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.

Magazine: Life & Science – July 2017

Life sciences represent an extremely diverse and inter-disciplinary 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.

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.

Dominik Hotz
Pharma and Life Sciences leader, PwC Switzerland

Dominik Hotz is Partner and Pharma 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 11 years ago. Since 2015, Dominik Hotz heads an interdisciplinary team of specialists who render comprehensive consulting services to the pharma and life sciences sectors.

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 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.