Resilience

Management teams’ daily  to-do lists in 2020 include a vast array of novel strategic and tactical decisions that impact both the short-term and long-term prospects of their companies. For life science companies, many such decisions focus on increasing the resilience of internal processes, supply chains, cost structures, and product pipelines.

Simultaneously, the global web of changing compliance rules and regulations continues to complicate long-term financial models and, for some, reveal market opportunities. Subsectors  of the industry, such as biotech, are seeing product complexity increase on a molecular level, creating barriers for new entrants and producers of generic solutions alike. In other areas, borders are falling – for example, wearable medical devices and processing of healthcare data, which are becoming as much the remit of big tech as it is life sciences.

The mix of life sciences and technology extends to new working conditions. Remote work and cloud-based tools create new opportunities for human capital management but require sturdy remote working strategies and technological setups.

To boost business model resilience, companies will need to address such unique challenges. Securing supply chains and putting in place fall-back options will only take a company so far. To further build up the resilience of their business operations, companies may choose to extend product pipelines, as well as invest in digital transformation or invest and acquire complementary companies, products, or technology providers.

Sourcing funds for R&D, pre-clinical and early-phase drug development, and necessary investment in evolving technologies can, however, be difficult considering efforts to reduce the cost of healthcare and Covid-related impacts on profits. Many life sciences companies have evaluated mergers, acquisitions, or strategic alliances as options to address these opportunities and challenges. Others are looking to expand overseas into new markets. Most of these transactions are complex, multi-faceted, and create significant uncertainty regarding financial reporting.

These are some of the areas where BDO’s daily interactions with both companies and investors make us an invaluable partner. We are experts at assisting companies build resilience and turn challenges into great opportunities and growth.