Future of Pharma

What key trends for 2023-2024 point the way to Pharma’s future?


Biologics versus Traditional Drugs

Biologics continue to grow at a higher pace than non-biologics and revenues from unbranded generics continue to decrease despite rising prescription rates.

Specialty drug spend grew by 12% in 2023 while traditional drugs grew 8% on an invoice price basis1. Specialty drugs includes personalized therapy, targeted therapy, and digital therapy among others. As of Nov 2023, specialty medicines accounted for 55% of net spending or some $260 billion, up from 28% in 20111. This increase was driven by growth in the autoimmune and oncology sectors.

The effect of more individualized and specialty drug approvals has triggered a phenomenon called “pyramid math,” where three percent of patients drive 70% of pharmacy spend. While these specialty drugs hold a great deal of promise for patients with rare diseases, they also introduce a new type of economics into the industry, in which fewer patients are essentially funding the next generation of the pharma R&D.

The biosimilars market will continue to expand as losses of exclusivity occur, with expected launches and uptake forecast to increase overall spending on biosimilars to $20-49 billion in 2027.

Within Biologics, Immunology and Oncology drugs currently lead sales growth at 20% and 14% 5-year CAGR respectively. Among traditional medicines, Antidiabetic drugs lead sales growth at 12% CAGR, followed by Vaccines at 8% and Mental health drugs of 5%1.


Inflation Reduction Act

The Senate Commerce Committee passed a bipartisan bill aimed at eliminating the practice of spread pricing in March 2023. Spread pricing refers to when a Pharmacy Benefits Manager (PBM) charges a payer more for prescription drugs than they pay the pharmacy and then keeps the difference.

The House also introduced Inflation Reduction Act (IRA) that focuses on “transparency” and “making sure PBMs pass on meaningful savings to consumers.”

The Inflation Reduction Act put drug pricing front and center again. Among other requirements, the IRA establishes a price negotiation process for buying certain drugs for Medicare beneficiaries, and redesigns Medicare Part D to provide less-expensive coverage to beneficiaries.

While the IRA passed with an agenda focused on pricing and market access, the ramifications will likely ripple across the enterprise from commercial strategy through R&D decision-making. With new pricing pressures starting in 2023 through Medicare inflationary rebates, Part D plan redesign coming in 2025 and price negotiation starting in 2026, the way manufacturers begin to adjust in 2023 will potentially provide a critical foundation for the rest of the decade.


Mergers & Acquisition

The M&A deal value in 2023 has been around $250 billion so far. Among the largest pharma deals, Seagen was acquired by Pfizer for $44 billion. As part of the deal, Pfizer gained access to Seagen’s four approved cancer therapies, collectively generating nearly $2 billion in sales in 2022. This strategic acquisition bolstered Pfizer’s existing and impressive portfolio of 24 approved oncological therapies.

Prometheus Biosciences was acquired by Merck for about $11 billion. The deal was centered around the potential of Prometheus’ candidate in phase 2 trials — PRA023 (now MK-7240) — to treat ulcerative colitis and Crohn’s disease. Among other acquisitions, Syneos Health was acquired by Veritas Capital for $8 billion, and Iveric Bio was acquired for $6 billion by Astellas for the FDA approved intravitreal solution for the treatment of geographic atrophy — Izervay (avacincaptad pegol). Another significant deal was GlaxoSmithKline’s $2 billion buyout of Canada-based company Bellus Health which strengthened GSK’s specialty medicines and respiratory portfolio.

Biologics, including oncology and immunology drugs, made up around 50% of all deals in 2023. M&A in 2024 is expected to include high volume of transactions, including strategic business partnerships, joint ventures, and alliances. Areas of high expected future growth, such as oncology and immunology, will likely see growth, along with drugs targeting central nervous system and cardiovascular diseases. Vaccines are another place the market will place a significant premium on therapeutic leadership. Biotech deals in the $5 billion to $15 billion range will be prevalent and will require a different set of strategies and market-leading capabilities across the M&A cycle.


Artificial Intelligence & Big Data

Big data is providing pharmaceutical companies with predictive, prescriptive, and diagnostic analytics that have led to new drug discoveries and developments. Further, it allows scientists to work with and link large datasets, detect patterns in real-time, predict outcomes, undertake dynamic risk scoring and test hypotheses. By applying these strategies to better inform decision-making, healthcare systems can leverage big data to improve the efficiency of research and clinical trials, building new tools for physicians, patients, and even regulators.

One of the most striking pharmaceutical industry statistics is that spending on AI will reach $3 billion by 2025 as companies invest in technology that may reduce the time and costs required to bring a new drug to market. AI-based drug discovery alliances are also increasing, from just 10 in 2015 to 105 in 2023. The aim is to overcome a very low success rate in drug discovery, with just 10% of candidates making it into clinical development despite applying new computational technology techniques to handle an ever-growing amount of biomedical data.

Pharma manufacturers are sharing how they’re integrating AI in telemedicine and imaging to treat various conditions, from diabetic retinopathy to blood cancer and even internal bleeding. Applying AI to big data in life sciences can help companies reshape business models, streamline biopharma manufacturing, and enhance everything from cognitive molecule research and clinical trial data flow to product intelligence.

Physicians, surgeons, and nurses are leveraging artificial intelligence to retrieve insightful analytics that drive care optimization and workflow efficiency through predictive, AI-powered systems.


IoT-Powered Virtual Hospitals & Telemedicine 2.0

This trend includes both telemedicine and wearable devices connected to the global network known as the Internet of Things (IoT). By using connected devices to remotely monitor patients and provide communication channels for healthcare professionals, more elements of care can be delivered remotely. This will be Telemedicine 2.0 because it goes beyond the simple delivery of remote care, such as remote consultations, to a holistic approach to remote patient care and treatment. Virtual hospital wards are an example of this trend in action in 2024 – where a central location acts as a hub for monitoring multiple patients in their own homes.


Decentralized Clinical Trials

Approximately 85% of trials don’t begin on time due to enrollment issues. To some extent, this is dependent on the type of trial. For example, enrolling healthy participants in a trial may only take a few months. For other disease areas – rare diseases, oncology, and gastrointestinal conditions – enrollment can take years, significantly affecting trial success. Moreover, 30% of patients discontinue trials due to a poor non-clinical experience. Trial retention is an important element of successful trial execution. Study sponsors can suffer severe setbacks if enrollees don’t complete a trial.

Patient-centric trial design is expected to be a defining capability for the future. The COVID-19 pandemic drove the industry to rethink the traditional paradigm for clinical trials, accelerating the development and use of decentralized design. The ability to design, execute and oversee clinical trials that run in the home, near the home in retail pharmacies and virtually is a must-have. Decentralized settings reduce the burdens on participants, such as the need to travel to a major academic medical center, and therefore increase the number of individuals willing to participate in a study. More convenient and less burdensome trials also increase the odds of retaining participants throughout a study. Furthermore, decentralized trials hold great promise for reaching underrepresented communities, resulting in more relevant research in which the study population looks like the disease population in the real world.

While the potential impact for patients (less burden, more access to trials) and for sponsors (faster trial enrollments, reduced dropout rates, more competitive trial design) is significant, creating a winning capability in decentralized trials means adopting significant changes. R&D leaders should evaluate their portfolios to assess which trials are best suited for a decentralized design, change processes related to trial enablement, update the vendor ecosystem to include suppliers that specialize in decentralized trials and upgrade the use of data and analytics to support the trial life cycle.


  1. IQVIA





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