Turning industry dynamics into an opportunity

Innovations are the lifeblood of the life sciences, according to Dominik Hotz. Owing to the steady increase in healthcare costs, pharmaceutical companies and hospitals not just in Switzerland but throughout the world are coming under tremendous pressure to reform their practices. For the Pharma and Life Sciences leader at PwC Switzerland, investments in digital technologies as well as collaboration between the various actors in the healthcare industry are a must if Swiss companies want to maintain their global competitive edge also in the years ahead.

“The interests of  the players in the healthcare industry are starting to intermingle.”

Life sciences represent an extremely diverse and interdisciplinary industry. How would you define the term personally?

Essentially, it’s all about the health of living organisms; in other words, plants, people and animals. In addressing this issue, the activities of the pharmaceutical industry, hospitals and the healthcare sector all come into play. It’s a rapidly growing area and many companies are elbowing their way in to it – even those from the agriculture industry, for example when it comes to novel seeds. 

Why are Swiss companies so successful in this line of business?

By its very nature, Switzerland has always had a tiny domestic market. Already in earlier days, this forced companies to expand beyond the nation’s borders both operationally and in terms of acquiring talented scientists from elsewhere. Out of this has come the kind of corporate culture that one can see today at so many large, globally active Swiss companies. Switzerland’s outstanding education system, with its technical colleges and renowned universities that foster a constant exchange with foreign schools of higher learning and the industry itself, is without a doubt an ideal seedbed. What’s more, the stability of the Swiss economy and hence the ability to plan for the long term are factors that are especially crucial to the pharma industry, given its innovation, production and approval cycles that last on average about ten years.

The vast majority of these companies are globally positioned. Which challenges and opportunities lie ahead as a result of this globalisation trend?

First and foremost, the tremendous dynamic of the market is an opportunity that should be exploited to the full. The challenge, though, is to be and remain an attractive partner for other players throughout the world; after all, the competition comes not just from here at home. And of course with this move towards globalisation, the mobility amongst specialists also increases, which in turn intensifies the international competition for top talents. The innovative ideas that Swiss firms count on for their success can spring up anywhere in the world. So in order to keep pace, it is all-important that they engage in cooperative ventures and knowledge transfer as well as invest in new digital technologies.

Digitisation is a buzzword also in the life sciences area. Which technologies and innovations do you find the most compelling?

Applications that monitor the course of a treatment and its efficacy, as well as those which simplify and enhance the dialogue between physician and patient. Applications like this are not only of direct benefit to patients; the data collected in the process also enable physicians and researchers to draw new conclusions about a particular illness and its treatment. That insight can potentially contribute to the development of alternate therapeutic approaches and innovative medical products.

Why, compared internationally, is Switzerland – despite the strong franc and limitations on immigration – still an attractive business location?

The fact that international enterprises are investing huge sums in Swiss production sites underscores just how prized our country is as a business location. I see four factors behind this attractiveness: firstly, the sheer volume of globally active life sciences companies that are clustered here. Secondly, the high standard of living which, thirdly, is a strong motivator for talents from across the globe to come and put their skills to work in this environment. And not least of all there’s Switzerland’s political and economic stability, which affords companies a high degree of planning certainty.

What influence do population growth, increasing life expectancy and skyrocketing healthcare costs have on the dynamics of the life sciences industry?

Population growth and increasing prosperity lead to greater demand for healthcare services and pharmaceutical products. In the OECD member nations, outlays for healthcare in the broadest sense already account on average for about 13 per cent of gross domestic product. And those expenditures are growing at a significantly faster rate than the economy as a whole. All of the actors in the healthcare industry are aware that this trend is not sustainable. Drug companies have come under price and margin pressures; primary physicians, specialists and hospitals need to work more efficiently and effectively. We’re also seeing an increase in M&A activity, as well as intensified collaboration and partnerships between companies and hospitals.

Which short- and long-term trends and developments can be expected in this cluster of Swiss companies?

On one hand, there’s the steady move towards convergence, which I already alluded to. The interests of the players in the healthcare industry are starting to intermingle; greater focus is being placed on the patients. And then comes the digitisation aspect: the exchange of patient data leads to improved treatments, and biostatistical methods make it possible to conduct efficacy analyses of specific therapies. 

Swiss companies’ resolute investments in research and development appear to be paying off by international comparison. But where does Switzerland need to catch up?

Political uncertainties can pose a potential threat by detracting from the long-term planning certainty that I mentioned before. Switzerland would do well to mitigate these uncertainties. Over the medium term, we need to find solutions for an OECD-compatible tax regime, as well as for a constitutionally consistent immigration policy which allows us to continue to attract the kind of international talent that reinforces the scientific and economic dynamism of Switzerland. And from a life sciences perspective, Switzerland should also make sure that it maintains its primacy in terms of parenting and education, sets uniform standards for medical treatment data, and strives to achieve greater intercantonal collaboration in the healthcare system.

Which three terms come to your mind spontaneously when you reflect on the topic of “Life”?

Laughing – discovering – appreciating. 

Dominik Hotz
Pharma and Life Sciences leader, PwC Switzerland

Dominik Hotz is Partner and Life Sciences leader at PwC Switzerland. Raised in a family of pharmacists, he became acquainted with the issues surroun­ding the industry already in his youth. Hotz studied philosophy and economics in Munich and at the London School of Economics and Political Sciences. Following various posts in the pharma industry and with biotech com­pa­nies, he joined PwC’s Advisory division eleven years ago. Since 2015, Dominik Hotz heads an inter­disciplinary team of specialists who render compre­hensive consulting services to the life sciences sector.

PwC studies about Life & Science:

20th CEO Survey:
Pharmaceuticals & Life Sciences key findings

Medical cost trend:
Behind the numbers 2018

2017 Pharmaceuticals and Life Sciences Industry Trends:
Ways to manage data, value medical treatments, and engage with patients in the New Health Econom

What doctor?
Why AI and robotics will define New Health