Health system reforms. Drug manufacturers face stricter access and pricing environments across key geographies as health systems pursue reforms to contain healthcare spending. In the U.S., the government announced its first 10 products subject to negotiation under the Inflation Reduction Act (IRA). Proposed legislation in the EU would reduce drug companies’ exclusivity window, from 10 years to eight, for new drugs that do not launch in all 27 member states within two years of their first launch. In Germany, the government is seeking to address perceived shortcomings of its national pharmaceutical regulations (“AMNOG 2.0”) with further reforms to control drug costs; meanwhile, in Italy, the long-anticipated reorganization of the Italian Medicines Agency (AIFA) is underway. In Japan and China, governments are pursuing similar initiatives to lower drug prices. What these far-flung initiatives add up to is a pharmaceutical industry facing uncertainty and the prospect of significant pressure on its revenue model.
Demographic shifts. Most countries are experiencing strong socioeconomic headwinds brought on by a combination of rapidly aging populations and declining birthrates. Spain, for example, is anticipating a total reversal of its labor force contribution to GDP growth (from +0.6% between 2000 and 2018 to -0.6% in 2040), flipping from a historic labor boost to a future burden; Switzerland, meanwhile, is forecasting a 30% rise in public health expenditures by 2050, driven largely by spending on long-term care. South Korea and China (among others) are already grappling with the economic consequences of having fewer working-age adults pay the taxes their governments need to fund healthcare services for their growing geriatric populations. These shifts underscore the urgent need to invest in prevention and “well care” to reduce future sick-care costs.
Changing patient experiences and expectations. Although trust in pharma has rebounded from recent lows, most healthcare consumers hold an unfavorable perception of healthcare in general and the pharmaceutical industry in particular. As detailed in the 2024 ZS Future of Health Report, roughly half of healthcare consumers across six countries say the system doesn’t care about people like them. There’s also a lingering divide between doctors and their patients over quality of care, with doctors almost twice as likely to believe their patients are happy with the healthcare they’ve received than patients are to say the same.
But even more worrisome than the disconnect between doctors and patients is the fact that more and more consumers opt to avoid the healthcare system altogether. The same survey found that one in four patients avoid seeking care because it’s inconvenient, and the same number say they avoid it because it’s too expensive. These negative sentiments pose significant challenges to pharma companies seeking to engage and treat patients. To buoy themselves against these headwinds, we expect pharma to employ the following five strategies—while continuing to ride the wave of innovation in digital technology and artificial intelligence (AI).
