AI is full of promise, but most companies are struggling to deliver results. Why do some teams manage to scale AI successfully while others hit a wall?

In this recorded webinar, experts from L.E.K. Consulting, SHL, and Penfold dive deep into the findings of L.E.K.’s recent AI transformation study. Rob Wild (L.E.K. Consulting), Steve DeLisle (SHL), and Nikki Christofi (Penfold) offer hard-won lessons from the front lines of AI implementation.

You’ll get:

• A breakdown of the hidden challenges that derail AI adoption
• Cross-sector examples of what success looks like (and what doesn’t work)
• Practical strategies to accelerate your AI roadmap

Whether you’re shaping strategy or driving execution, this is essential viewing for anyone serious about delivering real impact with AI.

For more insights from the study download the full report: Artificial intelligence - Natural Transformation.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting

On May 19, 160+ packaging industry executives and financial sponsors in the packaging sector gathered at the eighth annual L.E.K. Consulting/Smithers Future of Packaging conference in Chicago to discuss key dynamics shaping the outlook of the packaging industry. With challenging conditions for the packaging market persisting, there was an emphasis on the evolving role and importance of topics such as the macro backdrop, M&A, sustainability and operational improvement levers. Here are the 10 key takeaways:

1. Packaging macro conditions have continued to be challenging, though the fundamentals of what drives opportunity in the sector remain. Despite a backdrop of broader macro indicators being stronger (e.g., 2%+ real gross domestic product growth in 2024, low unemployment), packaging-sensitive indicators (e.g., industrial production, box shipment volumes, manufacturing PMI) have been more challenged in 2024 and leading into 2025. Persistent headwinds from post-COVID-19 consumer behavioral shifts, destocking and inflation continue to weigh on the U.S. consumer and subsequently on packaging industry volumes. But there is still plenty of gas in the tank when it comes to market fundamentals and opportunities for value creation within the packaging sector — for example, consolidation opportunities in distribution or in flexibles, substrate shifts in the perimeter of the grocery store, and automation, to name a few.
2. The emphasis on sustainability has softened among consumer packaged goods manufacturers (CPGs) amid challenges meeting 2025 goals and a weaker consumer wallet. Brand owners that set bold 2025 sustainability targets are recalibrating after facing challenges such as falling short of postconsumer resin (PCR) content goals. With limited regulatory pressure and strained consumer wallets, many CPGs have deferred targets to 2030 and beyond. Nonetheless, sustainability remains a long-term imperative, with the scope of what customers are considering from their packaging suppliers broadening beyond the material substrate to include additional measures such as usage of resources like water and energy.
3. Sustainable solution adoption can be accelerated by a thoughtful commercial strategy and segment targeting. Adoption of sustainable packaging remains relatively limited, but manufacturers are finding success through focused commercial strategies. By targeting specific end markets that are earlier on the adoption curve or identifying key applications where there is greater sustainability scrutiny (e.g., blister packs in healthcare), packaging manufacturers have found commercial success despite market dynamics. Manufacturers that have been able to partner with customers to deliver sustainable solutions that meet specific needs and potentially drive other advantages (e.g., taking out cost) have been the most likely to see success.
4. Packaging volume growth headwinds have adversely shaped the nature of recent M&A activity. The aftershock of destocking (which was largely resolved in 2024) and weaker volume growth have continued to suppress middle-market deal volumes, with M&A volumes reaching seven-year lows in 2024 that are approximately 60% lower than the 2021 high-water mark. Large-scale deals, however, have seen a renaissance as scaled players have looked to capture synergies through value creation and refocus their portfolios, including through carve-outs.
5. Private equity hold periods have been extended given recent volatility. Market conditions have meaningfully extended private equity hold periods, with 40%+ of assets from the 2018-20 vintages yet to retrade. There are, however, more favorable M&A dynamics that drove and are expected to continue to drive activity in the lower middle market and among corporate carve-outs. While uncertainty persists, there is cautious optimism that an increase in platform-sized deal activity may see a return in the near future, with demonstrating organic volume growth a critical catalyst for activity.  
6. Investors should expect conservative trading multiples outside of top-tier private market assets as well as a more challenging debt environment. Sellers may need to reset their expectations for valuation multiples as evidenced by public company valuations having compressed by about 0.9x relative to before the COVID-19 pandemic. Top-tier assets, however, should remain the exception and achieve historical multiples given that attractive fundamental drivers of investing in the sector remain. One of the larger issues to driving deal completions, however, has been achieving consensus on earning before interest, taxes, depreciation and amortisation (EBITDA) baselines. Overshadowing this is the more challenging debt environment as rates have continued to remain elevated, but the demand profile for packaging businesses is such that distressed scenarios are not expected to become prevalent across the industry.
7. Operational initiatives that can drive value creation, ranging from quick wins to transformational, have become more important in the current environment. Hold period extensions have also created longer timelines in which to execute transformational operational investments that fundamentally change how businesses operate (e.g., vertical integration, shaping around centers of excellence) and increasingly differentiate. There continue to be investments (e.g., investments in automation, supply chain streamlining) that can drive meaningful value, and these have been elevated in priority given the current labor and tariff environments. As a result of investments in these types of operational improvements, packaging companies have been able to largely protect margins, with public companies maintaining EBITDA margins of approximately 15%, which are just under the pre-COVID-19 levels of about 16%.
8. Supply chain resiliency will be a critical focus for manufacturers going forward to drive cost control, improved customer availability and tighter cash conversion cycles. Supply chain volatility, from tariffs to resin availability, continues to disrupt packaging players. Resilience strategies, including vertical integration and deepened supplier partnerships, are critical for operators, particularly where access to inputs is more constrained (e.g., PCR/PIR). Greater control over and flexibility with supply chains allows converters to be more dependable partners for their customers while also driving faster cash conversion cycles.
9. Innovation is an important opportunity to create value for customers while differentiating from competitors. With volumes under pressure, innovation has been solidified as a key vector to drive growth and market share gains. Companies that partner closely with customers to codevelop solutions are capturing share by identifying and solving critical customer pain points the customer may not be aware of. Innovators that are able to create value for customers (e.g., by driving operational efficiency and reducing overall packaging and nonpackaging costs) are the most likely to see success and capture a greater customer willingness to pay for higher-value solutions.
10. Tariff uncertainty will continue to drive volatility but also create opportunity for domestic manufacturers. The current tariff situation is impacting packaging operations since 60%-70% of the average packaging business’s cost of goods sold are based on raw materials. Furthermore, while 10%-15% of U.S. packaging demand is provided by imports, 50% of those imports come from Canada, Mexico and China. The near-term tariff environment is expected to remain volatile, with trade policy positions continuing to evolve rapidly. Even as there continues to be some progress on trade deals, the uncertainty and impact on consumer demand have already started to be felt, creating potentially softer near-term demand. Despite this, there are opportunities for domestic converters that can use their domestic footprints as a form of differentiation as brand owners look to near-shore their supply chains. However, investment decisions should create value agnostic of tariff policy and not depend on a specific policy in order to drive acceptable returns.  

