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1、Global Life Sciences Risk Outlook 2023Managing emerging risks,challenges and opportunities in the life science sector WTW Global Life Science S2/Global Life Sciences Risk Outlook 2023Opportunity and uncertainty in a time of rapid change The global pandemic was a watershed for the life science indust
2、ry.Businesses were forced not just to embrace new technologies and working methods,but to rethink existing operating models in order to deliver innovation at speed.This has left a deep impact,accelerating changes that will shape the sector for years to come from new clinical trial models and regulat
3、ory approval processes to digitalization and automation of processes.Though hugely promising,these rapid advances can be difficult to adapt to in the short term.They also raise ethical and legal questions around issues such as data privacy and health equity.How is the industry adapting?To find out w
4、hat the industry is thinking about these trends,and a range of other opportunities,risks and challenges,we asked more than 600 industry leaders and decision-makers for their views.Our respondents come from many different global regions and from a cross-section of businesses representing the life sci
5、ence ecosystem.Embracing change with cautionWe found that companies are conflicted about the rapid pace of change.In some cases,they see the same emerging themes such as adaptive,decentralized and hybrid clinical trials as having both strong positive and negative impacts on their businesses.As the s
6、ector becomes more dependent on data to inform strategy and drive innovation,firms are also more conscious of risks related to how that data is used and to getting appropriately informed consent.In a time of continuing uncertainty,many firms are looking to industry collaborations and strategic acqui
7、sitions to help them meet their challenges and exploit new opportunities.They less focused on new product launches,at least in the short to medium term.Global Life Sciences Risk Outlook 2023/3Key findingsStrategic focus is on collaborations and M&A over new products Industry collaborations emerged a
8、s the sectors greatest opportunity over the next two years,named by 35%of respondents among their top five business opportunities.30%put strategic acquisitions and industry collaborations among their top three strategic objectives.Only 16%said launching new products and 12%initial public offerings(I
9、POs)were a top strategic objective in the short term.Firms are excited about new technologies,with some reservations 53%said wearable tech was among their top five opportunities from digital transformation over the next three years.52%said automation and 50%artificial intelligence.But 56%named poten
10、tial complications of new vaccine technologies among the top three emerging themes that could have a negative impact over the next three to five years.Data privacy and informed consent are top risks to success As the sector faces increasing scrutiny over its use of patient data,46%of respondents nam
11、ed data privacy and informed consent among their top five internal risks to business success.38%named data privacy as one of their top three ESG governance risks.Health and race equity is rising up the agenda 50%named health and race equity among the top three emerging themes that will have a positi
12、ve impact over the next three to five years.But businesses are worried about falling short in this area 42%put issues related to health and race equity and access to medicines among their top three ESG social risks.The industry is embracing new clinical trials but with birthing pains More than half(
13、53%)thought evolving regulation of clinical trials was among the emerging themes that will have a positive impact over the next three to five years,while 34%said new trial models were among their top five opportunities.But 44%said hybrid,virtual and decentralized trials were among their top five rec
14、ent loss factors,and 31%said new models were among their top five internal factors posing a risk to success over the next three to five years.Enterprise risks are increasingly critical in life science Organizations are increasingly focused on a wide range of risks affecting their ability to do busin
15、ess.44%named environmental risk/severe weather among their top five external risks,43%said cost and availability of inputs,40%cyber risks,36%supply chain disruption and 36%social inflation including the rising cost of litigation.Climate-related risks are well understood but not always adequately cov
16、ered Although 57%said they were insured for the business interruption costs of an extreme weather event,35%said their insurance covered property damage only.5%were unsure if business interruption was covered and 2%said they had no property insurance.26%said extreme weather in the supply chain could
17、damage their business,but they have no insurance to cover this.Business type:Combined research and manufacturer(37%),established research business(35%),established manufacturer(20%),pre-revenue developmental(8%).Size:87%of companies with annual revenue over$100 million,13%up to$100 million.Find full
18、 details of our sample and methodology on page 28.Please note:the survey consisted of closed questions.Most questions asked respondents to select three or five options and rank them in order of priority.This report highlights some of the main findings from the survey.If you would like to see the det
19、ailed results,please get in touch using the contact details on page 29.When:September 2022.Who:626 senior decision makers,including CEOs,directors and managers of risk,finance,operations,research and legal.Where:Countries across Europe,North America,Asia-Pacific and Latin America.Sectors:Pharmaceuti
20、cal and biotech,contract manufacturing,medical devices,contract research organizations,generic/specialty drug manufacturers,diagnostic labs,neutraceutical and over the counter.About our surveyTop risksGreatest risks to business success in the next three-five years Internal factors1.Data privacy/info
21、rmed consent46%2.Labelling and packaging44%3.Product safety failure/product recall40%4.M&A risks39%5.Talent acquisition and retention 38%External factors1.Environment/climate change/extreme weather 44%2.Cost and availability of inputs including materials and energy43%3.Cyber risks 40%4.Changing or i
22、ncreasing legislation 39%5.Social inflation/rising cost of litigation 36%Participants were asked to select five and rank in order of level of risk4/Global Life Sciences Risk Outlook 2023The rise of real world evidence:Acceptance of data collected outside of clinical trials,from sources such as elect
