Saturday, 15 March 2025
A majority of companies in the health and biotechnology sector (life sciences) see new technologies as a significant driver of revenue growth, according to Deloitte’s latest 2025 Life Sciences Outlook report. The report reveals that 68% of life sciences firms expect advancements in technology to bolster revenue, while 57% anticipate a positive impact on profit margins. Additionally, 40% of industry leaders plan to focus on research and development (R&D) as a strategy to mitigate declining revenues.
The report underscores the transformative potential of digital technologies in redefining the life sciences industry. Artificial intelligence (AI), in particular, is highlighted as a game-changer for medical technology companies, with the potential to save up to 12% of total revenue over the next two to three years.
“AI in medicine represents a cornerstone of healthcare transformation, offering the potential to significantly enhance both operational efficiency and diagnostic accuracy,” said Władysław Mizia, Deloitte’s healthcare consulting leader. He noted the growing interest in AI within the sector, citing nearly 200 medical facilities participating in Poland’s Hospital AI Challenge. The winning project showcased the application of AI in optimizing public procurement procedures, illustrating the broad utility of AI—from clinical care to administrative processes. “AI allows hospitals to optimize resources and improve patient care quality,” Mizia added.
The report also highlights the pressing challenges facing the biopharmaceutical industry, particularly the looming expiration of high-value patents. By 2030, expiring patents for highly profitable medications could put over $300 billion in sales at risk. To counteract this, companies are increasingly prioritizing R&D, with 40% of executives identifying it as a key area to slow revenue declines.
Beyond R&D, the industry is also turning to mergers and acquisitions (M&A) to address revenue pressures. According to the report, 77% of surveyed executives anticipate an increase in M&A activity in 2025. This strategic shift is driven by the need to expand product and service portfolios quickly to offset the financial impact of patent expirations and rising cost pressures.
“R&D remains the backbone of innovation in life sciences, but M&A offers companies a faster path to diversification and growth,” the report’s authors noted. Companies are leveraging acquisitions to broaden their offerings and maintain competitiveness in a rapidly evolving market.
The findings are based on a survey conducted by the Deloitte US Center for Health Solutions between August and September 2024. The survey included 150 executives from pharmaceutical, biotechnology, and medical device manufacturers across the United States, Europe, and Asia. The report paints a picture of an industry leveraging technological and strategic advancements to navigate challenges while positioning itself for future growth.
Source: Deloitte and ISBnews