To learn more about the Future of Packaging conference or request a copy of the presentation materials, please contact us. 

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting LLC

Private healthcare in European markets continues to undergo significant expansion. Constrained public systems, long waiting lists and a rising appetite for better, faster access are pushing more patients to consider, and actively opt for, privately funded care. 

L.E.K. Consulting’s recent multi-country survey of over 3,500 patients across five European markets confirms this trend, with demand growing not only for traditionally private-pay services like dental care, but also for more complex specialities such as cardiology, oncology and orthopaedics.

Patients are willing to pay, even for complex specialities

More than half of surveyed patients indicated a greater likelihood of paying for private healthcare in the next five years across 11 out of 14 treatment areas (see Figure 1). Notably, this includes complex and traditionally publicly funded specialities — such as cardiology (45%), orthopaedics (44%) and oncology (39%) — where willingness to pay has historically been lower.

This indicates a fundamental shift in patient expectations and behaviour. Where private care was once limited to non-essential or supplementary services, it’s now increasingly seen as a necessary route to access timely treatment, especially in systems under pressure. 

The data shows this trend is most pronounced in Southern and Eastern Europe, where public infrastructure challenges are more acute and out-of-pocket models are already more normalised.

This shift suggests a structural change in consumer expectations. Private care is no longer seen solely as a convenience or an upgrade; for many, it is becoming a necessary alternative to access timely and quality care. 

As demand rises, pricing strategy becomes a critical factor in capturing that opportunity. Our earlier article looks at how providers can build smarter pricing models that reflect what patients value — and what they’re willing to pay for.

Demand driven by public system constraints and quality perceptions

Patients are motivated by both push and pull factors when opting for private care (see Figure 2). On the push side, limited access, long wait times and lack of public coverage were among the most frequently cited reasons. At the same time, the pull factors are equally compelling — a sizeable portion of patients are choosing private care due to perceived or actual quality differences.

For example, in Germany and Romania, over one-third of patients indicated that they associate better clinical outcomes, service levels or doctor availability with private healthcare providers. This reinforces the importance of quality differentiation as a commercial strategy — it’s not just about faster access, but also about offering a superior experience and outcome.

Providers that can build strong reputations around excellence in care, outcomes data and patient-centric design will likely capture greater market share, especially in higher-income segments or underserved urban areas.

Out-of-pocket and self-funded insurance uptake on the rise

Crucially, this demand is backed by patient willingness to pay. Across markets, more than half of respondents said they expect to increase out-of-pocket spending on healthcare in the next five years (see Figure 3). This includes countries with strong public systems, like the UK and Germany, highlighting a shift in mindset from entitlement to empowerment and choice.

At the same time, self-funded private medical insurance is also on the rise (see Figure 4). In our survey, nearly 1 in 3 patients had taken out private insurance independently (not through an employer), indicating that individuals are actively seeking ways to guarantee access to care on their own terms.

This presents a dual opportunity:

• For insurers to create more flexible, accessible and modular products that appeal to self-pay customers
• For providers to design offerings that integrate with or complement these insurance models, especially in ambulatory and specialist care settings

Out-of-hospital settings gaining traction

Patients are also increasingly open to nontraditional care settings. Nearly half of respondents (45%) indicated a preference for outpatient or standalone clinics, such as polyclinics or ambulatory surgical centres, for minor procedures.

This reflects a growing consumer preference for convenience, proximity and efficiency. Instead of navigating large, impersonal hospitals, patients are seeking care closer to home, often in settings that feel less clinical and more user-friendly.

From a commercial standpoint, this shift supports lower-cost, higher-throughput operating models. Providers that can deliver safe, high-quality care in community-based settings stand to benefit from:

• Reduced overhead and infrastructure costs
• Higher patient satisfaction and retention
• Greater geographic reach into suburban or second-tier cities

In most European markets, operators have already begun expanding urban polyclinic formats, offering general practitioner, diagnostic, specialist and day surgery services under one roof, with growing traction among both patients and insurers (see Figure 5).
 

Implications: A structural demand shift with provider upside

Taken together, the survey data points to a structural shift in European healthcare consumer behaviour that is not a temporary post-Covid-19 spike or an isolated national trend. The combination of rising out-of-pocket spending, self-funded insurance adoption, willingness to pay in complex specialities and openness to out-of-hospital delivery represents a transformational opportunity for private providers.

