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Growing surplus: Five burgeoning
sectors for accountants
By IBISWorld Industry Analyst Jeremy Edwards, exclusively for the AICPA conference
Rising businesses activity on the heels of economic recovery will open
up capacious pockets of growth for accountants
Highercorporate
profit will spur
businesses to
enlist accounting
services
In 2014, corporate profit is forecast
to expand 5.0% as improving
macroeconomic conditions precipitate
stronger nationwide consumer demand.
Rising consumer spending and low
interest rates have contributed to
favorable conditions for companies
across the United States. Consequently,
professional service providers, such
as accountants, have benefited from
the patronage of a growing pool of
increasingly profitable businesses. The
financial services sector represents the
single-largest market for accounting
professionals; however, growth has
not been limited to traditional major
markets. Various sectors experiencing
strong growth have become emerging
markets for accounting firms looking
to generate new business in dynamic
markets. Based on several factors
affecting industries in these sectors,
including new legislation, improving
technology and growing internet
penetration, IBISWorld has identified
five sectors poised to offer new
opportunities for accounting firms.
Healthcare horizons
The introduction of the Patient
Protection and Affordable Care Act
(PPACA) and phasing in of most
major provisions in January 2014 has
created strong growth opportunities for
providers of healthcare and associated
pharmaceutical products. According
to the Obama administration, 8.0
million people had signed up for health
insurance under the PPACA as of April
2014. Although this figure includes
individuals previously covered through
other provisions, it nevertheless
represents an opportunity for
professional service providers to cover
Ambulatory Surgery Centers
Generic Pharmaceutical Manufacturing
Biotechnology
Advertising Agencies
Auto Parts Manufacturing
Industry Growth
SOURCE: WWW.IBISWORLD.COM
2009-14
% Growth
2014
% Growth
2014
Value ($m)
2019
Value ($m)
2014-19
% Growth
4.9%
6.8%
5.5%
1.4%
10.8%
11.8%
4.8%
3.2%
1.1%
4.8%
$23,933.9
$42,673.7
$98,478.1
$34,442.0
$55,519.2
8.2%
4.8%
9.1%
3.1%
4.1%
$36,797.6
$53,875.0
$152,434.7
$40,123.0
$67,801.8
2. www.ibisworld.com November 2014 2
Growing surplus: Five burgeoning sectors for accountants
a burgeoning sector. In fact, IBISWorld
projects that the number of people with
private health insurance will grow 4.5%
to about $209.0 million in 2014, with
additional 3.3% growth expected in 2015.
Healthcare providers, such as those
in the Emergency and Other Outpatient
Care Centers industry (IBISWorld report
62149), are expected to experience
stronger growth during the next five
years, as more individuals are able to
afford private healthcare. Illustrating
this trend, the number of establishments
in the Ambulatory Surgery Centers
industry (IBISWorld report OD5971) is
projected to grow an annualized 7.9%
over the five years to 2019. Increasing
and changing ambulatory surgery center
(ASC) abilities, which will continue to
be propelled by new surgical techniques,
are expected to spur industry growth.
Therefore, opportunities are ripe for
accountants that provide audit and
accounting services to new healthcare
firms. Accountants will be able to
assist with the processing of a growing
amount of individuals expected to
apply for treatment through a variety
of health insurance plans. Additionally,
accountants can help healthcare
providers navigate new compliance
regulations and understand required
levels of insurance as these providers
grow and take on more patients.
Demand from hospitals and ASCs for
accounting services is also anticipated
to flow on to manufacturers of medical
instruments and supplies. The
implementation of PPACA provisions,
coupled with an increasingly aging US
population, are expected to contribute
to growth in downstream healthcare
manufacturing industries, thereby
offering new business opportunities for
accountants. For example, over the five
years to 2019, the Medical Instrument
and Supply Manufacturing industry
(IBISWorld report 33911a) is forecast
to grow at an average annual rate of
3.6% to $114.9 billion. Accountants
can increasingly target operators in
this industry through the provision of
audit and internal controls, merger and
acquisition advisory services and supply
chain management consulting.
Pharmaceutical potential
In addition to healthcare services and
medical equipment manufacturing,
new opportunities exist for accounting
professionals in the pharmaceutical
manufacturing sector. Brand name
manufacturers are forecast to
increasingly invest in research and
development (RD) to create new drugs
and patents. Accountants can provide
indications and timing of impairment
for intangibles, create RD costs and
assist in accounting amortization of
product development. In addition,
accounting professionals will be able
to help measure the capitalization of
development costs for generic drug
manufacturers as well as provide general
auditing and advisory services for both
industries. However, upcoming patent
expirations for several popular drugs,
such as Abilify, a schizophrenia and
bipolar disorder drug, and Copaxone,
a treatment for multiple sclerosis, are
forecast to limit growth in the Brand
Name Pharmaceutical Manufacturing
industry (IBISWorld report 32541a) and
lead to higher growth for operators in the
Generic Pharmaceutical Manufacturing
industry (IBISWorld report 32541b).
