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Facing pricing pressures, patent expirations and rising R&D costs, life sciences CEOs expect slower growth over the next three years. Based on research from KPMG, this article finds that sector CEOs are exploring opportunities to boost their trajectory using new technologies such as generative AI – supported by a stronger digital foundation. At the same time, appetite for M&A remains strong with many CEOs saying they will make strategic deals when markets stabilize.

As pricing pressures mount and the cost of delivering novel medicines increases, life sciences CEOs are dealing with a growing list of complex challenges. Yet there are also significant opportunities on the horizon – AI, precision medicine, digitalization and more. The big question is whether life sciences organizations are prepared to take advantage.


To find out, we surveyed 118 life sciences CEOs globally to ask them about the risks and challenges they face, their expectations for the next three years and the opportunities driving their businesses forward. Here are the key highlights that emerged:
 

  • The majority of life sciences CEOs expect anemic growth over the next three years. Fifty-six percent say they expect to achieve growth of less than 2.5 percent per annum. Pricing pressures and patent expirations are likely influencing expectations, along with a recognition that the high cost of promising new gene therapies and other precision medicines may limit adoption in certain markets.

About the survey


The Life Sciences CEO Outlook is based on data from the KPMG 2023 CEO Outlook. CEOs from 118 life sciences organizations were surveyed. Fifty-four percent represented pharmaceutical companies and 67 percent reported revenues of US$1 billion or more. Thirty-six percent were headquartered in the US, 10 percent in Japan and China, 9 percent in India, 8 percent in Germany and the remainder – 26 percent – in the rest of the world.

  • Life sciences CEOs are worried about supply chain disruption and trade regulation. Supply chain disruption emerged as the top risk as ranked by life sciences CEOs. And more than three quarters expect trade regulation to have a major impact on their organization within the next three years. Life sciences CEOs are increasingly worried about supply chain concentration risks as geopolitical tension rises.

  • They are looking to AI and emerging technologies to improve profitability and agility. Sixty-two percent of life sciences CEOs say that generative AI is a top investment priority for their organization, with profitability improvements cited as the top benefit. Yet 53 percent say they are worried about the ethical considerations of the new technology.

  • Future growth will be driven by digitalization and connectivity across the business. Life sciences CEOs say they will be placing more capital investment into new technologies versus developing workforce capabilities. M&A will continue to be a major factor, but CEOs would like to see market conditions stabilize and the cost of financing fall.

  • Public trust remains a key priority and CEOs are seeking to improve their capabilities. Life sciences organizations have a long history of investing into health, social and community programs. Yet just 70 percent are confident they have the right reporting capabilities and only 67 percent say that ESG has been fully embedded into the business as a means of value creation.

A deeper dive into the findings




  • CEOs are worried they might not outpace the market.  Eighty percent of life sciences CEOs are confident in the industry’s growth prospects. But just 69 percent say they are confident in their own company’s growth prospects.

  • Growth will be anemic. Fifty six percent expect growth of 2.5 percent or less per annum. Our respondents say that pricing pressures, patent expirations and R&D costs and challenges are top reasons for lower growth expectations.

  • CEOs are worried about a range of risks. But supply chain disruption was ranked as the top risk. With significant concerns about supply chain concentration risks, life sciences CEOs are concerned about any disruption to their operations.

  • After regulatory demands, CEOs are most worried about the impact of trade regulation. Geopolitical conflicts, trade regulation and inflationary pressures ranked as three of the top five risks worrying life sciences CEOs. 


“The life sciences industries are in an interesting time where the convergence of a wide range of transformative innovations are set to enable long-term growth, but at the same time there are a multitude of headwinds that include a tightening regulatory environment in the United States, a tougher venture capital market and geopolitical tensions. These headwinds will likely challenge the ability for new innovations to achieve success and optimal value. These circumstances paint a picture of an ecosystem where both the sources that help foster new innovation to become commercial and sources that help sustain existing commercial products are all challenged. The innovation is there but growth is being hampered by these other macro-level issues.”



Jeff Stoll
PhD., Principal, National Strategy Life Sciences Leader
KPMG in the U.S.






  • Advanced digitalization and connectivity are top growth priorities for life sciences CEOs. More than half (53 percent) say they will be placing more capital investment into buying new technology in 2023.

  • Generative AI emerged as a top investment priority for 62 percent of life sciences CEOs. But 46 percent say it will take between 3 to 5 years to see a return on the investment from generative AI. In particular, they are worried about new ethical challenges and heightened cyber concerns.

  • While appetite for M&A remains high, CEOs would like to see market conditions stabilize. They are more concerned about macroeconomic conditions than they are about finding appropriate targets and integrating them. 



  • Life sciences CEOs are keen to keep investing in public trust. Ninety-two percent say they plan to invest into social and community programs to fulfil their CSR goals, build their reputation and brand image, engage employees and mitigate risk.

  • Reporting capabilities can improve. Just 70 percent of respondents said they have the capability and capacity to meet new reporting standards. As regulators and stakeholders seek greater transparency and disclosure from companies, this will become increasingly important.

  • ESG must be linked to business value. Two-thirds said they have fully embedded ESG into their business as a means of value creation. Yet they also see big challenges dealing with the complexity of decarbonizing their supply chains.

  • CEOs think ESG will give them an advantage. The top two benefits of meeting stakeholder ESG expectations were cited as improved cost of finance and competitive advantage. Less of a concern is customer and employee engagement. 


“ESG really needs to be connected right across the organization and from front to back office. It needs to be aligned with business objectives, understood across the organization and driven down into the supply chain. And then data needs to be collected and reported out to various stakeholders. ESG can’t be viewed in a silo. It must be embedded enterprise wide.”


Alison Little
Global Leader, Connected Enterprise for Life Sciences,
KPMG International, and Principal, Advisory, KPMG in the U.S.



Navigating complex business challenges

KPMG member firms have deep experience in helping life sciences companies respond to challenges such as delivering better and lasting financial results for stakeholders, leveraging technology to help increase competitive advantage, and unlocking the power of ESG to transform businesses and build a more sustainable future. Contact us to learn more about how KPMG professionals can help address your organization’s current and future challenges.