The playbook is clear:

• Expand into high-value specialities where wait times or quality gaps are severe
• Invest in scalable, polyclinic-style formats that align with patient preferences
• Differentiate through service design, clinical outcomes and experience

For investors and operators, now is the time to shape networks that are fit for this new, more consumer-driven reality.

How can L.E.K. help?

We regularly engage with leading providers and payors across European markets to develop high-impact strategies for private healthcare, including:

• Defining the right payor mix
• Designing digitally enabled delivery models
• Building out a pan-regional care network

Our teams bring the data, insight and on-the-ground perspective to help businesses navigate complexity and scale with confidence. 

If you’re looking to define your strategy in this evolving space, get in touch. We’d love to share what we’re seeing and help take your healthcare business to the next level.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting LLC

Until recently, chronic condition special needs plans (C-SNPs), which have been offered since 2006, have largely flown under the radar. As overall enrollment in Medicare Advantage (MA) plans grew 8.3% annually from February 2016 to February 2022, C-SNP enrollment growth was much more tempered, at 3.8% per year over that span. But recently there has been a massive surge in C-SNP enrollment, more than doubling over the past two years, from 464,000 lives in February 2023 to 1.1 million lives in February 2025 (see Figure 1). 

While most of this growth was driven by the leading players UnitedHealthcare and Humana, the market has seen increased interest from regional plans such as SCAN and Alignment Health Plan, as well as the emergence of new plans focused on chronic conditions, such as Zing Health and Gold Kidney. 

At a time when many MA plans across the nation are facing profitability challenges, selectively exiting markets and/or products and reining in their growth ambitions, the growth in C-SNPs stands out as a singular bright spot in a challenged MA market. This edition of L.E.K. Consulting’s Executive Insights outlines (1) why C-SNPs are gaining traction, (2) what payers need to do to succeed in C-SNPs and (3) what to expect in the market going forward.

1. Why are C-SNPs gaining traction with beneficiaries and payers?

C-SNPs are a type of MA plan that provides targeted care for individuals with specific chronic conditions, with the intent of improving patients’ health outcomes at lower costs. Member eligibility is based on whether an individual has a specific chronic or disabling condition among the 15 approved by the Centers for Medicare & Medicaid Services (CMS). 

C-SNPs offer a customized approach to meet the unique needs of these individuals based on their conditions (see Figure 2) and can target a single CMS-approved chronic condition or a CMS-approved group of commonly comorbid and clinically linked conditions. Most C-SNPs (97% of enrollment) target some combination of cardiovascular disease, chronic heart failure and diabetes. 
 

Key elements of C-SNPs include richer benefits tailored to specific conditions, such as reduced cost sharing for specific treatments or helpful ancillary benefits, as well as enhanced care management through dedicated care coordinators. The focused and customized approach of C-SNPs in targeting specific chronic conditions places additional requirements on payers, such as providing an auditable model of care to CMS demonstrating that their plan adequately addresses the applicable chronic condition. 

C-SNPs can have a meaningfully better value proposition for members relative to regular MA plans:

• C-SNPs offer enhanced disease management programs that are designed to help individuals better manage their health and prevent complications. These programs deliver personalized care plans for each member based on their specific chronic condition, medical history and unique health needs.
  
  The emphasis C-SNPs place on care coordination among healthcare providers ensures a more integrated approach to managing patient health. This coordination, alongside the patient education, medication management and specialized care teams offered by C-SNPs, can help reduce fragmentation in care and improve clinical outcomes.
• C-SNPs also provide enhanced benefits tailored to members’ conditions, which helps reduce members’ out-of-pocket (OOP) spend. C-SNPs typically offer greater access to relevant specialists through lower copays relative to those of regular MA plans, reducing OOP spend on specialist visits more frequently utilized by members with chronic conditions. Similarly, C-SNPs often offer richer prescription drug coverage (e.g., lower coinsurance, lower copays) for specific medications to treat relevant chronic conditions, as well as enhanced coverage for preventive services (e.g., vaccinations, screenings, wellness programs).
  
  Access to additional supplemental benefits addressing social determinants of health (e.g., healthy food, groceries, nonemergency transportation) is often provided by C-SNPs, helping reduce the burden of managing chronic conditions.

The benefits of C-SNPs are also increasingly being recognized by payers as opportunities to grow enrollment and increase market share within population segments that offer some of the highest per-member revenue opportunities:

• C-SNPs target a population sicker with chronic diseases, resulting in risk-adjusted capitated payment from CMS (i.e., the per-member/per-month payments based on members’ expected cost of care) at approximately 1.5 to two times that of the average MA member. If managed well, the higher per-member revenues can more than offset the higher expected medical costs and richer benefits offered to these members.
  
  A well-designed C-SNP care model can improve clinical outcomes and reduce cost relative to typical MA offerings. The investment in care management infrastructure, such as case managers to monitor patients between visits and promote medication adherence, can lead to fewer emergency room visits and hospitalizations for these members with complex illnesses.
• The richer benefits offered by C-SNPs also allow payers to accelerate their MA enrollment growth and increase market share. The tailored product offering with enhanced benefits can be more attractive to eligible members relative to the MA alternatives. Further, payers are able to market and sell C-SNPs year-round, unlike regular MA plans, which allow enrollment only during the annual enrollment period from October to December. Launching a C-SNP can also have a defensive motivation, as it can help payers retain high-revenue members who might otherwise get poached by competitor C-SNPs.
• In some cases, C-SNPs can serve as the “next-best alternative” for payers to access high-cost/high-revenue eligibles if they are barred from participating in the dual-eligible special needs plans (D-SNPs) market. Opportunities for MA plans to participate in D-SNPs are gradually becoming limited, as state Medicaid programs are increasingly looking to align their Medicaid and Medicare programs and requiring MA plans to have state Medicaid contracts in order to sell D-SNPs.

