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Life sciences industry outlook: Winter 2023

Feb 06, 2023

Life sciences industry outlook key takeaways

The outlook for biopharma remains mixed this year.

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Life sciences services companies, particularly clinical research companies, have maintained strong growth despite the economic headwinds.

The medtech sector is well positioned for opportunity once macroeconomic uncertainty eases.

Life sciences Economics

Looking ahead, life sciences companies will encounter fundraising challenges and competition for experienced and highly skilled talent, as well as fallout from economic headwinds. However, innovation and opportunity are always on the horizon for many businesses in the medtech, life sciences services and biopharma sectors. We explore what’s happening and what’s to come.

After two record years during the pandemic, 2022 was quiet. We expect a continued strong demand for labor from biopharma companies, and with layoffs in other industries there will be opportunities to recruit data scientists and other specialists that would otherwise find work in tech. However, until the private and public markets become more accessible, new biotechs will struggle to form and companies running low on cash may find few good options.

Coming out of a period of staggering growth during the pandemic, life sciences services companies, particularly in the clinical research space, have maintained strong growth despite the economic headwinds of 2022. Looking toward 2023 and 2024, we see a potential easing of these headwinds as the federal funds rate hikes potentially peak in the first half of 2023.

The past year has been difficult for the capital markets, as most major indexes were down due to inflationary, geopolitical and macroeconomic uncertainty. Investment in 2022 slowed slightly compared to the record high in 2021, but we expect strong consumer demand will continue to drive investment in the sector as companies leverage accelerating technological improvements to provide affordable direct-to-consumer health care solutions.

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