Life Sciences CEOs bullish on growth prospects and AI investment despite economic challenges

• Seventy-nine percent of life sciences CEOs are confident about their company’s growth prospects – up 10 percentage points from last year – with 20 percent expecting to achieve five percent growth or more.
• The vast majority, 94 percent, say they will increase headcount over the next three years and 37 percent think they will grow their workforce by six percent or more.
• In a year, confidence in the overall health of the industry has dropped 13 percentage points since last year (from 80 percent in 2023 to 67 percent in 2024).
• The top challenges noted by life sciences CEOs include economic uncertainty (57 percent) and geopolitical complexities (53 percent).
• Sixty percent say Gen AI is their top investment priority with 77 percent expecting to see ROI on the emerging tech in the next five years.
• Less than half (43 percent) of sector CEOs are confident they can meet their organization’s net zero goals by 2030 - the second-lowest level of confidence amongst the 11 different sectors surveyed.

Life sciences sector CEOs are confident about their own company’s growth prospects despite lessening confidence in the industry, economic uncertainty, and challenges faced with AI adoption and meeting net zero targets, according to the KPMG 2024 Life Sciences CEO Outlook released today.

The report is a sector cut of the KPMG 2024 CEO Outlook, now in its tenth year globally, which reveals 79 percent of sector leaders are expressing confidence in their own company’s growth prospects, as confidence continues to grow from the previous year (up 10 percentage points). One fifth (20 percent) also expect to see earnings growth above five percent.

To support these growth prospects, the vast majority of leaders (94 percent) plan to increase their workforce over the next three years, with 37 percent estimating a headcount growth of six percent or more.

Kristin Pothier, Lead of Global Deal Advisory and Strategy for Healthcare and Life Sciences, and Principal, and National Life Sciences Sector Leader, KPMG in the US, said:

“We are now in a new era of innovation in life sciences. Researchers are using multidiscipline omics (genomics, proteomics, cellomics, metabolomics) to advance precision medicine and diagnostic development across disease areas. Not surprisingly, this is playing out in M&A, where the largest pharma deals in the last 12 months have been fueled in part by precision medicine in the post-genomics era.”

Peter Liddell, ASPAC Region Lead for Life Sciences, Principal Advisor, Healthcare and Life Sciences, KPMG in Singapore, added:

“Across all segments of life sciences, we are seeing global players start to rationalize their therapeutic areas which has led to some significant M&A activity. The expectation is that a lot of this freed-up cash will be used to take leading positions on some of these very innovative — and potentially competitive — opportunities.”

Despite this outlook, confidence in the overall health of the industry has dropped to 67 percent from 80 percent last year. The survey reveals economic uncertainty (57 percent) and geopolitical complexities (53 percent) as the top challenges noted by CEOs for the year ahead.

The race to embrace AI

A key to success in life sciences is innovation. Therefore, it’s no surprise that the survey reveals sector CEOs are ramping up their investment into new technologies, digitalization and AI to catalyze growth and innovation. Despite concerns about ongoing economic uncertainty, 60 percent of sector CEOs say that Gen AI is their top investment priority. More than three-quarters also state AI will help them create competitive advantages in the near future, as 77 percent are expecting to see ROI in the next five years.

Yet, life sciences CEOs feel there are significant risks and concerns with the still-emerging technology, with their biggest concern being around regulation. Eighty-four percent say the current lack of regulation is challenging adoption of the technology and 70 percent believe that the pace of progress on Gen AI regulations will be a barrier to their organization’s overall success.

Sector leaders also have clear concerns about their organizations’ readiness to take on new forms of AI. Only 38 percent are confident their data is ready for AI and only 37 percent think they have the right skills to fully leverage the technology.

ESG and building trust

CEOs understand that mastering ESG is integral to their operations, strategies and building public trust. Failure to do so could negatively impact their sustainability and reputation. Thirty-eight percent of life sciences CEOs believe their ESG strategy has the greatest impact in building customer relationships and brand reputation.

Jon Haynes, EMA Region Lead of Life Sciences, Client Lead Partner, KPMG in the UK, commented:

“The life sciences sector is a firm believer in the importance of sustainability, with a number of large European based pharma companies, in particular, being in the vanguard of ESG. That is working its way through the supply chain and we’re seeing material changes in the life sciences ecosystems.”

Companies across the entire life sciences spectrum have a key role to play in the transition to net zero. Positioned in the middle of the value chain, life sciences companies’ emissions are indirectly affected by activities of their upstream suppliers, such as raw materials and ingredients manufacturers, as well as the direct emissions produced by their own operations.

However, the survey reveals that just 43 percent of sector CEOs are confident they can meet their organization’s net zero goals by 2030 - the second-lowest level of confidence amongst the 11 different sectors surveyed as part of the research. Leaders cite a lack of skills and expertise, the complexity of decarbonizing their supply chains, challenges gathering and analyzing data and problems, and setting up the right internal controls.