2. What do payers need to succeed?

Despite the potential for profitability and growth, there are challenges and risks to successful C-SNP operation for payers. If not managed well, the financials for C-SNPs can be upside down. Payers should evaluate their capabilities and readiness carefully before launching a C-SNP offering. Key elements for success include:

• Robust care management
  Whether operated by the payer or delegated to capable providers or third parties, managing complex chronic populations effectively and profitably requires resource-intensive infrastructure and clinical know-how to close gaps in care, reduce the number of emergency room visits and hospitalizations and manage disease progression.
• A high-quality provider network
  Like broader MA, the primary care provider is key to managing and coordinating care for C-SNP members. Payers typically leverage the same provider networks for C-SNPs as for their broader set of MA products, which helps ensure network adequacy and reduces the potential for abrasion when members move from MA to a C-SNP.
  
  C-SNPs gravitate toward geographic markets that have high-quality provider networks, such as Optum Care or CenterWell, that are capable of taking capitated risk and in many cases may rely heavily on payer-owner provider assets. Additional “wraparound” care delivery groups (e.g., in-home care management, house calls) are also often employed to increase the frequency of engagement and coordination of member care across various settings (e.g., home, physician’s office).
• Accurate risk adjustment
  The importance of engaging members upon enrollment, thoroughly evaluating member health status and appropriately capturing/coding all relevant conditions is heightened for chronic and polychronic populations with more complex care needs and ensures both the suitable management of a member’s conditions and the proper level of payment to compensate for the associated medical costs.
• Competitive product design
  Successfully growing membership and gaining scale requires a competitive product offering. The product design not only needs to be richer than alternative MA plans in the market but also must be tailored to the specific chronic condition in order to reduce barriers to care and OOP costs.
• An effective sales engine
  To drive member targeting and enrollment, payers typically rely heavily on brokers. Because the eligibility verification and enrollment process for C-SNPs is more time intensive than for broader MA plans, it is critical for payers to provide brokers with enhanced training, educational resources (e.g., on unique plan designs) and incentives to promote C-SNP offerings.
  
  To reach the more specialized chronic condition populations, payers also deploy grassroots marketing strategies — such as hosting health fairs and workshops and appearing at church services and community events like bingo nights — as well as digital campaigns targeted to specific communities.
  
  Additionally, cultivating strong partnerships with strategic providers plays an essential role in boosting member awareness and driving referrals. Providers, given their clinical knowledge of patients’ conditions and the trust they command, are uniquely positioned to recommend health plan options to patients as part of their broader care strategies.

3. What should we expect?

Given recent changes challenging the finances for payers in the broader MA market (e.g., changes to risk adjustment, utilization spikes, declining Star ratings), C-SNPs offer payers the potential for enhanced economics and increased membership. The potential to increase share and improve financial performance through C-SNPs is expected to draw continued interest from both large national payers and smaller health plans looking to further penetrate the significant white space of eligible populations. 

Large national players, which have increasingly exited markets in broader MA due to financial challenges, are seeing C-SNPs as an opportunity for growth and margin expansion leveraging much of their existing infrastructure (e.g., primary care groups, wraparound in-home care assets). Smaller health plans are looking to differentiate through innovative offerings for further market penetration. 

C-SNPs will not be immune to the challenges impacting the broader MA market, however. For example, recent changes to the CMS risk-adjustment methodology, which are driving down the average capitated reimbursement per member, also apply to C-SNPs. 

In the near term, these challenges may increase barriers to entry and heighten the importance of sufficient care management infrastructure and efficient provider networks to successfully operate C-SNPs. As a result, in the next few years, we expect to see a focused set of capable health plans emerge and establish themselves as leaders in the space, being able to successfully navigate these financial challenges and invest in the infrastructure and provider/broker relationships to position themselves for further growth.

Conclusion

In an MA market facing growing headwinds, C-SNPs represent a compelling opportunity for payers to drive profitable growth and deliver differentiated value to high-need populations. However, success in this space will not come easily. Winning payers will be those that can invest in the right capabilities — robust care management, accurate risk adjustment, strong provider integration and performance management, and effective sales strategies — while carefully navigating the same financial pressures buffeting the broader MA landscape. 

As C-SNP enrollment continues to surge, the market will likely be led by a group of sophisticated players that can balance the complexity of managing chronic conditions with the operational and financial discipline needed for sustainable long-term growth. Those that move decisively now stand to carve out a durable advantage in an increasingly competitive and critical segment of MA.

To discuss how L.E.K. can support your C-SNP strategy, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting LLC

As AI adoption accelerates, many organisations still struggle to translate investment into measurable value. In this video, L.E.K. Partner Jean-Philippe Grosmaitre explains why strong change management is critical to making AI work — not just in theory, but in practice.

Watch the full video to learn how businesses can close the AI Delta by combining technical execution with leadership, trust and behavioural change.
For more insights on embedding AI into organisational strategy, read “Proving AI’s Value in Business With Effective Change Management.”
 

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting LLC

External trends and technological advancements are driving transformation in the animal pharmaceuticals industry. From rising pet ownership to the phenomenon of pet humanisation, several factors are fuelling demand for innovative medicines that enhance longevity and quality of life.

In the livestock sector, regulatory shifts towards sustainable farming and the need to optimise margins in a challenging economic climate are accelerating the adoption of powerful new pharmaceutical technologies.

Meanwhile, advancements in AI and rapid breakthrough innovations in human health are providing a platform for profound change, enabling the animal pharma industry to meet evolving demands more effectively.

As the industry undergoes this transformation, established players are refining their strategies, smaller firms are seeking scale and new innovators are emerging. These shifts are reshaping the competitive landscape and creating distinct growth and investment opportunities across different segments of the market.

