Global Healthcare Leaders Study 2021

Reports and studies — Financial Advisory, Healthcare

September 27, 2021

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Lazard’s fourth in-depth study of global healthcare industry leaders surveyed 171 C-level executives and 29 investors across Biopharmaceuticals, Medical Devices and Diagnostics, and Healthcare Services.

Last year’s Global Healthcare Leaders Study focused on the COVID-19 pandemic, which at the time was still in its early stages. One year later, we see a high correlation between healthcare industry leaders’ responses and the subsequent course of events.

In the 2020 study, 64% of healthcare leaders predicted the pandemic would continue into the second half of 2021 or beyond – a view that seemed overly pessimistic to many others at the time.
The majority of respondents in 2020 were more pessimistic about the development of an effective and widely available therapeutic treatment, with a minority putting the probability of such a therapeutic at better than 50%. As of this writing, while antibody therapies have been developed to treat COVID-19, they have not become standard of care or changed the trajectory of the pandemic.

These findings underscore that healthcare industry leaders have true insight not only into their own industry dynamics, but also into public health-related trends.

This year’s study focuses both on industry leaders’ pandemic-related challenges and expectations and on their broad strategic priorities for their businesses. Central findings include:

1. COVID-19 is here to stay. Healthcare leaders expect the pandemic to continue through 2022 and beyond. And they have significant concerns about vaccine hesitancy, vaccine distribution shortfalls in developing countries and new variants causing resurgence.

Healthcare leaders are concerned about scenarios that could create risk for resurgence. More than 80% of respondents express moderate or high concern about uneven vaccine uptake due to vaccine hesitancy, as well as vaccine distribution shortfalls in developing countries.
More than 70% express moderate or high concern about waning immunity caused by new variants. Notably, healthcare leaders have relatively lower concern about waning immunity caused by diminished levels of antibody or cellular immunity than they do about new variants.

Digital Revolution is a permanent shift

70%

Healthcare leaders responded

Permanent shift to greater importance of data analytics

67%

2. The pandemic is changing the world and the healthcare industry faster than expected, for better and for worse.

Flexible, hybrid working arrangements have been widely adopted by office workers during the pandemic, and 70% of healthcare leaders expect this to be a permanent shift. Almost half of respondents also expect a permanent shift in economic activity to virtual channels, with less in-person interactions, movement and travel.
Healthcare leaders also expect serious negative impacts of the pandemic beyond the immediate health risks, with a significant majority predicting worsening national and global inequity, greater populism, political and societal polarization, and protectionism.
64% of respondents expect the pandemic to permanently accelerate the digital revolution, technology and automation in the business arena.
S.-based healthcare services leaders are especially certain that data analytics will transform U.S. healthcare, with 67% expecting a permanent shift to greater importance of data analytics, AI and ML, and 57% expecting a permanent shift to greater use of clinical decision support and physician benchmarking, compared to 45% and 26%, respectively, of all study respondents.
Despite alarming episodes of overburdened intensive care facilities around the U.S. during the past 18 months, 53% of our respondents do not expect greater hospital capacities as a result of the pandemic. And only 19% expect a permanent shift in the faster adoption of value-based care.

3. Pricing and reimbursement remains the greatest strategic challenge for healthcare companies, while scientific innovation and advances in digital technologies and data analytics are the greatest forces for transformation.

When healthcare leaders focus on the greatest strategic challenges facing the healthcare industry, pricing and reimbursement remains at the top of their list by a significant margin. In this year’s study, 68% cite this as a top three challenge, compared to 61% in 2019 and 57% in 2017.
On the other hand, scientific innovation and advances in digital technologies, data analytics, artificial intelligence and machine learning are seen by the majority of healthcare leaders as the forces that will most transform the healthcare industry over the next five to ten years.
More than half of our respondents expect the digital revolution to significantly transform virtual healthcare. Notably, a significant acceleration in virtual healthcare delivery could help mitigate healthcare leader concerns about equitable access to healthcare. In addition, approximately one-third expect a similar transformational effect on both biopharmaceutical research and physician clinical decision support using real-world evidence.

The vast majority of respondents believe that more M&A is fundamental to driving growth

David Gluckman Managing Director

4. Financing and strategic activity will continue at recent levels or accelerate.

The need for growth and the need for innovation are viewed as the top catalysts for increased M&A activity, according to healthcare leaders. These are followed by reasonable price levels and value expectations and the opportunity to diversify or strengthen competitive position.
Investors in particular are focused on the need for growth and reasonable price levels and value expectations, with 90% and 67% of investor respondents, respectively, citing these as top catalysts for greater M&A activity. Leaders of large-cap public companies (with market values greater than $25 billion) are especially focused on reasonable price levels and expectations, with 72% of these respondents citing this factor as a top catalyst, compared to 50% of all study respondents.
Overall, 78% of respondents expect bolt-on acquisitions to increase in 2022 and beyond, and 74% expect strategic alliances/licensing to do so.
Most healthcare leaders expect private financings, IPOs and equity follow-ons to stay at the same level or increase for the balance of 2021 and into 2022. However, the majority of healthcare leaders expect SPAC financings to decrease over this period. Investors in particular have a strong view that SPAC financings will decrease, with approximately 80% expecting a decline, compared to approximately 60% for all study respondents.

5. Biopharmaceutical company leaders expect the pandemic to catalyze an even greater focus on scientific innovation, digital technologies and innovative clinical trials with greater use of real-world evidence.

The majority of biopharmaceutical leaders expect the pandemic to have at least a moderate impact on their sector, and many expect permanent shifts in a number of areas. The largest number expect greater use of innovative clinical trial designs, clinical trial management and use of real-world evidence, with 51% expecting a moderate impact and 33% expecting a permanent shift in this area.
Very similar numbers expect permanent shifts with greater focus on scientific innovation; increased focus on data analytics, AI and ML in R&D; and a rise in digital-enabled, virtual approaches to commercialize products.