Life sciences CEOs remain optimistic about their companies’ growth prospects despite a decline in industry confidence, economic uncertainty, and challenges surrounding AI adoption and net zero targets. These findings are part of the KPMG 2024 Life Sciences CEO Outlook, a sector-specific analysis of the broader KPMG 2024 CEO Outlook, now in its tenth year globally.
The survey reveals that 79 per cent of life sciences CEOs are confident in their companies’ growth, marking a 10 percentage point increase from the previous year. One fifth of respondents anticipate earnings growth of over five per cent. To support this growth, 94 per cent of sector leaders plan to increase their workforce over the next three years, with 37 per cent expecting headcount growth of six per cent or more.
However, confidence in the overall health of the life sciences industry has dropped to 67 per cent from 80 per cent in 2023. CEOs identify economic uncertainty (57 per cent) and geopolitical complexities (53 per cent) as the primary challenges for the year ahead.
AI Adoption and Challenges
Innovation remains central to the life sciences sector, with CEOs prioritising investments in technology, digitalisation, and artificial intelligence. Sixty per cent of respondents cite generative AI as their top investment focus, and 77 per cent expect a return on these investments within five years.
Despite its potential, concerns around AI adoption persist. Regulatory gaps are seen as a major barrier, with 84 per cent of CEOs citing the lack of clear regulations as a challenge. Additionally, 70 per cent believe the pace of progress in generative AI regulations will hinder their organisation’s success.
Internally, readiness for AI adoption also poses difficulties. Only 38 per cent of sector leaders are confident their data is prepared for AI integration, and 37 per cent believe they have the necessary skills to fully leverage the technology.
ESG and Net Zero Goals
Environmental, social, and governance (ESG) considerations are becoming integral to life sciences operations and strategies. Thirty-eight per cent of CEOs believe ESG initiatives play a key role in building customer trust and brand reputation. Vijay Chawla, Partner and Head of Life Sciences at KPMG in India, commented: “The life sciences sector is a firm and keen believer in the importance of sustainability, with a majority of pharma companies, in particular, being in the vanguard of ESG. This is working its way through the supply chain and we’re seeing material changes in the life sciences ecosystems which is a positive step in the right direction. Gen AI is poised to be a game changer and will be more impactful than ever before.”
Life sciences companies, situated at the midpoint of the value chain, face significant challenges in achieving net zero goals. Emissions are influenced by upstream suppliers and direct operational outputs. Only 43 per cent of sector CEOs are confident in meeting their net zero targets by 2030, the second-lowest confidence level among 11 sectors surveyed. Leaders attribute this to a lack of skills, the complexity of supply chain decarbonisation, data collection challenges, and difficulties in establishing internal controls.
The survey highlights the balancing act life sciences CEOs face as they navigate growth, technological innovation, and sustainability in an evolving global landscape.