This Executive Insights, the second instalment in L.E.K. Consulting’s series on animal health, explores four major company archetypes within animal pharma and clearly identifies tailored growth strategies that you can use to create value through consolidation, operational efficiencies and targeted innovation.

The first instalment, “The Future of Animal Health: Strategic Lessons from Human Healthcare,” explores the key drivers reshaping animal health, their implications for the industry’s future and valuable insights drawn from innovations in human health.

Animal pharma companies: Four major archetypes

The animal pharma market comprises several distinct types of companies, each with its own strategic priorities and competitive pressures. Understanding these archetypes is crucial for CEOs and investors looking to identify where opportunities exist and how different market segments are evolving. Below, we outline four key categories of companies that define the industry today (see Figure 1). 

Large animal health players: Market leaders with overall portfolio breadth and depth

The animal pharma industry is led by a dominant group of successful multinational companies — including Zoetis, MSD Animal Health, Boehringer Ingelheim and Elanco — that have driven sector growth and fuelled innovation, both organically and inorganically.

Although these large players continue to serve both companion and livestock segments, their strategic focus in recent years has increasingly leant towards advancing the companion animal market. Several important factors have generated this shift.

First, the companion animal market has demonstrated superior growth potential, triggered by increasing pet ownership, the rising tendency to treat pets as family members, the escalating penetration of pet insurance and a growing prevalence of chronic conditions in ageing animals. In response, leading animal pharma players have ramped up investment in innovative therapies, such as monoclonal antibodies, cell and gene therapies, and AI-based diagnostics tailored to treating and prolonging the lives of pets.

At the same time, the livestock pharmaceutical segment faces mounting economic and regulatory pressures, contributing to relative deprioritisation of certain areas. Concerns over sustainability and antimicrobial resistance have led to stricter regulations on antibiotics use, even as changing consumer preferences for plant-based and food-technology alternative proteins and reduced meat consumption in some regions have constrained market expansion.

Moreover, livestock producers operate in a price-sensitive environment, limiting their ability to absorb cost increases and reducing margins for pharma companies. As a result, while large actors continue to invest in livestock health, they are focusing more and more on complementing their strongest livestock portfolios and developing higher-value innovations, such as vaccines, precision livestock farming and sustainability-related solutions.

This strategic shift has also led to the divestment of some non-core livestock businesses, freeing up capital for investment in high-growth companion animal segments.

Zoetis’s recent M&A activity can be viewed as a case study for this trend. In 2022, Zoetis acquired a Cambridge (UK)-based animal biotech, PetMedix, that develops antibody drug candidates, targeting areas of unmet clinical need in addressing both chronic and terminal diseases that affect dogs and cats. Then, in 2024, Zoetis agreed to divest its medicated feed additive portfolio to Phibro Animal Health for $350 million, allowing Zoetis to prioritise higher-value solutions, including vaccines, biologics and genetic programmes.

Small to midsized players: Portfolio breadth with distinct areas of expertise

Midsized animal pharma companies typically blend portfolio breadth with distinct areas of deep expertise in specific sub-sectors, therapy areas or modalities, whereas smaller players tend to concentrate on a certain geography, sub-sector, or set of therapy areas and modalities, and use this as a base for further expansion and growth.

Companies in this category usually operate with a leaner R&D budget and emphasise market expansion and cost efficiencies. Unlike larger animal pharma companies, they are less likely to divest assets, and instead actively seek scale advantages through acquisition and partnership.

For example, Ceva Santé Animale, one of the largest midsized players, has significantly grown its livestock biologics business through acquisitions while also expanding its companion animal business through the 2024 acquisition of pet biotech Scout Bio. Huvepharma's acquisition of AgriLabs in 2018 likewise strengthened its foothold in the US livestock pharma sector.

Innovative biotechs: Developing a pipeline and partnerships

The animal biotech sector, while smaller than its human counterpart, is sparking greater interest due to its potential for breakthrough therapies. These biotech companies are developing clinical pipelines with a variety of novel therapies, including cell and gene therapies, biologics, vaccines, and alternatives to traditional antimicrobials.

Companies such as LEAH Labs are working on CAR T-cell cancer therapies for companion animals, for example, while Anivive is leveraging AI to accelerate drug development in this space.

Though they sometimes lack the resources to scale and commercialise their innovations independently, this can make innovative biotechs attractive acquisition targets or partnership propositions for established industry incumbents and savvy strategic investors.

Take Kindred Biosciences, for example, which developed a deep pipeline of novel biological therapies for companion animals before being acquired by Elanco for $440 million in 2021. This acquisition — along with Ceva’s purchase of Scout Bio, among others — highlights the appetite among large players for de-risked, late-stage biotechs that can complement their portfolios.

Animal biotech companies are also pursuing innovation in the livestock sector, such as publicly listed ECO Animal Health, which has produced next-generation antibiotics for pigs and poultry that meet current guidelines for responsible use of antimicrobials.

Established innovators: Building portfolios via M&A and incremental innovation

Legacy brand and generics companies and other established innovators often rely on product lifecycle management strategies, such as incremental innovation in formulations or delivery mechanisms. They often seek to expand geographically in order to sustain or build market presence, or acquire smaller generics companies or license successful legacy brands to augment their portfolios and improve operational efficiencies.

With products already established in the animal treatment paradigm, these companies can turn stable, cash-generating growth into opportunities for investment in either M&A or comparatively low-spend, incremental R&D.

Norbrook, a Northern Irish manufacturer of differentiated veterinary pharmaceutical products, has steadily boosted its generics range, manufacturing capabilities and geographic reach alike through targeted acquisitions. And Chanelle Pharma, acquired in 2024 by UK private equity firm Exponent for an estimated €300 million, has assembled one of the largest animal generics portfolios in Europe, leveraging its R&D expertise to generate data for new registrations and its extensive manufacturing capabilities to scale production globally across a range of dosage forms.

