Proposal title goes here| Section title goes here2 2018 Global life sciences outlook l Innovating life sciences in the fourth industrial revolution:Embrace, build, grow Outlook 3Economic overview 3 Embrace 9Embracing exponential changes in technology 9Embracing geopolitical change 13 Build 15Building an adaptable organization for the future of work 15Building a culture of courage to help counter uncertainty 19Building data integrity, maximizing the value of data22Building patient trust and centricity 23Building a smart, cross-functional regulatory approach 26 Grow 29Growing through partnerships and new operating models 29 What’s next: Actions for 2018 33 Appendix 35 Endnotes 37 Contacts 40 Table of contents 2018 Global life sciences outlook l Innovating life sciences in the fourth industrial revolution:Embrace, build, grow 3 Emerging technologies are creating atransformative opportunity for life sciences,and scientifc achievements are on a recordpace. The geopolitical climate is ushering ina new era led by the passage of tax reformin the United States and Brexit in the UnitedKingdom. In addition to embracing thesechanges, life sciences companies are lookingfor ways to meet the opportunities andchallenges coming in 2018. Forward-thinkingorganizations will be: Building an adaptable organization for thefuture of workBuilding a culture of courage to helpcounter uncertaintyBuilding data integrity, maximizing thevalue of dataBuilding patient trust and centricity, acrossthe journey of careBuilding a smart, cross-functionalregulatory approachIn order to grow, life sciences companieswill need to continue to look for newpartnerships and operating models.Alliances and partnerships will beparticularly important for accessing externalexpertise and technology. And technologycompanies, both large and small, are alreadypoised to disrupt the industry. Economic overview “Health life sciences” refers to the applicationof biology and technology to improve healthcare, and includes biopharmaceuticals,medical technology, genomics, diagnosticsand digital health. The sector generates awide range of products including drugs,medical technology, diagnostics and digitaltools.1Growth trendsPharmaceutical drugs On the heels of a slow recovery, globalprescription drug sales are forecast to growat an impressive annual compound rate of6.5 percent in the next fve years. Worldwidesales are expected to be US$1.06 trillion in2022 (Figure 1).2 This growth is in contrast tothe 2.2 percent compounded annual growthrate (CAGR) in 2012-2016, but still under the8.4 percent CAGR before the global fnancialcrisis in 2004-2008.3 However, this trajectorycould be tempered by pricing pressures anda potential second patent clif.4 Outlook Figure 1. Worldwide total prescription drug sales, 2008-2022 Source: EvaluatePharma, 2017 739 209 112 695 189 106 651 169 101 614 151 95 587 134 90 567 123 84 575 115 79 563 102 77 579 96 75 567 90 70 568 84 67 587 79 66 556 70 60 547 7054 536 6054 20082009201020112012 GenericsOrphanPrescription excl. Generics & Orphan+6.5% CAGR 2017-22 201320142015201620172018201920202021 0 200 400 600 800 1200 1000 2022 649664686 732719727750741768774 811860 920 990 1,060 WWPr esc rip tio n D rugSa les($b n) 4 2018 Global life sciences outlook l Innovating life sciences in the fourth industrial revolution:Embrace, build, grow Although not at previous levels, mostresearch-based pharmaceutical companiesare reporting an uptick in revenue andprofts. Spending on prescription drugs isexpected to increase in every market exceptVenezuela over the next few years. Recoveryin spending will be fueled by consolidationin generics markets and increased budgetsfor high-priced treatments, including orphandrugs. Some companies are still strugglingwith patent expiries, estimated to be aUS$194 billion risk for sales in 2022.5The industry will continue to look toemerging markets for growth, albeit not asaggressively as in the past.6 Among the top20 pharmaceutical markets in the world,eight are emerging countries supportedby an increasing middle class. China isexpected to reach the top three in the nearfuture. However, constraints could comefrom government incentives that reducemedication reimbursements and health carecosts.7Worldwide pharmaceutical and biotech R&Dis forecast to grow 2.4 percent per year to2022, slightly lower than the 2.5 percentannual growth between 2008 and 2016. TotalR&D spend is expected to reach US$181billion in 2022, compared to US$156.7 billionin 2016.8 Signifcant innovation is comingfrom small niche companies focused ondiscovering new drugs. Less than a quarterof drugs discovered are brought to marketby the big pharmaceutical companies.9The industry is expected to continue toface challenges in R&D returns (Figure 2).10 The cost of bringing an asset to marketreached record levels in 201711 and manyof the largest drug developers will continueto be challenged by losses to generics.12With an increase in the number and speedof approvals,13 a new normal in R&D istriggering competition in pricing, leaving lesstime for a manufacturer to gain substantiallyfor breakthrough applications.14 In 2018, thenew US administration promises to continuethe path towards faster approvals, but therisk in accelerated approvals can be a drugturning into a market disaster.15Figure 2. Three-year rolling average returns on late-stage portfolio, 2010-2017 Source: A new future for R&D Measuring the return from pharmaceutical innovation, Deloitte Centre for Health Solutions, 2017 2010-2012 8.4 6.76.0 5.04.8 3.7 12.6 Mean - extension cohort Extension cohortOriginal cohort Top performer Bottom performer First quartile Median Mean Third quartile 14.1 17.0 -5% 0% 5% 10% 15% 20% 2011-20132012-20142013-20152014-20162015-2017 Ab sol uteIR R ( %) Or igi na l co ho rt 。。。。。。