The life sciences industry is likely to bear the impact of the global economic downturn in the long term, with one-third of the executives covered under a new survey by consultancy firm Deloitte forecasting a reduction in research & development spending in the future.
As per the report by global consultancy Deloitte in collaboration with The Economist Intelligence Unit, curbing of costs in response to the financial slowdown and the continuing capital crunch is likely to have an impact on the life sciences industries in the years to come.
"Nearly one-third of the executives surveyed see a reduction of R&D spend in the future and nearly half believe that up to 40 per cent of biotech companies will cease to exist in five years," the report added.
The recession has caused companies to downsize R&D, as 43 per cent of the respondents are focusing on products to provide a more immediate return and 32 per cent are reducing R&D spend.
However, 30 per cent of executives surveyed said that developing a robust R&D pipeline and focusing on innovation are important to their longer-term success.
"While the immediate hit of recession has been largely absorbed, the life sciences industry may look back at this time as a turning point," Deloitte Touche Tohmatsu industry Leader (Global Life Sciences and Health Care) Robert Go said.
"Health plans driving out costs, expiring patents, evolving generics legislation — all of these trends were in play before the economic downturn, but the downturn is now accelerating their impact," Go added.
While the near-collapse of global capital markets had immediate implications for even the largest competitors in the industry, the impact on biotech may be staggering.
The survey revealed 68 per cent of biotech executives surveyed believe that between 20 and 40 per cent of biotech companies would not exist in five years as a result of the global economic downturn.
The survey is based on online responses from of 281 senior industry executives from across the globe.