Investment strategies for growth and value creation

Within the shifting landscape of animal pharma, CEOs and investors can pursue a range of strategies to build value in the sector. Each of the four archetypes described above presents different opportunities for acquisition, consolidation and growth. L.E.K. has explored several strategic investment plays that align with market trends and show potential for strong returns (see Figure 2).

Acquiring and building from established, cash-generating innovators and investing in the pipeline

One effective strategy for CEOs and investors is to acquire a well-established innovator, such as a legacy and/or generics business, and use its cash generation to fund targeted R&D and innovation. This model, widely used in human specialty pharmaceuticals, encourages incremental value creation without the risk profile of early-stage biotech investments.

For example, a legacy manufacturer with a strong market presence could serve as a springboard for further expansion into specialty pharmaceuticals, since it has the ability to reinvest cash flows into high-margin niche therapies — such as dermatology treatments or pain management solutions — creating significant upside potential.

Private equity-backed Dechra, which chooses acquisitions to blend generics and innovation, embodies the coveted end goal of a specialty animal pharma model. The success of human pharma companies that revitalise legacy brands while expanding via targeted M&A also demonstrates how this approach could work effectively in animal pharma.

Scaling a livestock pharma business: Consolidation vs carve-outs

The livestock pharma market remains highly fragmented, presenting multiple pathways for CEOs and investors to add or build a scaled, independent organisation, by either consolidating small-to-midsized companies to form a larger, integrated business or acquiring a divested livestock business from a large animal pharma player and expanding it through astute acquisition choices.

Both approaches build scale in livestock pharma, with the choice determined by existing industry infrastructure, long-term strategic objectives and one’s appetite for integration complexity.

1. Consolidating small or midsized players into a scaled leader
   By maximising a long tail of small and midsized animal pharma businesses, CEOs and investors can execute a roll-up strategy to customise a scaled player. The integration of multiple businesses brings many advantages, from a broader portfolio and enhanced distribution networks to an optimised supply chain and more efficient operations. This approach can also strengthen pricing power and market positioning.
   
   Huvepharma, for instance, has pursued expansion through strategic acquisitions such as its 2018 purchase of AgriLabs, which bolstered not only the company’s portfolio but also its market presence. This model works best with companies that offer complementary product lines and geographical reach to generate synergies and drive long-term profitability.
2. Acquiring a livestock carve-out and growing through bolt-ons
   Large animal pharma companies today are streamlining their portfolios, often divesting non-core livestock businesses to focus on high-growth companion animal segments. These carve-outs present opportunities for CEOs and investors to acquire an established platform boasting existing products, infrastructure and market access.
   
   Rather than integrating multiple independent businesses, this strategy depends on scaling the acquired asset through targeted bolt-on acquisitions, licensing agreements or geographic expansion.
   
   A recent example is Phibro’s acquisition of Zoetis’s medicated feed additive portfolio of six manufacturing sites with over 300 employees total. Such divestments will continue to emerge as the benefits of this approach — including building a cash-generating, standalone business without the complexities of a full-scale consolidation — become obvious.

Reformulation as a livestock value creation strategy

For CEOs and investors capitalising on opportunities in the established legacy livestock space, product reformulation is an essential strategy for driving value. By inspiring animal pharma players to optimise administration, reduce labour demands and enhance market differentiation, reformulated products can significantly improve customer adoption and competitive positioning. This approach is particularly effective in the livestock segment, where efficient operations and cost savings are critical drivers of purchasing decisions.

L.E.K. has highlighted several reformulation strategies that enhance the customer value proposition and increase the value of a livestock portfolio (see Figure 3). 

Supporting an innovative late-stage biotech to scale and exit

Investing in late-stage biotechs with validated technology opens a partially de-risked entry point into animal health innovation. Although the high risk of early-stage biotech investment typically puts it in the realm of venture capital, companies with a late-stage pipeline or recently approved products could present a strong acquisition play.

CEOs can allocate budget to grow biotech platforms and can support successful commercialisation by providing clinical development expertise, manufacturing and an up-and-running sales network. Investors can provide growth capital, as well as their expert networks, to scale these products and businesses, positioning them for eventual trade sales to larger industry players.

Examples include Dechra’s acquisition of Invetx and Elanco’s acquisition of Kindred Biosciences, both of which demonstrate the willingness of incumbents to pay premiums for biotechs with innovative, de-risked pipelines. Actors adopting this strategy should focus on therapeutic areas with high levels of unmet need, such as platform technologies that address chronic conditions in pets. Biotechs with therapies in development that have already been clinically validated for similar conditions in humans add an extra layer of protection.

Strengthening the customer through veterinary services consolidation

In addition to investments in animal pharma organisations of various types, alternative plays exist across the animal health value chain, including pet insurers, online retailers and veterinary chains, among others (see Figure 4). Consolidation of veterinary practices is an ongoing, tried and tested trend, prompted by increasing professionalisation within the industry and rising in-catchment competition across all dimensions.

Private equity group EQT has already capitalised on this trend through the acquisitions of IVC and Evidensia in 2017 to create IVC Evidensia, a leading veterinary services provider in Europe and North America. By 2021, EQT had already sold a minority stake, and the group is exploring a lucrative IPO for as early as 2026.

Despite highly consolidated veterinary practices in markets such as the UK and Sweden, significant opportunities remain for further consolidation in large, high-growth markets in the rest of Europe, including Germany, France, Spain and Italy. 

Why CEOs and investors should act now

The animal pharma industry is at an inflection point as shifting market dynamics create compelling opportunities for CEOs and investors alike. Large players are divesting non-core assets, the livestock sector is ripe for consolidation, legacy brands and generics offer stable cash flows, and once-innovative biotech companies are reaching advanced clinical stages.