23、ronic health records and mobile devices,will accelerate.This is helping scientists to study how patients use and respond to drugs in real world situations,speeding up drug development.Health equity in drug treatments:With more real-world data that accurately represents different races and background
24、s,life science businesses will be better able to develop drugs and medical devices that meet the needs of the population.Cell and gene therapies:Expect more new therapies based on mRNA technology to emerge following on from the success of COVID-19 vaccines.Gene therapies offering personalized treatm
25、ents that stop disease in its tracks are also getting nearer to reality.Data mining and repurposing of drugs:More life science businesses are using artificial intelligence(AI)to mine data on existing drugs to find potential new uses for conditions including rare diseases that lack investment in new
26、drug development.Bioengineering and bioprinting:Having grown small patches of the heart muscle and blood vessels inside laboratory animals and generating simple structures such as cartilage using 3D printing,scientists are getting nearer to synthesizing complex human tissues.Key life science trends
27、to watch in 2023Collaboration and consolidation are key prioritiesThe rapid development of vaccines and drugs to combat Covid-19 demonstrated what could be achieved when scientists,businesses and regulators work together to achieve common goals.This experience seems to have changed attitudes in the
28、industry.Our survey suggests that businesses have not only come to see the value of working in closer co-operation,but many put it ahead of other priorities.Industry collaborations,including strategic alliances and partnerships,emerged as the sectors biggest business opportunity over the next two ye
29、ars,named by 35%of respondents globally.Almost a third of respondents(30%)said acquisitions and divestments were top priorities.However,theyre also concerned about the risks involved.Almost two-fifths(39%)of global respondents named M&A among their top internal risk factors,rising to 43%in Europe.Pr
30、oduct launches not an immediate focusBusinesses are taking a more cautious approach to new product development and stock market listings.Only 16%of respondents said launching new products was a top strategic priority for now,and 12%IPOs.These results suggest that firms are more focused on consolidat
31、ing and strengthening their portfolios than new launches at least in the near term.This could reflect a desire to pause after the pandemic period,which was marked both by intense activity and high levels of disruption.Supply chain disruption still a dragWhile the shutdowns associated with the pandem
32、ic may be largely in the past,the supply chain issues associated with it continue to be a drag on the sector.A third of respondents(33%)said supply chain disruption was among their greatest risks to success over the medium term,while 24%said it was among the biggest obstacles to achieving their stra
33、tegic objectives.When asked which supply chain risks they were most worried about,just in-time operating models(42%),shortages of talent(41%)and raw material shortages(38%)figured strongly,along with cyber risks(38%)and natural disasters(37%).Objectives and strategy6/Global Life Sciences Risk Outloo
34、k 2023Figure 1:Top three strategic objectives for the next two years Q What are your organizations top strategic objectives for the next two years?Select and rank top three62095220252240%10%20%30%40%50%60%Improving marginsIncreasing dividendsCap
35、ital expenditure investmentIncreasing liquidityExpanding international footprintLaunching new products to marketIPO0%10%20%30%40%50%60%TotalNorth AmericaEurope APACLATAM3028342830273026244682426268232225249Strategic acquisitions or divestments of companies,divisions
36、and/or licensesIndustry collaborations to accelerate innovation/R and DAccelerating R and DOrganic growthStabilizing the businessReducing costsDeveloping manufacturing capabilityPriorities and challenges vary across regionsWhen we asked about top strategic objectives and the greatest obstacles to ac
37、hieving them,interesting variations emerged between global regions.Accelerating the R&D pipeline was a top priority for 50%in Latin America,but only 16%in Asia-Pacific and North America,where new products are less of a priority now.Industry collaborations to accelerate innovation produced a similar
38、disparity,named by 46%in Latin America as a top priority but only 24%in APAC.Looking at obstacles to achieving strategy,Latin America was most concerned about a lack of suitable acquisition targets(32%).Europe sees supply chain disruption as the biggest obstacle(29%),while APAC is affected more than
39、 others by internal culture not aligned with objectives(27%)and capacity constraints(23%).These results suggest many businesses are still struggling to get back to their pre-pandemic strength,albeit theyre facing different challenges in each region.Base:All respondents(626)North America(201)Europe(1
40、60)APAC(140)LATAM(125)Global Life Sciences Risk Outlook 2023/7Figure 2:Top five greatest opportunities for the life science sector over the next two years Q Which of the following do you believe represent the greatest opportunities for the life sciences sector over the next two years?(Participants w
41、ere asked to select 5 and rank in order of level of opportunity)34232252620272822362527302824262826223822282232923293429273029283227Cannabidiol(CBD)products0%10%20%30%40%50%60%Personalized medicineEmbracing sustainabilityGene therapiesNew ways of workingIncreasing patient centr
42、icityRising global demand for healthcare servicesDigitalized assessment and diagnosisAgeing and changing populationsTotalNorth AmericaEurope APACLATAM40353232362934353933343437342946323028284326362934292828290%10%20%30%40%50%60%Industry collaborationsReopening post-pandemicNew
43、clinical trial models,including adaptive,hybrid and decentralized trialsCell therapies including mRNAContinuing with adaptations to business made in response to the pandemicIncreased technology in productionData,artificial intelligence and machine learningGreater collaboration between commercial org
44、anization,regulators and authorities8/Global Life Sciences Risk Outlook 2023Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)Figure 2:Top five greatest opportunities for the life science sector over the next two years Q Which of the following do you believe represent the grea
45、test opportunities for the life sciences sector over the next two years?(Participants were asked to select 5 and rank in order of level of opportunity)A large proportion of the assets in many life science companies lies in the intellectual property that surrounds their products.That can make acquiri