Biotechnology legislation
and growth possibilities
Stronger business conditions following
the recession have resulted in surging
corporate profit and, therefore, renewed
RD spending. Biotechnology has
been a key benefactor of rising RD
expenditure; according to the OECD,
the Biotechnology industry (IBISWorld
report NN001) accounts for about
10.0% of total US business expenditure
3. www.ibisworld.com November 2014 3
Growing surplus: Five burgeoning sectors for accountants
on RD. This industry is a particularly
attractive target for accountants looking
to generate new business, due to new
government legislation that will come
into effect over the next five years. The
PPACA is expected to provide tax breaks
for smaller biotechnology companies and
reduce costs associated with research and
clinical trials. In addition, the Approval
Pathway for Biosimilar Biological
Products, which will permit biologics to
maintain 12 years of market exclusivity,
is expected to benefit the Biotechnology
industry, following product approval
from the Food and Drug Administration.
Revenue for the Biotechnology
industry is projected to increase an
annualized 9.1% to $152.4 billion over
the five years to 2019 and accountants
will play a key role in helping young
biotechnology businesses grow. Typically,
smaller industry firms do not have
the resources to perform their own
accounting and financial functions,
especially those grappling with difficult
or changing regulations. Additionally,
many biotechnology firms will seek out
funding through either private sources
or initial public offerings, for which
companies’ generally require audit
services to present financial information
and analysis to potential investors.
Additionally, accountants that are able
to market their ability to help establish
internal control systems and implement
processes to handle company cash
and liquid resources will successfully
attract the businesses of small startup
biotechnology companies seeking
accounting advisory services.
Digital media trending
Despite the digital sector’s widespread
market penetration over the past five
years, many growth opportunities still
exist in the digital market. The use of
smartphones and other mobile internet
connections, including all broadband
internet-capable devices, is expected
to grow at an average annual rate of
6.0% to 313.0 million users over the
five years to 2019. Consumers are
increasingly turning to smartphones
and tablet devices to access content
on the go. Therefore, industries with
high levels of technological change and
exposure to online systems offer major
growth opportunities for accounting
firms. According to a 2013 McKinsey
Company survey, the percentage of
companies positioning and branding
material through online and offline
channels rose from 31.0% in 2012
to 38.0% in 2013. Additionally, the
percentage of companies using advanced
customer targeting to advertise on a
full-enterprise basis increased from
17.0% in 2012 to 30.0% in 2013.
As a result, the number of firms
in the Advertising Agencies industry
(IBISWorld report 54181), many of
which specialize in online and digital
media, is forecast to expand over the
next five years. Furthermore, larger
firms looking to break into this rapidly
growing sector will target many smaller
industry operators as potential merger
and acquisition (MA) material.
Potential MA deals will provide
growth opportunities for the provision
of auditing and assurance services to
produce accurate historical financial
statements for potential purchasers.
Moreover, the Video Games industry
(IBISWorld report NN003) is also
expected to grow due to the large number
of smartphone games being released
regularly, many of which target emerging
demographics. For instance, according
to Flurry, a mobile analytics firm, female
mobile social gamers account for 53.0%
of the market, compared with 40.0% for
traditional video games. Consequently,
significant growth opportunities exist for
firms in this industry looking to capture
new markets, while accounting firms
can help developers secure funding.
Furthermore, PwC’s 16th annual global
4. www.ibisworld.com November 2014 4
Growing surplus: Five burgeoning sectors for accountants
CEO survey revealed that 38.0% of
CEOs in the entertainment and media
sector consider new product and
content development key methods for
growing their businesses. Accounting
professionals can assist video game
developers and other online publishers
with applicable international financial
reporting standards pertaining to
International Accounting Standards 2
and 38, which refer to inventories and
intangible assets, respectively.
Auto store aftermarkets
Finally, significant growth opportunities
for accountants have opened up within
the automotive sector. Although US car
manufacturers are finding it difficult to
compete with international producers,
who hold a competitive advantage
with regard to lower wage and capital
costs, auto aftermarkets are proving
popular among US consumers. As a
result, the Auto Parts Manufacturing
industry (IBISWorld report 33639)
is expected to expand, with industry
revenue forecast to rise at an average
annual rate of 4.1% to $67.8 billion
over the five years to 2019. Growth
will be largely due to greater consumer
spending and the increasing popularity
of ancillary automobile products.
However, high transportation costs
and a thinning difference between the
cost of manufacturing domestically
versus overseas is causing automotive
aftermarket companies to consider
whether to continue manufacturing
abroad or to return certain product
lines to the United States, a trend
known as reshoring. Accounting
firms can make inroads into the auto
parts manufacturing sector through
the provision of audit and assurance
services, as well as detailed financial
statements, which would include their
cost of revenue in each market and
whether changing production locations
would be financially beneficial. Merger
and acquisition activity also remains
an option for operators to reduce
costs through economies of scale and
provides another line of business for
accountants looking to enter the sector.
About IBISWorld Inc.
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