By acting now, CEOs and investors can choose from a variety of well-defined strategies to create value and establish an advantageous position in an underpenetrated market.

How L.E.K. can help

We help clients navigate the opportunities emerging in the animal pharma landscape. We partner with CEOs and investors to identify growth avenues, from acquiring stable legacy portfolios to partnering with late-stage biotechs, as well as pursuing organic expansion. Our deep sector expertise and rigorous analytical approach allow clients to act decisively and build high-value positions in a rapidly developing market.

If you’d like to discuss growth opportunities further, reach out to the team.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting

Training the Street, a leader in financial services training, recognised the direct-to-learner market as a key opportunity to drive growth and efficiency. Training the Street saw a clear chance to leverage their trusted brand and deep expertise to accelerate growth and use direct-to-learner sales to grow in the core corporate learning offering.

To market to a younger, digitally savvy audience of college students and young professionals, they had to build a competitive advantage out of their digital experience and e-commerce journeys. Our role was to sharpen their strategy, enhance their digital presence, and create a platform that positioned them to capture market share and deliver sustained growth.

What We Did

To truly understand how to engage with direct-to-leaner marketing and sales, we started by putting the learner at the centre of the experience. We deployed ethnographic and quantitative research to uncover key buying moments and leaner personas to address each unique challenge and goals. 

The insights revealed a disconnect. Training the Street’s most critical audiences, students and early professionals, were often overwhelmed by its offerings. The site was challenging to navigate, lacked clear course comparisons, and was not conducive to peer recommendations, which are a critical selection driver.

This led to a revamp not just of the digital experience, but also the merchandising and course offerings and marketing to target and engage key learners. With confidence on the new offerings and key product bundles, a new site experience was designed and tested with the new products. The insights from real learners and co-creation and refinement gave us the confidence to launch an entirely new experience.

The Impact

The results were immediate. Audiences viewed Training the Street as an industry standard, and the refined product assortment, positioning, and designs brought the experience up to a standard that aligned with their expectations of the brand’s heritage as a market leader. 

Testing showed learners were more easily able to navigate to their immediate needs, while professionals valued the clearer pricing and career-focused content.  By addressing key pain points, elevating user trust, and reducing friction, Training the Street is positioned to expand its reach, grow its revenue, and compete confidently in the evolving market.

For more information, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting LLC 

Packaging is undergoing a strategic reinvention across Europe. No longer a static line item in the supply chain, it’s now a dynamic platform for innovation — and stock-keeping unit (SKU) development sits at the centre of this transformation. New product formats, smarter labels and intelligent materials: brand owners are doubling down on packaging as a lever for growth, differentiation and operational efficiency.

These are the findings from L.E.K. Consulting’s fourth annual European Brand Owner Packaging Survey, conducted in December 2024 and January 2025. The survey, encompassing 645 brand owners across Germany, France, the UK, Spain, Italy and Poland, provides a detailed view into how companies across sectors are investing in packaging and SKU innovation in a more fragmented and fast-evolving consumer landscape.

This article, the second in our series, unpacks how SKU investment is evolving by category, the rise of smart packaging features, and the strategic logic driving design and format decisions. The next will examine how these innovations intersect with the growing demands for sustainability and compliance.

Momentum builds behind SKU innovation

Investment in SKU innovation is rebounding. During the coronavirus pandemic, many brand owners and retailers reduced SKU counts and refocused their portfolio to cut complexity and cost, amid a decline in traditional retail and a surge in e-commerce, as well as a consumer shift back to core brands and household staples. 

Since then, the macroeconomic environment has experienced both short-term reprieves and a number of external shocks. As a result, while nearly half of brand owners kept innovation spend flat or reduced it between 2020 and 2024, 80% now expect to increase investment in the next four years (see Figure 1).
 

The fastest-moving sectors are beauty and personal care (62% have increased investment) and healthcare, pharma and wellness (61%). These categories are both innovation-intensive and margin-sensitive, making SKU diversification a powerful tool to tailor offerings across geographies, price points and consumer segments.

The highest positive change towards more innovation is expected for beverage, from 46% which increased spend in the past to 77% planning increases in the future. Other very material increases are reported for food and retail.

What's fuelling the investment surge?

SKU strategies are being re-engineered around flexibility and speed. According to our survey, 45% of respondents describe their 2024 approach as “flexible innovation funnels,” and 44% point to “customisation/personalisation.” Nearly as many (43%) say they are prioritising digital-first or technology-driven launches (see Figure 2).
 

Spending plans for the next two years reflect this. The top three investment areas are flavour variation, pack size changes and packaging redesigns — all of which support agile marketing, seasonal campaigns and market-specific adaptation.

Smart packaging takes hold

Smart packaging is no longer niche. Adoption is now broad-based, with 69% of respondents using temperature or freshness indicators, 40% deploying mislabelling identifiers, and 39% using tamper-evident mechanisms. But the real story lies in how these features are being deployed by sector (see Figure 3).
 

In beauty and personal care, smart packaging is driving margin. One German brand shared, “The temperature sensor patches we added to skincare product packaging attract customers who value quality. We’ve increased margins by 10%.” Polish respondents in the same sector noted a 15% lift from QR codes linking to product information and usage tips.

In healthcare, smart features are being used to support adherence and patient outcomes. A German pharma brand added an electronic display reminding users when to take medicine: “It’s particularly appreciated by older customers,” the company reported.

Meanwhile, food and food service brands are leveraging QR codes to build engagement. A Spanish company explained, “We used QR codes to unlock exclusive recipes, generating greater loyalty and margins.” Others cited smart freshness indicators that help optimise pricing and shelf rotation in retail settings.