46、ng those companies complicated and risky.Depending on how intangible the assets are,it can be hard for buyers to gain the clarity they need about the IP risks they are acquiring,or to value the assets in the business accurately.In a highly-regulated sector,it can be difficult to make sure that a tar
47、get company is compliant with all legal and regulatory requirements,from data privacy to clinical trials and product safety,or to confirm that the intellectual property is valid and enforceable.WTW insight:M&A risksThese risk factors may explain why many firms in our survey are focusing as much on c
48、ollaborations and partnerships as on M&A deals in the coming years.With this in mind we recommend that businesses contemplating an acquisition use industry experts during the due diligence period.Where most of the value lies in intangible assets,acquiring companies need to make sure the target compa
49、ny truly owns its intellectual property.Businesses also need to identify regulatory exposures,guarantees or obligations to previous owners or inventors,as these will transfer with the M&A transaction,potentially reducing the value in the target company.WTW insight:Supply chain The life sciences sect
50、or depends on complex supply chains including active product ingredient manufacturers,testing labs,warehouses and packagers/labellers.Severely challenged during the pandemic,our survey suggests these networks continue to experience shortages of workers and materials and increasing disruption from na
51、tural disasters,cyber-attacks and geopolitical instability.Companies may also be vulnerable to sudden changes in trading terms with overseas partners,as well as reputational damage if suppliers dont live up to their standards and commitments.Businesses should look to strengthen resilience against th
52、ese threats within their supply chains.Consider measures such as nearshoring production,regular checks on the financial solvency of suppliers,and increasing cyber security controls.Add supply chain risk and resilience to the executive agenda and embed it in strategic planning.This can be linked to e
53、xisting functional business risk assessments.Carry out routine stress testing and assessment using scenario planning and simulation modelling to quantify the impacts and mitigate the effects of risks.Expand the network of suppliers to reduce reliance on a single source for critical components and ra
54、w materials,or on multiple suppliers located in the same area.Develop a balance between just-in-time and just-in-case inventory levels.Global Life Sciences Risk Outlook 2023/9The life science sector is in a period of transformation.Digitalization,new technologies,new clinical trial models and medica
55、l advances,such as gene and cell therapies,not only promise to revolutionize healthcare,but also the way the industry works.The pandemic accelerated changes and adaptations,from remote trials to the use of AI and machine learning,which should bring efficiencies and growth in future years.But the ind
56、ustry will also face new and complex risk issues arising from these changes(see WTW insights:clinical trials,page 13).Exploring the potential of new technologiesWe found that businesses are both excited by the potential of these changes and anxious about the disruption and potential risks they can b
57、ring.At least half(50%or more)said wearable tech,automation and artificial intelligence were opportunities for their businesses over the next three years.New clinical trial models(34%),cell therapies(32%),and increased technology in production(31%)were all among the sectors greatest opportunities.Ho
58、wever,56%said the potential complications of new vaccine technologies could have a negative impact on the sector,which could reflect unease about potential long-tail liabilities.Rapid change leaves firms running to adaptNew technologies and working methods10/Global Life Sciences Risk Outlook 2023 Gl
59、obal Life Sciences Risk Outlook 2023/11Figure 3:Top five greatest digital transformation in the next three years Q Thinking about digital transformation,which of the following do you think offer the greatest opportunities to your business in the next three years?Rank 1/2/3/4/5 Adjusting to new clini
60、cal trial modelsAdaptive,hybrid and decentralized clinical trials offer huge potential to speed up the trial process and widen participation.However,the path to implementation may not be smooth for all adopters.More than half(53%)thought evolving regulation of clinical trials was among the emerging
61、themes that will have a positive impact over the next three to five years,but 45%said they will have a negative impact.The same proportion said hybrid,virtual and decentralized trials were a major loss factor though some of this may reflect the disruption caused to all trials during the pandemic.Mor
62、e than a third(36%)said problems recruiting to trials were among their greatest risks to success.We also found some doubt about the effectiveness of risk management processes around clinical trials,which may be related to the rapid pace of change.Almost a third(30%)said although they had risk manage
63、ment processes in place,those processes may not always operate consistently and effectively.Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)494846Hybrid workingSoftware as a Medical Device(SaMD)Quantum computingBlockchainTelemedicine535252500%10%20%30%40%50%60%Wearable techS
64、mart manufacturingAutomationImproved data and data accessArtificial intelligence and machine learningTotal524949Figure 4:Impacts of emerging themes over next three to five years Positive impact Q Which of these emerging themes do you think will have the greatest positive impact over the next three t
65、o five years?Rank 1/2/3 Figure 5:Impacts of emerging themes over next three to five years Negatvie impact Q Which of these emerging themes do you think will have the greatest negative impact over the next three to five years?Rank 1/2/3565349494745Potential long-term complications of new vaccine/mRNA
66、 technologiesPotential long-tail liabilities from cell and gene therapiesHigh treatment costs of new therapiesIssues related to informed consentManufacturing process contamination,for example nitrosaminesEvolving regulation of clinical trials0%10%20%30%40%50%60%Total535150504947TotalPersonalized med
67、icineHealth and race equityDevelopment of cannabidiol(CBD)productsDigital transformationRepurposing drugs for new use casesEvolving regulation of clinical trials0%10%20%30%40%50%60%12/Global Life Sciences Risk Outlook 2023Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)Base:
