Life Sciences and COVID-19 – Your Future Under a Microscope
In March 2020, the World Health Organization (“WHO”) recognized the novel strain of coronavirus (“COVID-19”) as a pandemic. The pandemic has severely restricted global economic activity and caused significant volatility in the global market. Like many sectors, life sciences companies and their investors are experiencing the sudden impact and rapidly shifting strategies to combat the economic hardships. Given the uncertainty regarding the spread of this coronavirus, many companies have shut down operations and began to implement a variety of cost-cutting measures in an attempt to keep the business afloat.
While the outbreak has had negative effects on a number of companies in the life sciences industry, it is providing many companies with additional opportunities and an optimistic outlook on the future. A significant amount of pressure has been put on these companies demonstrating how essential they are to contributing to solutions to this pandemic through clinical trials and tests, vaccine development, and device production to name a few. In an industry historically driven by innovation, our research shows many companies are benefiting from the reliance on their experience and thought leadership to provide a solution. Take for example three of the industry’s primary verticals: 1) laboratories and diagnostics, 2) pharmaceuticals and biopharmaceuticals, and 3) device manufacturers.
Laboratories and Diagnostics
Diagnostic testing for COVID-19 has been critical, and very sensitive, during the pandemic. Although testing demand and many other factors has put pressure on infrastructure, testing turn-around has increased in volume and turn-around time according to the Centers for Disease Control and Prevention (“CDC”). From commercial labs to private clinical laboratories, various types of laboratories have contributed to flattening the curve related to this pandemic. Shifting priorities to target the outbreak has delayed other lab studies, caused shortages of chemical agents used in test kits, and shown potential bottle-necks in the approval process.
Regardless, the value of these diagnostics and labs to the public is more evident than ever. Companies have become more nimble rapidly deploying quicker results and their regulators maintaining the current quality levels while accelerating approvals, to keep up with current and future demand. We are bullish this has set a new stage for future innovation of diagnostic testing and the regulatory process.
Pharmaceuticals and Biopharmaceuticals
Over the prior two decades, globalization of pharmaceutical and biopharmaceuticals (“pharma and biopharma”) supply chains has been a primary focus to drive cost reductions. Companies have seen distribution of certain ingredients vital to the production of drugs, received from other countries, come to a screeching halt. Pharma companies are sifting through historical records and analysis to determine what vaccine, or an innovative combination of vaccines, may be the solution not only to this virus, but also to the shortages in the distribution of other active ingredients. While these companies are currently pouring resources into research in a race to find the solution, financial stability and the current supply chain will remain volatile. However, once this antibodies, vaccines and other solutions are found, will it be a blockbuster for the industry?
Although its pandemic occurred one hundred years ago, the 1918 influenza pandemic is one many have compared to what we should expect from the COVID-19 pandemic. According to the CDC, there are expected to be approximately 175 million influenza vaccine doses distributed during the 2019-2020 season alone. Although the outcome of our current pandemic is unclear, the continued production of this many vaccines per year, one hundred years later, shows a glimpse of what the post-pandemic world could look like.
Medical Device Manufacturers
Medical Device manufacturers are feeling similar affects to pharma and biopharma in regard to the global supply chain. These companies have been forced to seek alternatives to supplying and manufacturing, the necessary parts for its products while fulfilling a significant shortage in medical equipment and increasing the safety standards of its production teams. As seen in the President’s order for General Motors to produce 30,000 ventilators, even manufacturing companies outside of the world of life science have been told to step in and assist with the current burden these companies are attempting to fulfill.
While mostly flying under the radar of the public eye, this pandemic has brought medical device manufacturers to the forefront. During this pandemic, and in some period of time to follow, we expect the demand for these products to continue its upward trajectory and gradually begin to stabilize as supply levels accumulate. This increased demand will force these companies to create innovative solutions around the production of goods and the localization of its supply chain.
Navigating the Period of Uncertainty
It is critical too for companies in the industry to understand and appropriately implement measures intended to relieve any burden, or take advantage of increased attention, for life sciences companies and its investors. While details of the COVID-19 outbreak continue to unfold, we expect these verticals to focus on items such as:
- Focus on necessary precautions in the current environment and re-evaluate the crisis-prevention plan
- Capture a vast number of differing scenarios in current financial models
- Explore current and future COVID-19 government assistance and funding opportunities available
- Discover alternative supply chains for elements utilized in various drug compounds
- Continue to innovate through technology to create digital customer interactions
- Monetize the may tax credits designed specifically for these innovative companies