By Karen Taylor, Director Deloitte Centre for Health Solutions

Our blog last week explored Deloitte’s 2024 Global Life Sciences Sector Outlook report, with a focus on three of the six disruptive trends that we consider life sciences enterprises should consider paying particular attention too. This week’s blog explores the other three trends. Both blogs highlight that with geopolitical, economic, and regulatory landscapes still proving uncertain, life sciences will need to continue relying on innovation, agility, and collaboration as they build on their strong commitment to improving people’s lives.

Pricing pressures rising globally and the threatened impact on R&D

Drug spending is rising and expected to accelerate globally over the next few years but varies across countries. Spending for medicines is largely correlated with degrees of economic development and a country’s overall health care expenditure. Use of medicines is typically higher in higher-income countries than in lower-income countries. Some countries are more volume driven, while others are focused on access to innovation in medicines. Specialty medicines are projected to represent more than 40 per cent of global spending by 2028, with more than half of total spending in leading developed markets.

Drug pricing and value continue to come under increasing scrutiny as pricing pressures are felt globally. In 2024, government-mandated pricing pressure and controls are expected to play an increased role in the affordability and accessibility of certain medicines. It’s a complex topic, governed in wide ranging ways across the world, and requires taking multiple stakeholder perspectives into account.

Key takeaways:

• Rising costs and shifting spending patterns - global pharma spending is accelerating, fuelled by both population growth and a growing demand for expensive specialty medications.
• Global push for affordability through price controls - concerns about affordability are leading governments worldwide to implement stricter pricing controls on medications.
• US price cuts raise innovation fears - the US drug pricing negotiations raise concerns about a potential decline in R&D investment by pharmaceutical companies facing lower profits. While some argue this could stifle innovation, others point out that R&D spending isn't solely tied to the number of new drugs and may even incentivise a focus on truly novel discoveries rather than incremental improvements.
• Finding a balance between affordability, innovation, and patient access - pharma companies face the challenge of developing strategies to make products commercially viable within pricing constraints. Government should address issues like the high cost of developing treatments for rare diseases and streamline the lengthy drug approval process.

Shifting trends in openness: Globalisation versus localisation and impact for multinational companies

While life sciences and medtech companies are increasingly global, the global economy is changing, with global trade increasingly more concentrated and geopolitically close, relying on a smaller pool of trading partners. In the rest of 2024 Deloitte expect to see a blend of globalisation and localisation or ‘glocalisation,’ with shorter supply chains, an emphasis on re-establishing domestic manufacturing and a more strategic role for government. The United Nations’ latest ’World Openness Report 2023’ shows ‘world openness’ falling 0.4 per cent—a downward trend amidst a growing move away from openness between countries, sectors, and regions.¹

The Asia-Pacific (AP) region is expected to yield among the highest growth over the next few years—due to its sizable consumer base, increasing disease incidence, and supportive regulatory frameworks. At the same time, China and Japan are among the largest economies in the pharma and medical device markets with two understandable but diverging approaches being taken. China is advancing policies that prioritise its own national interests and technologies, while Japan’s trade openness is at its highest level historically—at almost 47 per cent and up about 10 points from 2021 to 2026. The multiple factors driving these diverging models include trade corridors, macro political dynamics, access to talent, views on growth, and IP protection.

Key takeaways:

• Declining globalisation, shifting power - traditional globalisation appears to be waning, with countries adopting policies that prioritise domestic interests. China and the US are major players, with China aiming to become a high-income economy and remain a dominant exporter.
• Glocalisation drives change - companies are focusing on shorter supply chains, reshoring manufacturing, and leveraging government support. This trend, known as glocalisation, is shaping trade patterns and R&D strategies.
• Resilient trade, cautious monitoring - global trade dipped in 2023 but is projected to rebound in 2024. The World Trade Organisation emphasises monitoring recent trends, as some experts remain wary of deglobalisation's impact.
• The talent game - attracting and retaining talent is crucial for R&D innovation. Programs are incentivising talent return, but established researchers prefer less intervention.

Achieving better patient outcomes with personalised experiences

Health care is shifting towards personalised care with a focus on improving patient experiences and outcomes. Life sciences and medtech organisations are increasingly focused on achieving better patient outcomes, not only through more rigorous science, but through better patient experiences. Life sciences executives surveyed by our Deloitte US colleagues believe that the leading action their organisations need to take in 2024 is ‘improving patient experience, engagement, and trust’ - which is fast becoming a higher priority for more companies than in 2023.

While there is plenty of research that shows that personalised care and treatments support better experiences, and many opportunities to improve touchpoints throughout the patient journey, ensuring an effective and positive outcome requires a thorough and specific understanding of each journey to respond proactively and predictively to what patients may need. As the process becomes more digitally enabled and personalised, it should also become more ‘straightforward’ and seamless.

Shared decision-making (SDM) which allows patients to actively participate in treatment choices is an important component of personalised care. However, studies show there is an ongoing need for improvement between the theory and practice of SDM. Moreover, implementing authentic SDM remains a challenge due to varying patient preferences and provider mindsets. The process is ripe for more personalisation to deliver the right solution at the right time. Life sciences companies can play a vital role in promoting SDM by providing educational resources, patient decision aids (PDAs), and optimising patient touchpoints. Importantly, life sciences companies are increasingly focused on ‘informed’ decision-making to support SDM, and also help build trust especially as SDM can promote appropriate care, decrease overtreatment, meliorate health outcomes, and thereby, may reduce health care costs.

Key takeaways:

• Personalised care for improved patient outcomes - health care is increasingly prioritising personalised care experiences that go beyond just better treatment options. The goal is to actively involve patients in their care journey, leading to better engagement, adherence, and ultimately, improved health outcomes.
• Challenges to authentic SDM implementation - patients have diverse preferences for involvement, ranging from actively researching options to deferring to a provider's expertise. Some health care providers may favour a paternalistic approach, hindering genuine patient participation.
• Understanding the patient journey – every disease and patient journey is unique. Health care should be adaptable and cater to individual needs and circumstances, whether it's a sudden cancer diagnosis or the gradual progression of a chronic illness.

Conclusion

The current and growing levels of uncertainty across the geopolitical, economic, and regulatory landscapes, mean life sciences companies are likely to continue to come under a myriad of conflicting pressures. On the one hand, the acceleration in scientific knowledge, pace of innovation, growing level of collaboration and partnerships are leading to new treatments and even cures for previously untreatable disease and for many people their health outcomes are more positive than ever before. On the other, the acceleration in global pharma spending and rising cost of specialty medications are adding to the pressures on all stakeholders to find ways of balancing affordability, innovation and patient access. Resolving these conflicts is challenging but will be critical to achieving optimal pricing and reimbursement, in the use of medicines in the future.

Karen Taylor - Director, UK Centre for Health Solutions

Karen is the Research Director of the Centre for Health Solutions. She supports the Healthcare and Life Sciences practice by driving independent and objective business research and analysis into key industry challenges and associated solutions; generating evidence based insights and points of view on issues from pharmaceuticals and technology innovation to healthcare management and reform.

Email | LinkedIn

_____________________________________________________________________________________
[i] WORLD OPENNESS REPORT 2023-Institute of World Economics and Politics Chinese Academy of Social Sciences (cssn.cn)