The COVID-19 pandemic has created a perfect storm of risk for life sciences companies. Yet, in its midst, there are approaches to understand, assess and address risks to mitigate disruptions and tap into opportunities to help patients, providers and the industry itself.
A virulent combination of circumstances has increased the risks to life sciences companies seeking better treatments for COVID-19 patients, and others working to develop a vaccine to defeat the virus. Among the factors increasing risks are an abrupt disruption of business operations, interruptions to supply chains, a shift to working remotely, rapidly changing regulatory guidelines, and an accelerated timeline to develop a vaccine. “We’re seeing that businesses are changing, adjusting their priorities,” said Narendra Sharma, Grant Thornton senior manager in Transformation. “A pandemic and the dynamics of business are very different.”
“Are you prepared to manage the business risks that have occurred due to COVID-19?”
• 7% don’t have controls to manage current and future risks
• 54% have more to do to manage risk
• 25% have an adequate risk plan in place
54% of life sciences leaders in a recent webcast said they do not have controls to manage current and future risks, or they have more to do.
Some risks are new, others have risen in impact
“A pandemic warrants industry perspective, looking at our potential risk and finding a path to mitigate risk, especially in areas where the risk is really amplified. It means looking at our business portfolio, our business roadmap, and adjusting the practice," said Sharma. Potential risks include the following:
“A pandemic warrants industry perspective. It means looking at our business portfolio and business roadmap, and adjusting the practice.”
– Narenda Sharma
Grant Thornton LLP
Innovate risk assessment and mitigation
- Patient safety. Some clinical trials’ monitoring and product quality controls have been moved off-site, creating challenges in implementing clinical procedures standards for patient safety.
- Employee safety. Distancing and masking provide a level of protection, but the virus is persistent.
- Governance and compliance. As health authorities revise methods and timelines for submission reviews and inspection, life sciences organizations must adjust quickly to avoid regulatory and legal consequences, and reputational damage. Not adhering to changes in governance and the regulatory landscape increases the risk for legal and financial penalties for noncompliance. And the boon of federal funding for COVID-19 R&D comes with additional scrutiny.
- R&D. Timeline pressure because of the urgent need for vaccines and treatments has consequent risks.
- Operations. Changes in processes due to remote working, material handling and supply chain shortages may significantly impact business operations.
- Sales. Oversight of marketing and communications to patients, health care providers and the scientific community has often not caught up to changes in delivery, e.g., from personal contact to virtual events.
- IT. Activities performed remotely increase vulnerabilities in IT systems and cybersecurity, raising risks to data integrity and security.
“First and foremost is the business’ responsibility to tackle these challenges that lie ahead with COVID and provide as much clarity and transparency to their employees, and their clients, as well,” said Anand Nagaraj, a professional with Catalent Cell & Gene Therapy.
Nagaraj’s organization has created working groups to identify and address risk, and multidisciplinary task forces to examine areas of disruption to execute mitigation activities. In conjunction, IT security action has been stepped up. “Life sciences face the risk of breaches to sensitive data every day,” he said. “I think now, with the pandemic, that’s heightened one hundredfold.” Security teams are responsible to monitor a range of issues that include remote workers, communication among facilities worldwide, and security integration plans among sites.
Recognize opportunities revealed amid risk
“Teams are focused on updating their business plans, and making sure that they’re aligned on strategic initiatives and focused on how the risk universe and risk management activities have been impacted,” said Meredith Murphy, Grant Thornton managing director of Advisory Services in Life Sciences.
“It’s really important that there is transparency across the entire business as it relates to those high-risk areas and how you’re looking across and sharing risks with the board, the audit committee, the executive team and management.”
– Meredith Murphy
Grant Thornton LLP
It’s also important for organizations to address risk through stronger teamwork, with different units sharing information and communicating more often, she said. “It’s really important that there is transparency across the entire business as it relates to those high-risk areas and how you’re looking across and sharing risks with the board, the audit committee, the executive team and management.”
One example of addressing risk today is a trend of life sciences companies embedding a compliance team member on an initiative to bring a new high-risk product to market. “Organizations are evaluating how to move their compliance functions to be a first line of defense, rather than taking a more reactive approach,” Murphy said.
Take advantage of data analytics
“There certainly are opportunities for some quick wins around how you leverage different data and technologies to manage and respond to risk,” said Murphy. Data analytics can provide insights for mitigation, enhancement of efficiency and value, and reduction of costs. Companies are seeing value in using data and analytics to gauge the impact of supply chain shortages, remote work, and third-party risk management.
In addition, regulatory guidance released in 2020 demonstrates an expectation for corporate compliance programs to have access to volumes of data and to perform analysis to aid in risk mitigation, Murphy said. “As a result, we’ve seen a real shift toward analytics being leveraged as an essential component for risk assessments, due diligence procedures related to M&A, compliance reviews, third-party risk management, transaction monitoring and testing type activities.”
While the environment is expected to continue to be turbulent, life sciences companies can take action to not only manage risk but also uncover new opportunities:
- Update existing risk assessment and business plans.
- Use data analytics for informed responses.
- Be flexible to meet continually changing priorities.
- Redeploy resources based on skill.
- Increase coordination between lines of defense.
Learn more by registering to replay the webcast, Managing your risk universe during the COVID-19 vaccine race
Managing Director, Advisory Services
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Senior Manager, Transformation
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