The COVID-19 pandemic has forced life sciences companies to examine all aspects of their operations, and in many cases, accelerate portfolio reviews as they focus on investing in their core business for the post-pandemic future.
Life sciences executives in the 23rd edition of the EY Global Capital Confidence Barometer (pdf) say that they are increasing investments in areas such as digital transformation (67%) and customer engagement (65%) to help grow long-term value. These investments make sense as the pandemic changed the way patients receive care, with telemedicine becoming more pervasive and greater use of virtual technologies to conduct clinical trials.
The pandemic has also had a mixed impact on life sciences companies. Indeed, 89% of executives saw a decline in profitability because of the pandemic. Although many big pharmas have been at the forefront of developing and delivering COVID-19 treatments and vaccinations, other biopharmas were affected. Patients were unable or unwilling to see their physicians, resulting in fewer new prescriptions written and treatments administered (e.g., cancer drugs). Medtech companies were hurt by delays as hospitals temporarily halted nonessential procedures.
But the impact on profits is expected to be short-lived: 76% expect a return in profitability during 2021 or 2022, underscoring that while there may be short-term disruptions in treatments, there is little elasticity in long-term demand.
One way life sciences companies are responding to the pandemic is by examining their long-term business plan to ensure the portfolio aligns with future needs. A vast majority of executives (90%) said that they had conducted a comprehensive strategic and portfolio review, with 56% of respondents noting the pandemic accelerated the timing of the review.