Economists project challenges and a decrease in global output in 2023, due to several factors including inflation, the war in Ukraine and lagging supply chain issues. However, the life sciences industry is poised for growth and opportunity, and emerging trends have allowed companies to remain resilient and capitalize on innovations that are strengthening the industry.
Health awareness is rising – and so is the demand for healthcare.
Against the backdrop of the recent pandemic, many people have developed an increased awareness around their health and wellbeing. Habits are changing, and people are taking a more proactive approach to personal care. In a Deloitte survey of healthcare consumers, almost half the respondents reported using a wearable device to measure their health. Of that group, approximately one-third reported wearing the device to monitor health concerns. This trend coincides with an aging U.S. population and a high prevalence of chronic disease. Together, these factors create a greater demand for healthcare products and professionals.
R&D investment is high.
Undoubtedly, research and development is at the core of life sciences innovation and a main driver for growth in the industry. Human clinical studies exemplify this growth, with over 5,500 non-COVID studies conducted in 2022 compared to 4,700 in 2021 – a 17% increase. This trend shows no signs of slowing, especially in oncology and gene/cell therapy studies, which have had an annual growth rate of 27% since 2016. A survey of medtech executives revealed that most plan to focus more on investments in research and development, fulfilling the growing appetite for medical care and helping to improve the patient experience.
Pharmaceutical and medical device revenues are projected to grow.
The rapid evolution of the life sciences field makes it an attractive target for investors. Global pharmaceutical revenue projections are forecasted to reach $1.14 trillion in 2023, reflecting a 5.7% year-over-year increase. Global medical device revenues are forecasted to be approximately $579 billion in 2023, with an anticipated annual growth of 5% until 2027. In both examples, most of the revenue is U.S.-based.
Employment in life sciences is outpacing overall employment.
The life sciences field has had strong job gains across several segments, including biotechnology and research and development. In the U.S., the industry has grown at an annual rate of 6.6% over the last decade, compared to a 1.2% annual increase for overall employment. Average monthly job postings continue to increase, with postings up 28% year-over-year as of August 2022. Over the last 20 years, medical science occupations rose by 131%, and biochemist and biophysicist occupations rose by 167%. And while the industry was not immune to negative impacts of the pandemic, life sciences employment recovered faster than overall employment in the U.S.
Amid worldwide economic uncertainty, the life sciences industry remains resilient and can help insurance brokers stabilize their risk management portfolios by mitigating any effects of negative growth from other industries. However, it’s important to understand that life sciences firms may have different needs depending on size and stage of development. For established firms, insurance advisors could be asked to prioritize programs that could help shore up those vulnerabilities from a property standpoint through a broader scope or limits for contingent business income coverage. Insurance advisors could also be asked about risk management measures to make a firm more defensible in the event of a product liability claim, particularly in light of the current tort inflation trends. Emerging firms, primarily in research and development, could find it more difficult to obtain financing amid rising interest rates. It is foreseeable such firms will ask their insurance advisors for highly cost-efficient solutions with an emphasis on research and development projects.
With these factors driving buying decisions, the insurance advisor’s ability to gauge a client’s current stage of development and choose a carrier with the right solution is imperative. CNA has coverage solutions for life sciences firms across the entire spectrum of development through a small business unit for emerging firms or a middle market unit for more established ones. These solutions respond to the nuanced needs of the life sciences industry. Furthermore, CNA has a dedicated team of underwriters, risk control consultants and claims adjusters who employ a consultative approach in bringing the expertise and organizational strength of CNA on behalf of such firms.
To learn more, visit our Life Sciences page.
The purpose of this article is to provide information, rather than advice or opinion. It is accurate to the best of the author’s knowledge as of the date of the article. However, this article should not be viewed as a substitute for the guidance and recommendations of a retained professional. Any references to non-CNA websites are provided solely for convenience, and CNA disclaims any responsibility with respect to such websites.
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