68、All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)WTW insight:Clinical trialsWe have seen an explosion in the number of clinical trials taking place around the world,from around 20,000 in 2000 to more than 400,000 today.1 With this expansion,the sector has struggled to recruit appr
69、opriate patient groups and retain them throughout the trial period.The new decentralized and hybrid trial models make this easier because people can take part remotely,with little or no travel required.However,the new models also bring risks and challenges.Not seeing patients face-to-face can mean i
70、ts more difficult to ensure informed consent,control the trial conditions,and verify that patients have adhered to trial rules and guidelines.Regulations are also tightening.The EU is implementing the new Clinical Trials Regulation that will make all data from trials publicly available where there i
71、s a public interest.2 This has the potential to increase exposure to liability for companies and directors if claimants can show they failed to act on adverse data.Businesses need to review their processes to make sure that decentralized and hybrid trials meet standards for informed consent and that
72、 the data can be independently verified.Also,those businesses operating in the EU should adapt their systems to make data available for publication.1 Number of registered studies 2000-2022 https:/ClinicalTrials.gov2 https:/health.ec.europa.eu/medicinal-products/clinical-trials/clinical-trials-regula
73、tion-eu-no-5362014_en Big data raises ethical and legal concerns Governance factorsLife science is collecting more data than ever from sources such as clinical trials,medical devices,new technologies,manufacturing systems and biologics.Businesses in the sector are increasingly mining these datasets
74、to unlock insights,accelerate drug discovery and make better decisions.More than half of respondents to our survey(52%)said that improved data and data access were among their greatest digital opportunities in the next three years.Meanwhile,with the rise of digital healthcare,the industry is coming
75、under increasing scrutiny from regulators,courts and the public into how it uses patients data and obtains their consent.This may explain why almost half(46%)named data privacy and informed consent among their leading internal risk factors,while 38%named data privacy as one of the sectors greatest g
76、overnance risks.Addressing demands for health equityCalls for equity in health treatment and outcomes,and access to medicines,are growing louder around the world.Respondents to our survey saw both the benefits this could bring and also the potential risks if the industry does not make enough progres
77、s in these areas.Half(50%)named health and race equity as an emerging theme that will have a positive impact over the next three to five years,while 42%put issues related to health and race equity and access to medicines among their greatest ESG social risks.Growing climate and environmental risksA
78、large proportion of respondents(44%)named environment,climate change and extreme weather among their top external risks over the next three to five years,rising to 50%in North America and 57%in Latin America.Respondents in these regions may be referring to the impact of weather-related natural disas
79、ters,such as hurricane Maria,which devastated Puerto Rico and caused extensive damage to life science operations there.A majority of respondents(54%)named pollution and waste among their biggest environmental risks.However,a similar number(67%)said they had no specific insurance to cover these risks
80、.Many were unsure whether pollution and waste were covered by other policies,or thought they werent covered at all.ESG risksFigure 6:Greatest ESG risks to business Q Which of the following governance factors pose the greatest risk for your business?(Participants were asked to select 3 and rank in or
81、der of level of risk,with 1 being the highest)14/Global Life Sciences Risk Outlook 2023Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)4336495335384437353537374336303427304333325253623232726160%10%20%30%40%50%60%TotalNorth AmericaEurope APACL
82、ATAMHealth and safetyData protection and privacyExecutive compensationESG reportingBribery and corruptionAudit committee structure and board compositionWhistleblower schemesLobbying and political contributionsDrug pricing Global Life Sciences Risk Outlook 2023/15Figure 7:Greatest ESG risks to busine
83、ss Q Issues with which of the following social factors pose the greatest risk for your business?(Participants were asked to select 3 and rank in order of level of risk,with 1 being the highest)Figure 8:Greatest ESG risks to business Q Which of the following environmental factors pose the greatest ri
84、sk for your business?(Participants were asked to select 3 and rank in order of level of risk,with 1 being the highest)Social factors Environmental factors Global Life Sciences Risk Outlook 2023/753565455565759546254384344238343961464445TotalNorth AmericaEurope APACLATAM0%10%20%
85、30%40%50%60%Energy(eficient,renewable,sustainable)Climate change(carbon footprint and emissions)Pollution,waste and recyclingProcurement(sustainable,green)Natural resources(water,raw materials,biodiversity)Sustainability strategyHealth and race equityAccess to medicinesLabor standardsEmployee engage
86、mentHuman rightsCommunity relationsGender,race,and diversityDrug pricing42434844324246444384044324243638343933323292434TotalNorth AmericaEurope APACLATAM0%10%20%30%40%50%60%Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)Base:All respondents(
87、626)North America(201)Europe(160)APAC(140)LATAM(125)WTW insight:Data privacy and consentLife science companies have a natural interest in analyzing the data they collect to learn about patients,develop new treatments and maximize social and economic benefits.Data sharing and data mining can create r
88、icher datasets and deeper insights,for example helping to identify new use cases for existing drugs.However,this is also where potential pitfalls can lie.As data protection regulations and decisions evolve,firms can unwittingly stray into privacy breaches if adequate consent is not obtained.This may
89、 help to explain why data privacy and informed consent emerged as the greatest internal risk to business success in our survey.Life science businesses should review the informed consent process to address this risk and to make sure patients are informed about how their data will be used,by who,for w
