs responding to the PwC survey who said head count will decrease in the coming year grew from 8% in 2018, to 15% in 2019.  An additional 30% of CEOs believe headcount will remain the same in 2020, while the majority, 55%, of CEOs still expect head count to increase, down from 63% in 2018.  Healthcare’s reputation as a relatively recession proof industry may be the cause of the dampened concern in this industry, but the availability of skilled healthcare and life science workers was also a concern, and may CEOs indicate they plan to retrain or upskill workers amidst a general labor shortage.

Three Challenges Keeping CEOs Awake at Night

PwC identifies 3 top concerns of healthcare and life science CEOs, mainly centered around fiscal realities:

  1. The Rising Cost of Healthcare. 93% of health system CEOs and 81% of life science CEOs put the rising cost of care at the top of their list of concerns in the PwC survey.  While it’s clear that many countries, particularly the U.S., are near a breaking point when it comes to cost, the dichotomy between cost and value/outcomes is forcing both industries toward massive upheaval and restructuring to achieve their goals.  This is evidenced by merger and acquisition activity, Q2 of 2019 had the highest deal volume for pharma and medtech companies over the last two years, according to another PwC study.
  2. Resource Constraints. With cost pressure come resource constraints.  82% of pharma CEOs and 86% of healthcare CEOs said resource constraints were worrisome.  PwC is projecting the shortage of healthcare professionals to reach 12.9M by 2025.
  3. Addressing Social Determinants of Health. 49% of life science CEOs and 68% of healthcare CEOs are kept up at night by worries about this wild card.  Socioeconomic determinants of health – the physical, social, economic and behavioral characteristics that affect health outcomes – are the clearly the missing variable in the equation when it comes to improving outcomes.  These factors are often the fatal flaw in programs designed to improve outcomes while reducing costs.  One size fits all evidence-based medicine programs are evolving toward mass personalization approaches that take advantage of technology, as health consumerism continues to grow and patients demand care plans that meet them where they live, with attention to quality of life.

Outside of healthcare, CEOs across industries in the PwC survey cited overregulation, terrorism and geopolitical uncertainty as top concerns, with significant variation by region.  As healthcare services rarely cross borders, it’s not surprising that these geopolitical concerns were not priorities for healthcare and life science CEOs.  The U.S. election cycle in 2019 may change this in the coming year.

It is surprising that cyber threats, a top concern across industries in North America, was not in the top 3 concerns in the 2019 PwC study, given that healthcare data is one of the most-frequent and lucrative targets for cyber criminals.  Cyberthreats did make the top 3 concerns in last year’s 2018 PwC healthcare study so it is interesting to see this particular concern wane among these industry leaders, perhaps the result of increasing comfort with security in the cloud, as they add cloud-based solutions to their portfolios.

AI and Analytics Grow in Importance for CEOs

The PwC study data confirm that health and life science companies are perhaps over the initial hype about artificial intelligence (AI) but are getting even more serious about analytics.  With growing consumerism and competition top of mind, the data CEOs want most but were least likely to have were data about brand, reputation and customers’ needs and preferences.  Over 90% value this data most, but less than 30% have comprehensive information on these topics.  Financial forecasts, projections and business risk data were also on the list of analytics CEOs want more of.

The AI data from the PwC study show that CEOs still see potential for AI, with 81% of healthcare and 75% of life science CEOs indicating they believe AI will significantly change the way they do business.  However, they are not acting on this sentiment, only 4% of healthcare and no life science CEOs claim to have implemented AI on a wide scale, and 1/3 of CEOs in both industry segments claim they have no plans to pursue AI initiatives in the coming year.

The Model N View

At Model N, we are working to bring modern analytics and AI capabilities into our products, with intelligent features that embed analytics into workflows, and offer dedicated analytics like our Intelligence Cloud.  These solutions help our customers gain visibility into their contracts with end-to-end revenue management, gross-to-net forecasting, projections, and more.  We look forward to working with our customers to maximize every revenue moment as they navigate the complex road ahead.  For more information, please visit our website or email us by clicking here.

Start typing and press Enter to search