Health Industries (HI): six priorities to reinvent the business
PwC’s 27th Annual Global CEO Survey
Companies recognize the need to reinvent themselves and are already moving to change their business models.
CEOs in the healthcare sector need to accelerate their efforts to analyze and evolve their business models in order to deliver sustainable results for stakeholders and society. What are the forces driving or slowing this transformation? What does it take to succeed? These are the questions to shape a change that can meet global challenges. We present to you the six priorities that CEOs of Health Industries (HI) companies should put on their agenda to realize the change.
PRIORITY
Consider the long-term economic strength of the business model
Globally, 97% of CEOs claim to have taken action to transform their business model over the past five years. Even in the health sector, the vast majority of interviewed CEOs have stated that in the past five years they have taken at least one step to change the way the company operates and creates value. However, translating actions into results remains a challenge. Despite the efforts, almost half of the Italian HI CEOs, more than globally, state that they are not sure if their company will be economically sustainable in a decade if it continues on the current path, confirming the urgency to revise the business model.
Percentage of HI CEOs stating that their company will not be economically sustainable over the next 10 years if it maintains the current model
PRIORITY
Understanding macro trends and turning obstacles into opportunities
Changes in patient/customer preferences, regulatory changes and technological transformations are for health sector CEOs the factors that in the next three years, more than in the previous five years and more markedly than in other sectors, both in Italy and globally, will impact the value creation of companies and will determine their transformation.
Percentage of HI CEOs for whom the following factors have caused changes in the last 5 years/will cause changes in the next 3 years in the way the company creates, distributes and acquires value (Only show answers «Very» and «Extremely»)
PRIORITY
Understanding macro trends and turning obstacles into opportunities 2/2
In such a complex and rapidly changing environment, health sector CEOs have a clear need to reinvent themselves, but they are going to face structural barriers to change. Among Italian CEOs, 56% state that the regulatory environment is the main obstacle preventing their company from changing the way it creates value (compared to 48% of global CEOs). The lack of employee skills, as well as a shortage of digital skills are considered less critical obstacles.
Factors that prevent companies from changing the way they create, deliver and acquire value
(Only show answers «Largely» and «Mostly»)
PRIORITY
Resolve inefficiencies to free up resources
Health CEOs see significant inefficiencies in their company's activities (email management, hiring procedures, expenses approval, meetings, etc.), amounting to about 45% of the time, and in some cases much more significant than in other sectors. The cost of these inefficiencies amounts to hundreds of billions. Resolving these inefficiencies, e.g. by automating or digitizing some routine tasks, frees up resources for change and value creation.
Estimates by HI CEOs on the percentage of business time spent inefficiently on the following activities/processes
PRIORITY
M&A as a lever for growth and transformation of business models
The health sector, especially in Italy, is characterized by solid investment activity and a strong resilience compared to other sectors. This demonstrates the attractiveness of the sector and the fact that the lever of M&A is fundamental for the transformation of the business model (e.g. to acquire new skills or assets) and to support growth strategies (e.g. to review their business portfolio, create platforms, etc.). The HI CEOs in Italy state that M&A is among the factors with the greatest impact on value creation, significantly higher than the CEOs of other sectors (+ 10 p.p.).
PRIORITY
Seizing the opportunity of AI generative in a responsible manner
Italian HI CEOs, in addition to declaring adoption levels of generative AI higher than the global average, consider such technology the main engine of their companies' transformation in the coming years: for example, they expect that generative AI will drive the development of new skills (75%), increase employee efficiency (65%), and improve the quality of their company's products or services (53%). However, there are concerns about possible consequences and risks associated with its adoption (cybersecurity, misinformation, ethical issues, etc.).
The opinion of HI CEOs on the impact of generative AI
PRIORITY
Aiming for sustainability beyond energy efficiency
CEOs in the Health sector, both globally and in Italy, state that the greatest progress has been made in improving energy efficiency. There are still few CEOs with plans for other climate actions, such as the incorporation of climate risk into financial planning or product/service innovation. A broader vision of sustainability offers opportunities to create innovative business models that not only mitigate risks, but also strengthen economic-financial returns and benefit Society.
Percentage of HI CEOs reporting progress in the following actions related to climate change
(Shown only the responses “Underway” and “Completed»)