90、hat purpose,and whether it could be used for commercial gain.Tickbox or blanket consent may no longer be enough to protect organizations from claims resulting from misuse of data.Already,under GDPR regulations in Europe,consent must be opt-in and we can expect the standard of consent required to ris
91、e further in the coming years.16/Global Life Sciences Risk Outlook 2023 Global Life Sciences Risk Outlook 2023/17WTW insight:EnvironmentThough not generally a heavily polluting sector due to the generally clean manufacturing process,the life science industry does have significant environmental liabi
92、lity risks.Given the nature of its products,any untreated or poorly disposed waste can be highly damaging to both humans and wildlife if it gets into groundwater or rivers.Antibiotic waste can also promote the development of antibiotic-resistant pathogens that are harder to treat.The sector also fac
93、es similar risks to any large company with complex operations.For example,building a new lab or factory could bring historic pollution to the surface,which can contaminate the soil and cause toxic runoff.To mitigate these risks,companies should apply a global standard for environmental management ac
94、ross all global operations,ideally with a dedicated team to oversee and enforce policies.Our survey suggests that businesses may be unaware of the range of risks they may face,or whether their environmental risks are covered by general liability or property policies.Our experience at WTW also confir
95、ms that few life science firms buy specific insurance for environmental liabilities.Firms should engage with their brokers to identify their exposures and decide if environmental impairment liability(EIL)insurance is appropriate for their business.EIL covers historic as well as sudden and accidental
96、 pollution and will pay for clean-up,legal and crisis management costs.Standard insurance will generally either fully exclude or pay only a small portions of these claims.18/Global Life Sciences Risk Outlook 2023Firms focus on a range of enterprise risksPerceptions of risk seem to have shifted.Where
97、as life science companies may have once focused on core risks,such as product liability and D&O,our survey suggests businesses are concerned about a much wider range of enterprise risks affecting their ability to do business.Cost and availability of inputs(43%),supply chain disruption(36%),the risin
98、g cost of litigation(36%)and political risks(33%),all featured among the sectors top external risks to success over the next three to five years.This suggests that,as the sector matures,life science companies face the same pain points and headaches as many other sectors outside of the healthcare eco
99、nomy.Cyber threats are increasingTwo-fifths(40%)named cyber risk among their greatest external risk factors,reflecting increased threats to the sector as criminals continue to target companies processing high value,sensitive life science data.The UKs National Cyber Security Centre(NCSC)reported over
100、 200 attacks specifically related to the pandemic,including on vaccine research.3Businesses are especially worried about the risk of breaches from within their business that could compromise security 43%said internal cyber risk was a leading cause of losses in the last two years,while 35%predicted t
101、his would be among their greatest risks in the coming years.FBI warns of vulnerabilities in medical devicesMedical devices are increasingly connected through smart technology and the internet of things(IoT).The average hospital room contains dozens of mobile devices,applications and networked system
102、s,many of which run on outdated operating systems.In September 2022,the FBIs Internet Crime and Information Center issued a white notice that unpatched medical devices lacking adequate security features were increasingly vulnerable to cyber-attack.4 The notice,which follows several similar alerts fr
103、om the Cyber and Infrastructure Security Agency(CISA),cited reports from cybersecurity firms that more than 50%of connected medical devices and IoT devices had known critical vulnerabilities.Product recall still a top riskProduct safety and associated recall and liability risks continue to be a majo
104、r concern,named by 40%of respondents among their top risks.Even more(44%)are worried about labelling and packaging issues.In an ever-tightening regulatory environment,errors in the information provided with medical products can just as easily lead to recalls as issues with the products themselves.Wh
105、en asked what would be the biggest impact of a product recall on their business,a high proportion(43%)named reputational damage and 37%public scrutiny among their top three,perhaps reflecting the increasing media and public interest in health-related stories.Risk landscape3 https:/www.ncsc.gov.uk/fi
106、les/Annual-Review-2020.pdf4 https:/www.aha.org/system/files/media/file/2022/09/fbi-pin-tlp-white-unpatched-and-outdated-medical-devices-provide-cyber-attack-opportunities-sept-12-2022.pdfFigure 9:Top five risks to business success in next three-five years Q Thinking about the next three to five year
107、s,which of these external factors do you believe pose the greatest risk to your organizations success?Rank 1/2/3/4/529292530329333530333363727336343343340%10%20%30%40%50%60%Labor costsPolitical risksPandemicsIntellectual property issuesCompetitionBig data/data privac
108、y/informed consentBrand and reputational riskTotalNorth AmericaEurope APACLATAM574438325043393550464043940373636303938363734383536423041310%10%20%30%40%50%60%Environmental risk/climate change/severe weather eventsCost and availability of inputs(such as raw materials,energy,transport)Cyber
109、 risksChanging or increasing regulationSocial inflation rising costs of litigationRapid digitalizationSupply chain disruption Global Life Sciences Risk Outlook 2023/19Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)With widening access to healthcare and ageing populations,de
110、mand for pharmaceuticals,medical devices and biotech innovations continues to increase around the world.But medical advances can also increase product risk.For example,in 2018,potentially carcinogenic nitrosamines were found in products for treating high blood pressure,and also in drugs used for dia
111、betes,stomach acid and smoking cessation.This led to a series of costly recalls,with resulting reputational damage,loss of revenue and increased public scrutiny.What made this more difficult was that there had been no expectation or requirement to test for nitrosamines prior to 2018 when they were f
112、ound to be potentially harmful.A succession of negative events in recent years,including class actions related to faulty hip and knee replacements,pain pump litigation,and the ongoing opioid crisis,have led many product liability insurers to restrict cover or exit the market.This reduces available c
