2022 for the pharmaceutical space will be remember as the year of multi factorials negative events. Numerous contributing factors including retreat of Covid-19 especially in China, disruption in the global supply chain and logistics due to Covid-19 post and existing effects. The unfortunate war between Russia and Ukraine, that strike waves into various industries. The ever-high energy prices in Europe and around the globe. Hyper-inflation that carries an aggressive ever-high, interest rate increase, together with hiking prices of real-estate and other consumables products cross borders. The after Covid-19 employees working habits and motivation, with high rates of them looking to change their current job, and to work more remotely, a fact that causes a global manpower shortage that impact different industries. The bear stock markets performance, with poor primary and secondary markets fund raising. Global drug shortages, that happened due to increased energy prices, new legislation presentation, lack of quality employees, shortage of basic materials (e.g., foil aluminum, intermediates, glass vial/bottles, tubes and str), disruption in the logistic supply chain. The magnitude of the events was well perceived in the pharma industry, with cross boarders impacts that strike the industry in full swing. The disruption in the supply chain had caused a 200% increase in logistics and transportation costs, and increased supply leading time, which had a direct impact on the final products prices.

This was a roller-coaster year, one could only hinder what the company could do in order to improve her preparedness to cope with the challenges. In unsatiable days sticking to the company competitive advantage is the key. Focus on executing the strategy and sharping the company versatility is another important factor to allow the necessary flexibility to cope with existing and upcoming challenges. Supply chain importance had was well felt, through the year. Companies that had robust and resilience supply chain division had performed better than their industry peers. Planning is an important part, but if you physically do not have goods to sales, your money stream is affected in a way that impact all the value chain. Unsatisfied costumers and end consumers especially for medicinal products can hold an impactable negative outcomes to all the stakeholders and irreversible damage to the company. The orchestra of the combined instruments is what cause this year to be ever challenging. Companies from one end was looking to relinquish a challenging 2 years of Covid-19 and convert them quickly into a year of prosperity and growth. Nevertheless, it seems that government efforts to stimulate the markets only fuel in a high magnitude the turbulence we are experiencing, especially because of the 0-interest rate and cheap money borrowing environment they promote. It acts like a double edge sord. The change from hyper-inflation to aggressive interest rate increase happened expeditiously without one central tenor to make sure he’s applied tools been calibrate to the right level.

Making a bold move to cope with the current situation is important, nevertheless, overreacting to magnitude event can contribute to refuel the crises and generate new ones. Applying long terms plans, with responsibility and taking measurable steps is the key to prevent recessions that loom on the global economy. The pharmaceutical market had shown resilience in navigating in blustery sea, nevertheless, the pharmaceutical market is still sensitive to various recession threats. Experiencing a high interest rate environment can apply significant impacts on the company loans structures and the company sustainable growth. The “cost of money” can very much diminish the company development, with less ambitious projects get into traction. Consumers living in a recession environment tend to tighten their wallet and avoid unnecessary incidental purchasing. The OTC market seems to be vulnerable to recession more than other pharma segments, nevertheless, in a lower magnitude of those of traditional global business. The paradox is that pharmaceutical companies tend to perform better in recession periods, as patients attend to suffer from more stress that led to depression, cardiac disorders, blood pressure and more. Surprisingly, patients have more time to treat themselves and attend to perform more checkups and treat their existing health issue. Every threat is an opportunity and the companies that will know to leverage those turbulence time and will be courage enough to make bold moves will outperform their peers.

Investing in technological tools that will improve the company competitive advantage will be imperative. Focusing on supply chain software implementation, improvements and automating of the organizational redundant process will allow companies to grow out of the crisis ever stronger. Applying cutting edge technological features as business intelligence, artificial intelligence and machine learning can reveal a new world of unravel opportunities. The lack of quality talents will somehow be relieved with wider manpower selection expected because of various companies’ shrinkage. The energy crises expected to relieve with the first sign of the alleviation of Russian Ukrainian war. It will be hard to foreseen how this will evolve, nevertheless the global consensus advise that the war will be cease in the first half of 2023. Additionally, the European and various global players led by Germany, apply a strategical plan to disconnect from the oil and gas dependency on Russia, hence we can expect to see a relieve in the coming months. Supply chain disruptions might take longer to be fixed, as it is impacted by multifactorial events, which consist various stakeholders to align and restore/improve their operation. Companies and business that raise funds in the 0-interest rate, with no real sustainable business models will soon evaporate, and real business will take the lead. The hype around technological companies that appears like mushrooms in the previous years, with high valuations and fund raising will be less popular. Investors appetite will be more conservative and will be shift toward money making companies. Technological companies will need to reinvent themselves and the way they are getting funded, and I hinder that there will be a lot of collaboration between conventional industries (e.g., pharmaceutical companies) and technological start-ups that can synergistically enhance each other.

There is still a lot of uncertainty towards the future, but one thing there is a consensus about is that 2023 should be less volatile than 2022. I can gently advise that we can expect a return to growth in the third or fourth quarter of 2023.