Retailers are applying smart tech for operational efficiency as much as customer engagement. One German respondent said, “We analysed sales patterns in terms of freshness indicators to optimise stock levels and prices.” Across regions, the most consistent use cases converge around margin enhancement, experience differentiation and inventory agility.

A strategic pivot, not a tactical one

What’s clear is that SKU innovation in Europe is neither isolated nor opportunistic; it’s coordinated, data-driven and increasingly sector-specific. Brands are using packaging not just to contain product, but also to optimise performance across shelf appeal, consumer interaction and operational resilience.

The result is a high-stakes balancing act: tailoring SKUs to diverse needs while avoiding complexity creep and supply chain fragmentation. For leading brands, the answer lies in smarter design, modular innovation frameworks, and embedded technology that pays off in both margins and market share.

IRead our previous article on cost management. In our next installment we’ll explore how sustainability is being woven into this picture — and whether smart packaging and SKU expansion can coexist with Europe’s increasingly strict environmental mandates.

Please contact us to find out more.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting 

As out-of-pocket healthcare spending continues to rise across Europe, a major opportunity is emerging for providers: pricing strategy. Historically, pricing in the private healthcare sector has often been reactive, ad hoc and inconsistently applied — especially for out-of-pocket patients. But as private pay becomes a bigger slice of the pie, pricing is now a frontline strategic lever that can help capture value, drive share gain and open new patient segments. For example, in the UK, c.36% of patients surveyed indicated that they were more likely to pay for private healthcare for orthopaedics than they had been in the past five years.

L.E.K. Consulting’s recent survey of over 3,500 patients across five European markets sheds light on the shifting dynamics, from how patients think about pricing to where providers are leaving value on the table.

Out-of-pocket spend is rising, but pricing discipline isn’t keeping up

Private pay, once a niche or supplementary funding source, is becoming a core pillar of healthcare financing. Across markets, more than half of respondents said they expect to increase out-of-pocket spending in the next five years (see Figure 1). Even in countries with strong public coverage, like the UK and Germany, a significant share of patients foresee a shift toward personal healthcare expenditure. 

This shift in willingness — and expectation — to pay more out of pocket underscores the commercial urgency of thoughtful pricing strategy. Patients are ready to pay, but they are also more discerning than ever. Providers that don’t price strategically risk leaving value untapped or, worse, turning price-sensitive patients away.

Alongside this, patients expect to see prices continue to rise, particularly in areas of high demand or constrained capacity (see Figure 2). Across major specialities such as orthopaedics, cardiology and oncology, more than 50% of patients expect prices to increase over the next one to two years, with a sizeable chunk expecting increases above 10%.

These expectations are rooted not only in inflation, but also in structural drivers like long wait times and limited private capacity, both of which patients see as justification for rising prices.

These pricing shifts are happening alongside broader changes in patient behaviour and care preferences. Our second article explores how demand for private healthcare is expanding across Europe — and what that means for service design, access models and patient expectations.

Patients are actively comparing prices — more than ever before

Another clear shift is that patients are becoming more price aware and price sensitive. Across the five countries surveyed, 61% of patients agree or strongly agree that they compare prices more now than they did five years ago when selecting a private provider (see Figure 3).

In a market where choice is expanding and transparency is increasing (even if slowly), price is no longer a silent factor. It’s part of the patient decision-making process — and a well-calibrated pricing strategy can become a key competitive differentiator, particularly in high-volume services such as dentistry, dermatology or diagnostics.

High prices remain the No. 1 barrier, but affordability can be strategically designed

Despite growing demand, price remains the single biggest barrier to broader private healthcare adoption (see Figure 4). Across all five countries, nearly 40% of patients said that high prices are what most prevent them from using private services more often — far outpacing concerns about public healthcare satisfaction or lack of insurance coverage.

This represents a strategic challenge and an opportunity. Instead of defaulting to flat price increases, providers can rethink pricing across three levels:

• Entry points: Establishing clear, affordable offerings to bring price-conscious patients into the funnel
• Tiering: Segmenting services (e.g. basic vs premium consultations) to reflect varying preferences and price sensitivity
• Packaging: Creating bundled offers or subscriptions for common needs (e.g. chronic care, diagnostics)

Affordability isn’t about being ‘cheap’ — it’s about structuring value in a way that is clear, compelling and sustainable for both patients and providers.

The call for price transparency is loud and clear

More than ever, patients are asking for clarity. Across nearly every treatment area surveyed, 70% or more of respondents said they want to see greater price transparency from providers (see Figure 5). The demand is consistent across markets and specialities, from standard dental care to complex oncology services.

Price transparency is no longer a nice-to-have. In an environment where price sensitivity is rising, opaque pricing can erode trust and stall growth. On the flip side, providers that embrace transparency and use it to signal fairness, accessibility and quality are well positioned to gain share.

Strategic pricing: A commercial lever too often overlooked

The takeaway? Pricing is a strategic tool, not just a reaction to inflation. Providers that treat pricing as a source of commercial value, not a mere back-office process, can:

• Capture higher revenue yield across their network
• Gain share among price-conscious patients
• Build stronger brand equity through perceived fairness and value

Whether you’re a single-site clinic or a multi-country group, pricing discipline can help unlock EBITDA growth — often with faster impact than volume-driven strategies alone.

How can L.E.K. help?

L.E.K. regularly works with healthcare providers, platforms and investors across Europe to develop robust pricing strategies, from designing affordable access tiers to building analytics-powered pricing engines to aligning price architecture with market positioning and brand promise.

If you’re looking to unlock more value through smarter pricing — whether for out-of-pocket, insured or hybrid models — get in touch. We’d love to share what we’re seeing and help tailor the right solution for your business. 

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting LLC