113、apacity in the insurance marketplace.To protect themselves from claims in this environment,life science companies should be able to demonstrate robust evidence of safety,and clearly and honestly communicate risks and benefits with patients.In recent years,the largest awards have been against compani
114、es that failed to fully disclose all the potential side effects of their products and devices.WTW insight:Product liability/product recallFigure 10:Top impacts of product recalls Q If your business needed to recall any of its products,which of the following would have the biggest impact.Rank 1/2/30%
115、10%20%30%40%50%4040373636353343Reputational damageUnable to provide customers adequate healthcareLoss of revenue to customersPublic scrutinyLoss of revenueBusiness interruption/closureRegulatory scrutiny/penaltiesLoss of ordersTotal20/Global Life Sciences Risk Outlook 2023Base:All respondents(626)No
116、rth America(201)Europe(160)APAC(140)LATAM(125)Global Life Sciences Risk Outlook 2023/21WTW insight:Cyber securityAs the life science industry has become more heavily reliant on the data that sits behind its innovations,protecting that data has become more business critical.The damage from a cyber-at
117、tack can go far beyond data theft:if systems are disabled,whole businesses can be put out of action with implications for patient care and potentially large claims and losses.To reduce their risks,businesses must implement sensible cyber security measures,such as reviewing remote access protocols,us
118、ing multi-factor authentication,segmenting networks so sensitive data is not on the same server as email,and creating offline back-ups of business-critical data and assets.Increasingly,insurers will not provide cyber cover unless these security measures are in place,especially for mid-sized and larg
119、e life science companies.If an attack happens,firms need to know that their insurance can cover the true scale of losses,including lost production,ransomware demands,failure to supply products or services,business interruption,data breaches and other forensics and legal compliance costs.Businesses w
120、ith cyber insurance should review their cover and make sure it is broad enough to cover potential costs.If relying on general or professional liability policies,make sure they dont have data-related exclusions.Remember that most product liability policies do not cover cyber risk.As cyber risks conti
121、nue to evolve,businesses should understand what cover their existing policies provide and what is available to them in the wider marketplace.They should also clearly understand where insurance stops and their balance sheet will take a loss.For example,cyber insurers remain reluctant to cover any bod
122、ily injury arising from a cyber incident.With the conflict in Ukraine and instability in other global regions impacting supply chains,its not surprising that geopolitical risk tops the list of factors that could get in the way of effective risk management.More than half of respondents(53%)named it a
123、s their biggest challenge in addressing risk over the next three to five years.The increasing frequency and severity of climate-related weather events is also posing problems for risk management.Although 57%of respondents said they were insured for the business interruption costs of a weather event,
124、35%said their insurance covered property damage only.5%were unsure if business interruption was covered and 2%said they had no property insurance.A substantial minority(26%)said they have no cover for extreme weather risks in their supply chain.Given these challenges,businesses are focusing on devel
125、oping greater resilience to external shocks.Business continuity planning is high on the agenda,with more than three quarters(77%)of businesses following a formal process to ensure plans are harmonized across the organization.As part of this process,businesses should analyze and quantify weather risk
126、s and give more consideration to where they locate new facilities.Insurers and brokers can advise on risks and availability of cover for different locations and help life science companies make more informed decisions.Firms may lack systems to manage IP risksIntellectual property(IP)is the lifeblood
127、 of most life science businesses.A large majority(69%)agreed that insurance for IP risks was mission critical or necessary.Yet,it also emerged as the risk area with the lowest risk management maturity.Half of firms(50%)said that they either had no standardized risk management process for intellectua
128、l property or that it did not operate consistently or effectively.Conflict and climate make risks harder to manageRisk managementThis suggests that some mid-market firms may lack sophisticated internal systems for managing these risks,and may struggle to understand and quantify them.New technologies
129、 such as wearables and AI may change their IP risk profile,and their risk management strategies may not have caught up yet.They may also find it difficult to transfer risks effectively due to a lack of insurance solutions that meet the sectors specific needs.More than a third of respondents(35%)said
130、 they had no specific cover for IP but thought it was covered by other insurance.Although some types of business in our survey,such as service providers,may be less concerned with IP than others,this is still a startling finding.Most policies that firms might rely on,such as general liability and cy
131、ber,have exclusionary wording around IP,so it is not safe to assume that other policies will cover these risks.How to manage IP risks Understand your risk profile:Make sure that you incorporate IP into your risk management strategy at the enterprise level.Include not just R&D but also the legal depa
132、rtment,finance,sales and marketing,procurement and IT.All play a role in IP,whether thats inventing,licensing,protecting or exploiting it.Quantify your risk:Ask yourself some key questions.For example,what would the lost asset value and revenue loss be if a key patent or trademark were found to be i
133、nvalid or unenforceable,or if key trade secrets walked out the door with a departing employee?Reduce the financial impact:By building an IP risk profile and quantifying the combined financial impact of your companys IP exposures,you can make decisions on how to reduce that impact;whether through a r
134、isk transfer solution or retaining the risk internally or in a captive.22/Global Life Sciences Risk Outlook 2023 Global Life Sciences Risk Outlook 2023/23Figure 11:Greatest challenges to addressing risks over the next three-five years Q Which of the following will pose the greatest challenge to addr
