Sector News

What's new on pharma's worry list? Cybersecurity and more

October 10, 2017
Life sciences

Anyone who’s read a Securities and Exchange Commission filing in the U.S. recognizes the risk disclosure section, where biotech and pharma companies list the pitfalls of investing in their shares.

Like an investor-oriented version of the risk disclosures in drug ads, they run the gamut from garden-variety competition to political unrest in farflung markets.

The accounting and advisory firm BDO sifted through those statements to discover just what the top 100 life sciences companies are most worried about these days. And though many of the same challenges have caused a lot of hand-wringing year after year after year, a few of this year’s 25 most anxiety-provoking risks haven’t always been top of mind.

One example—ripped from the headlines, as they say—came in 21st place among the risks cited most often in 2017’s annual reports: Natural disasters, war, conflicts and terrorist attacks. Back in 2013, only 47% of biopharma 10-Ks listed one or more of these as investment risks. This year? A big leap to 81%. Considering the series of enormous storms, earthquakes, terrorist shootings and drive-up attacks, it’s no wonder.

Another headline-making worry: The ability to maintain company infrastructure, including IT security and privacy. The increase there was even more marked, from 46% in 2013 to 89% in 2017. And given that Merck & Co.’s cyber breach happened after most companies filed their annual 10-Ks, that number may well take another jump next year.

But the biggest leap was workforce-related. Labor concerns—including pension costs, rising healthcare costs, immigration and outsourcing—popped up in 78% of the reports examined, up from just 24% in 2013. Healthcare insurance costs for employers have burgeoned over the past five years, of course, and more recently, biopharma companies have flagged immigration shifts as a threat to their ability to attract and keep top scientific (and other) talent.

New to the top of the list? Litigation. Every company examined listed legal proceedings and lawsuits as risks to their operations, up from just 84% in 2013. Take a look at Johnson & Johnson’s legal fight against thousands of claims that its talc products caused ovarian cancer, or AbbVie’s load of lawsuits over the safety of its testosterone drugs. One bellwether testosterone verdict just last week put AbbVie on the hook for $140 million in damages. AbbVie plans to appeal.

Meanwhile, the perennial worries won’t surprise anyone. Competition and marketing challenges figured in at the top in 2017 filings, along with intellectual property protections (or loss thereof) and the success (or not) of current and future drug launches all tied for first place, and they’ve been at or near the top for five years running. And then, of course, there’s regulation, by FDA and other authorities at the state and federal levels.

What’s ahead? FDA and regulation could take the lead, BDO says.

“The top risks cited by the largest 100 U.S. publicly-traded life sciences companies have remained relatively consistent over the last several years, with competitive pressures, intellectual property challenges, and the ability to commercialize and market products all tying for first place this year,” BDO says. “Nevertheless, new leadership steering the Food and Drug Administration (FDA), paired with political and regulatory uncertainty, could impact how those risks evolve.”

By Tracy Staton

Source: Fierce Pharma

comments closed

Related News

June 8, 2024

Lilly CFO leaves to join Alphabet

Life sciences

Anat Ashkenazi will leave Eli Lilly’s executive suite at the end of July to become CFO and senior vice president of Google and Alphabet. Ashkenazi has been CFO at Lilly since 2021 and originally joined the company in 2001. Over her 23-year career at the Indianapolis-based drugmaker, Ashkenazi also served as controller, CFO of Lilly Research Laboratories and as the finance chief for several global divisions within the company.

June 8, 2024

Edwards Lifesciences to cell Critical Care to BD

Life sciences

Edwards Lifesciences (NYSE: EW) announced it has entered into a definitive agreement to sell its Critical Care product group to BD (Becton, Dickinson and Company), in an all-cash transaction valued at $4.2 billion. With this agreement, Edwards is no longer pursuing the previously announced spin-off of Critical Care.

June 8, 2024

Danaher names Martin Stumpe as chief data and AI officer

Life sciences

The company, which owns diagnostics and life sciences businesses including Beckman Coulter and Cepheid, said the appointment reflects its increasing investment in AI as “a driving force for innovation and productivity.” Danaher is focused on AI by also spending on its internal capabilities and partnering with academic groups.

How can we help you?

We're easy to reach