Consumer confidence challenges
Funds and pharmaceuticals, though fundamentally distinct in their purpose, share similar and complex ecosystems.
And this is where consumer confidence emerges as an important issue. In her whitepaper, Breton mentions how the Bernie Madoff scandal in the funds sector and the opioid epidemic in pharma both showcased severe exploitation of trust, insufficient regulation, and devastating human and economic consequences.
An evolving status quo
This loss of trust has been threatening both industries. Consumers are looking for alternative solutions considered to be less risky and more transparent.
Pharma continues to grapple with a rise in consumers preferring natural therapies and alternative treatments.
The aftermath of infamous Ponzi schemes convinced many investors to shift towards tangible assets like real estate and commodities.
Regulatory responses enter the frame
To prevent new crises and protect the consumer, EU governments and regulatory bodies have taken proactive measures. A few regulatory directives and reforms have also been enforced to reinforce controls and safeguard consumers from negative consequences.
Leveraging technology for transparency
Both industries are turning to technology, particularly blockchain and digital ledger technology (DLT), to enhance transparency, traceability and security from production to delivery. For example, Blockchain’s ability to provide immutable, tamper-proof records is invaluable in maintaining data integrity and preventing fraud.
What’s next
Technology might lead to a change in the ecosystems as it might reduce the need for some players and, potentially, a disintermediation of the value chain.
It is hard to predict the future: Industry growth is based on consumer trust. Such trust is certainly subject to transparency and clarity. It will be interesting to confirm whether this holds true within a simplified ecosystem of players.
Ultimately, will the simplified ecosystem expand to the use of common technology by all stakeholders, including the regulatory authorities?
Industries need to think outside the box and compare their environment to unfamiliar ones. Curiosity breeds innovation, so by seeking solutions from other sectors, we may learn more not only about our own challenges, but ourselves. There may be more in common than we think, so we must seize the opportunity to explore these similarities.
In our latest Annick sat with experts – Romain Labbé (Secretary General at the IML), Natasha Deloge (Head of the Innovation Division at the CSSF), Pierre Mottion (Head of DLT and Strategy/Investment Fund Services at Clearstream), and Matthias Van den Eede (Head of Digital Business Development & Beewise at Azimut) – and dove deeper into consumer trust and tech in these industries. Tune in to this two-episode series of Conversations, powered by KPMG Luxembourg – Where pharma and funds converge – and read Annick Breton’s – Investing in health and wealth: Exploring the converging worlds of funds and pharmaceuticals.