135、essing your risks over the next three to five years?Figure 12:Extreme weather events insurance for property and business interruptions Q What best describes your property and business interruption insurance for the impact of extreme weather events?53565255495049544053474354638464949434246
136、52434944343474634TotalNorth AmericaEurope APACLATAM0%10%20%30%40%50%60%External geopolitical factorsLack of access to insurance and risk transfer solutionsLack of budgetLack of board buy-inLack of internal risk management tools and insightExternal regulatory factorsExternal economic facto
137、rsLack of knowledge and understanding of these risks232383734363330522We have property insurance to cover all associated risksOur insurance covers damage to property onlyOur insurance covers property damage and business interruptionNot sure if extreme weather events are covered
138、We dont have property insuranceTotalNorth AmericaEurope APACLATAM0%10%20%30%40%50%60%Global Life Sciences Risk Outlook 2023/23Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)Figure 13:Approach to busine
139、ss continuity planning to Q How would you describe your approach to business continuity planning?393834121451111TotalNorth AmericaEurope APACLATAM0%10%20%30%40%50%60%Our insurance covers damage to property onlyFormal process not linked to KPIsFormal board level process linked t
140、o business KPIsInformal process that everyone is asked to followNo formal process each division function has their own approach24/Global Life Sciences Risk Outlook 2023Base:All respondents(626)North America(201)Europe(160)APAC(140)LATAM(125)Global Life Sciences Risk Outlook 2023/25WTW insight:Extrem
141、e weather risksWhen hurricane Maria struck Puerto Rico,it demonstrated how exposed the life science sector can be to extreme weather risks.Although actual property damage was limited because life science facilities are generally built to withstand hurricane force winds,the storm caused severe busine
142、ss interruption as the power and communications infrastructure went down for several weeks.Limited availability of basics such as water and electricity meant some firms had to stop production,which lack of food,fuel and cash caused daily problems for the local workforce.These are issues that should
143、be considered before investing in catastrophe-prone regions.Businesses also face hidden exposures from extreme floods.Insurance coverage terms differ by country and may depend on factors such as contract terms,how a flood is defined and measured,or the application of retentions,which can differ from
144、 location to location.It is difficult for many companies to know whether they have cover in a particular situation,and for how much,especially across a large portfolio.To avoid unnecessary exposures,we recommend that life science companies use analytics to quantify their risks and probable losses in
145、 a variety of natural catastrophe scenarios.This can inform better decisions about what property limits to buy,how much risk to retain,or whether to finance it through a captive.Firms should also review their cover for contingent business interruption to make sure they are covered for the impact of
146、a natural disaster in their supply chain.Percentage deductibles for catastrophic events based on a percentage of the property value can be high,especially for large sites.Its good practice for risk and financial managers to walk through catastrophic scenarios with their insurance team so that deduct
147、ibles,limits and exclusions are clearly understood.WTW insight:ClimateClimate is becoming a leading area of concern for the life sciences industry,in common with much of the corporate world.As well as the physical risks to property from increasing wind,drought,wildfire and storm surge events,there a
148、re other longer-term risks that businesses need to evaluate and mitigate.For example,the transition to a green economy may cause significant disruption and potential cost.During this period,businesses may face problems sourcing raw materials and fuel,as well as changes in distribution,regulation and
149、 technology.Likewise,we may see a rise in public liability lawsuits claiming organizations knew about potential climate impacts but failed to act on them or failed to disclose carbon emissions or other air pollution.Businesses should reassess their exposures and insurance coverage to identify gaps f
150、or each type of climate risk.They can then decide on the right solution whether thats buying more cover,self-insurance,changes to contract wording or increasing capital spend on infrastructure.How WTW can helpWTWs Climate and Resilience Hub can help businesses measure their risks and make better ris
151、k management decisions.Protecting physical assets:our advanced Climate Diagnostic analytic tool can model and predict climate risks in a variety of future scenarios,as well as immediate risks from weather-related events in a portfolio of locations.Managing transition risks:our Climate Transition Val
152、ue at Risk(CTVaR)service measures how the transition to net zero will impact future cash flows,profitability and valuations,based on a clear,transparent Climate Transition Index.Reducing liability risks:WTW has developed a Climate Liability Risk Assessment,combining analytics,advice and transaction
153、expertise to help manage and minimize these risks.26/Global Life Sciences Risk Outlook 2023WTW insight:Geopolitical riskAs noted above,respondents ranked external geopolitical factors as the greatest risk challenge of the next three to five years.In Europe,the conflict in Ukraine has increased trans
154、port and energy costs and shut down some of the research services that Ukraine provides for clinical trials.The conflict has contributed to forecasts of a steep recession,which will hit government healthcare and research budgets already stretched by the pandemic.Potential conflicts elsewhere in the
155、world could further disrupt business models and force some companies to reconsider where they manufacture.Growing concerns about geopolitical risk in Asia is particularly alarming,given that China and India are central to the global pharmaceutical supply chain,playing major roles in generic drugs an
156、d active pharmaceutical ingredient manufacture.Geopolitical flashpoints in Asia include disputes between China and India,tensions in the Taiwan Strait and Chinas strategic and technology rivalry with the US,Australia and Europe.These issues have not gone unnoticed by political leaders.Some companies
