As the ground shifts underneath the feet of pharma execs everywhere, it is not surprising to learn that most are frustrated by regulators; mergers and acquisitions are not seen as a panacea for their woes; some, but not all, believe headcounts may stabilize and they acknowledge that capital spending is not in vogue. These are among the take-away items in a new survey by KPMG, which queried 107 US pharma execs on the near-term outlook for their companies.
For those who see the glass as half full, the survey found execs expect moderate revenue growth, although less than a year ago - 39 percent foresee revenue moderately higher compared to this time last year and 50 percent expect moderately higher revenue one year from now. But by how much? Well, 50 percent expect an increase of 1 percent to 5 percent, while 31 percent expect an increase of 6 percent to 10 percent. In the 2011 survey, 53 percent expected gains between 1 percent to 5 percent, and 22 percent expected gains between 6 percent to 10 percent.
Where will growth come from? A confident 52 percent believe new therapies from their own research will be the biggest contributor, followed 36 percent by therapies from a current or, optimistically, a potential alliance partner. Meanwhile, 34 percent see growth coming from markets outside the US and 25 percent cited repeal of the healthcare reform law as a potential growth driver, up from 16 percent a year ago.
For these reasons, 47 percent say new products and services that can be obtained through partnerships or alliances would be the top area in which they would increase spending the most over the next year, compared with 38 percent a year ago. By comparison, 41 percent will acquire a new business and 40 percent point to R&D spending, specifically, the 'in--house' variety.
At the same time, only 27 percent say investment is significantly under way, down from 33 percent a year ago. Meanwhile, 27 percent say they will wait until 2014 or beyond to make an investment. And just 13 percent anticipate an increase of 6 percent or more in capital spending compared to 23 percent a year ago.
As for M&A, 37 percent cited a merger or acquisition as a big growth driver, but now, only 27 percent see M&A as a growth strategy. Similarly, when asked what the likelihood of being involved in a merger or acquisition in the next two years, 36 percent say somewhat likely, down from 41 percent a year ago. And 21 percent say very likely, down from 32 percent a year ago.
Not surprisingly, 60 percent say regulatory and legislative pressures are the most significant barrier to growth over the next year, and 50 percent complain that increasing regulation and enforcement is their top concern, ahead of patent expirations of key medications and generic competition, which was the chief worry a year ago.
What about headcount? This is a mixed bag: 26 percent believe this will be about the same, up from 20 percent a year ago. Another 20 percent think headcount will decrease from 1 percent to 3 percent, up from 15 percent a year ago, and 18 percent expect headcount will rise from 1 percent to 3 percent, down from 21 percent a year ago.
Finally, 36 percent of the execs plan to use digital and social media, as well as mobile technologies, to gain customer insights, and 31 percent hope to tap these for applications to interact with customers, while 29 percent expect these tools will be used for recruiting and brand promotion, according to the survey (UPDATE: a KPMG spokeswoman tells us the complete report will not be publicly available for up to two weeks, but here is the press release).
As an aside, KMPG offered this breakdown of the 107 execs who were queried: 45 percent work for drugmakers with annual revenue of more than $10 billion, 36 percent with annual revenues of $1 billion to $10 billion, and 20 percent with annual revenues of $100 million to $1 billion.