How did your division help its customers in 2022?

2022 has been a transformative year for many of our clients. On the biotech side, the issue was the drop in valuations from the pandemic ‘sugar high’. Our focus has been on divestments, portfolio optimization, and, from a functional perspective, technology and supply chain activity. Additionally, clients need to make sure theircommercial potential is maximized so, on the customer and commercial side, patient services and reimbursement assistance are in high demand, in addition to M&A services. What we will see more of is the cash management challenges given the industry's need for it, with the topline eroding due to the upcoming loss of exclusivity wavedriven by biologics. Pharma will be squeezed from multiple angles, so the industry will need a multifaceted effort to maintain margins.

What is your financial outlook for the industry in 2023?

In 2022, the number of deals – from a volume and value perspective – was low, if not at an all-time low for the last10 years in the US. The volatility in the market prohibited dealmakers to deploy large capital, although we are expecting more deal activity starting in Q3 2023. More stable macro conditions and inflation under control will give better sight to dealmakers and the pipeline is promising. Because of the high valuations post-Covid, unconventional investors flooded into biopharma companies, and that capital infusion created unusual valuations that were not sustained.

In recent years, some biotechs IPO’d too soon. Generally, companies go public when ready for Phase 3 trial and launch to raise capital of +US$100 million. In contrast to this traditional approach, some companies in Phase 1 or even in pre-clinical stages went public. In 2023, biotechs with the right de-risked asset can do an alliance, beacquired, or will have an IPO window open. I expect the market to remain quiet for the first half of the year, but we need to keep in mind that pharma needs those products with the topline eroding. For the first time, we are estimating US$1.4 trillion of cumulative firepower to deploy toward inorganic growth and CAPEX. Pharma now has a balance sheet to afford those acquisitions, but low valuations do not mean pharma will go on a buying spree, it has to make sense portfolio-wise.

How do you assess the current technological penetration rate in the industry?

I see three areas of progress: on the patient engagement side; on internal processes; and drug discovery and clinical trial optimization. On the patient interface, it is key for a firm that the prescribed therapy is not discontinued. Digital patient engagements offer upsides, and patient-specific data and real-world evidence will help us get there. For internal processes, pharma needs robotic process optimization to intelligently improve the current methodsusing analytics. Financial and operational resiliency is key here. Finally, we saw tremendous potential in the past three years to leverage AI investment toward innovation, drug discovery and development. One revolution I could see occurring in the creation of clinical protocols through AI capabilities like ChatGPT.

How do you guide customers’ ESG strategy and regulatory approaches?

ESG-wise, pharma is ahead compared with other sectors. We have an ESG health equity survey that demonstratedhow health equity strategies are a priority for pharma. There is also a need for diversified clinical trials. Thankfully,now there is legislation about this offering FDA the ability to oversee diversity in proposed clinical trials. This will help accelerate the adoption of ESG principles.

Additionally, over the last 30 years, the number of products coming to the market is growing along with the penetration of biotech submissions within those NDA submissions. The FDA is focusing more on niche diseases, and the PDUFA Act that was recently renewed helps with drug approval visibility. The industry did not expect Medicare pricing negotiation in the near term. Some firms already stopped the development of certain programs because of it and now need to watch how potential future R&D projects will be affected.

How do you plan on helping the industry in 2023?

We are going to help the industry digitalize, prepare for the innovation deficit due to expiring patents and improve strategies that lead to better M&A opportunities. Finally, we will work to enable the better operational, workforce, and financial resiliency.