157、 may benefit from government efforts to reshore medical supply chains.However,the rise of health nationalism could lead politicians and regulators to raise the bar for access to their markets and restrict imports or exports.Finding the right business model to respond to politically-driven shifts in
158、the global supply chain will be a key strategic challenge for many life sciences companies in the next five years.There is no easy way to address or mitigate geopolitical risks,which remain unpredictable despite the best efforts of forecasters.However,scenario-based analytics can help quantify expos
159、ures and update resilience and business continuity plans.Businesses should also consider hedging strategies,such as having multiple supply routes and back-up suppliers.Specialist political risk or supply disruption insurance products can provide a further hedge,offering cover for perils such as emba
160、rgo,sanctions,or political violence.Global Life Sciences Risk Outlook 2023/27Conclusion:Securing the benefits of transformationIn many ways,the future has never looked brighter for the life science industry.Advances in technology and changes in the operation and regulation of clinical trials could h
161、erald a new age of innovation and a more efficient process for bringing products to market.With demand for pharmaceuticals and medical devices continuing to rise,increasing use of automation and AI,and a continuous pipeline of new biologics and cell and gene therapies,the sector looks set to see str
162、ong growth for years to come.However,there is also a crowded risk landscape to navigate.Greater reliance on data means more risk of data breaches,consent issues and cyber-attack.Calls for greater health equity and access to medicines,coupled with financial pressure on health systems,may undermine cu
163、rrent business models.External threats from global instability to climate change may put supply chains under strain.To build resilience against these threats,its a good idea to reassess the critical risk issues in your business,where you need to focus,how you can manage the key risks you face,and wh
164、ere you might need more protection.WTW offers a range of insurance and consultancy solutions that can support you through this process,helping you quantify,model,mitigate and transfer your risk,while protecting your reputation.Survey sample and methodologyMethodology Phone to webSample size 626 Glob
165、ally:North America(201)Europe(160)APAC(140)LATAM(125)Audience profile Execs responsible for risk management and/or insurance purchasing in large global Life Sciences companies(R&D and manufacturing)Fieldwork dates August to September 2022Our survey was carried out by our partner Coleman Parkes Resea
166、rch in September 2022,using a mixture of phone interviews and web-based survey forms.We received 626 responses from senior decision makers within life science businesses based in Europe,the U.S.,Asia-Pacific and Latin America.Study detailGeographyRolePublicly traded companyCompany revenueSpecialismA
167、udience profileIndustryDecision-making0%North AmericaEuropeAPACLATAM3226 22205%10%15%20%25%30%35%0%Pharmaceutical and biotechContract manufacturing organizations(CMO)Medical device/digital health companiesContract research organizations(CRO)Generic/specialty drug manufacturersTherapeutic research an
168、d developmentDiagnostic laboratoriesNutraceutical and over-the-counter(OTC)5%10%15%21212I am the key decision maker in terms of risk management and/or insurance purchasingI am part of a team who are involved in decision making regarding risk management and/or insurance purchasing and/or i
169、nsurance purchasing46540%10%20%30%40%50%60%17%17%16%16%16%16%General counsel/legalFinanceRisk managerOperations managerResearch directorCEO or equivalentYesNo67%33%Up to and including US$100mOver US$100m0%20%40%60%80%100%87130%373520810%20%30%40%Combined research and manufacturerEstablished research
170、 businessEstablished manufacturerPre-revenue developmental28/Global Life Sciences Risk Outlook 202329/WTW Global Life Science Survey 2022For more information,please contact:AsiaBen MacCarthyHead of Casualty,Asia+852 2195 Australia and New ZealandTracy GrantHealthcare Practice LeaderAU:+61 478 305 95
171、5NZ:+64 21 195 7146 BelgiumBeata Kaczynska-LombardiGlobal Pharma and Health Sciences Industry Lead+32 2 663 87 09beata.kaczynska-DenmarkKasper Dybmark Partner,Large Accounts+45 88 13 98 GermanyMartin CarbonManaging Director+49 69 IrelandTina OKeeffe Head of Healthcare and Life Sciences+353 21 420 It
172、alyPaolo MolteniChief Commercial Officer+44 20 3124 North AmericaJohn ConnollyNorth American Practice Leader Life Sciences+1 610-254-Sandie Mullen North American Broking Leader,Life Sciences+1 913-344- Steve FeickDirector,Life Sciences Practice 484-846- South AmericaEduardo MichelinDirector+55 11 21
173、61- UKEdward HunterLife Sciences Broking Leader+44 20 3124 Neil EmersonHead of GB Life Sciences+44 7507 Global Life Sciences Risk Outlook 2023/29DisclaimerWTW offers insurance-related services through its appropriately licensed and authorised companies in each country in which WTW operates.For furth
174、er authorisation and regulatory details about our WTW legal entities,operating in your country,please refer to our WTW website-https:/ is a regulatory requirement for us to consider our local licensing requirements.The information given in this publication is believed to be accurate at the date of p
175、ublication in December 2022.This information may have subsequently changed or have been superseded and should not be relied upon to be accurate or suitable after this date.This publication offers a general overview of its subject matter.It does not necessarily address every aspect of its subject or
176、every product available in the market and we disclaimer all liability to the fullest extent permitted by law.It is not intended to be,and should not be,used to replace specific advice relating to individual situations and we do not offer,and this should not be seen as,legal,accounting or tax advice.
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178、ot guarantee and are not responsible for the accuracy of such.The views expressed are not necessarily those of WTW.Copyright WTW 2022.All rights 2022 WTW.All rights reserved.FPS 4071474 WTW-80155/12/About WTWAt WTW(NASDAQ:WTW),we provide data-driven,insight-led solutions in the areas of people,risk
179、and capital.Leveraging the global view and local expertise of our colleagues serving 140 countries and markets,we help you sharpen your strategy,enhance organisational resilience,motivate your workforce and maximise performance.Working shoulder to shoulder with you,we uncover opportunities for sustainable success and provide perspective that moves you.Learn more at .