Failing to Demonstrate Value of Innovation is Top Risk Facing Life Sciences Sector, According to Ern...( NEW YORK April 23 /- Government and p...)

NEW YORK, April 23 /PRNewswire/ -- Government and private insurers are placing unprecedented pressures on Life Sciences companies to demonstrate value for the products they develop, according to The 2009 Ernst & Young business risk report, Life sciences. Insurers, governments and individuals are likely to increase demands to demonstrate value in the years ahead, as they confront mounting healthcare costs, a shrinking tax base, aging populations, and a mandate to provide care for a larger pool of citizens.

Meeting this challenge tops the list of the 10 most pressing risks facing the Life sciences industry in 2009, according to the report. Like most of the issues that comprise the list, the need to meet increasingly stringent demands for reimbursement has been exacerbated by the global economic downturn, which is challenging the high-risk/ high-reward model that companies have used to fund drug development efforts for several decades. The economy has prompted large and small companies to sharpen their focus on how they manage scarce capital, boost research and development productivity, and in some cases reinvent a long-held business model to build long-term shareholder value.

"This is a time of great upheaval in the pharma industry and it is intensified by the global financial crisis. Companies are looking with renewed vigor at how they manage the risks at the very core of their businesses," said Carolyn Buck Luce, Global Pharmaceutical Sector Leader at Ernst & Young. "But risk brings opportunity and the definition of crisis is 'the crucial stage or turning point.' This moment provides the industry with a chance to not only confront these immediate risks, but to take the actions that will strengthen their organizations in more fundamental ways as well."

In the biotech sector, the relative scarcity of capital to support drug development has placed new strains on the industry's traditional business mode
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