A trio of outside forces will test the pharmaceutical industry’s resilience in the year ahead, catalyzing the industry’s continued evolution via breakthrough science and innovation of its customer engagement strategies. In this piece, we examine key themes shaping pharma’s outlook in 2024 as well as the strategies companies will deploy to stay in front of these rapidly changing external dynamics.
The forces shaping pharma’s 2024 outlook
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).
Building resilience through scientific and portfolio innovation
We’re living through what The New York Times is calling a “golden age for medicine.” While once-revolutionary platforms and modalities such as monoclonal antibodies (mAbs) have become commonplace, we are now seeing the rise of novel modalities like mRNA, antibody drug-conjugates (ADCs) and microbiome-based therapeutics. Two of the five top-selling drugs today, Ozempic and Comirnaty, are based on emerging modalities: peptide therapeutics and mRNA technology, respectively. We expect this trend to continue, if not accelerate.
Last year stood out as a breakthrough one for gene therapy, marked by the Food and Drug Administration’s (FDA) and the Medicines and Healthcare products Regulatory Agency’s (MHRA) approval of the first CRISPR-based drug, Casgevy, for both sickle cell anemia and beta thalassemia. Separately, mRNA technology, by now well established thanks to its use in the world’s first COVID-19 vaccines, is poised to disrupt not only infectious diseases but also cancer and immunological disorders. And finally, ADCs are rapidly transforming oncology, with eight of 13 FDA approvals for these drugs occurring between 2020 and 2023. In a sign of what’s to come, in November 2023, the FDA approved its first ADC-checkpoint inhibitor combination therapy, this one for locally advanced or metastatic bladder cancer.
On the therapy area side, oncology and immunology will continue to dominate sales, but advances in previously high-unmet-need areas such as obesity, Alzheimer’s and cardiovascular diseases (CVD)—as well as precision medicines for a range of maladies—are gaining steam. Here’s what to expect in the year ahead:
- New drugs will create a revolution for obesity treatment. Despite years of effort to treat obesity through lifestyle changes, surgery and other interventions, the disease’s health and economic burden continues to rise: Around 800 million people are estimated to be living with this chronic disease. GLP-1s and GLP1/GIPs approved for obesity have shown remarkable clinical results—weight loss as high as 25%, compared with 7% for earlier drug classes—dramatically altering the treatment landscape for patients and providers. Using a combination of drugs, technology, coaching and more, there’s finally a credible pathway to overcoming obesity.
- Disease-modifying treatments for central-nervous system (CNS) disorders will create significant growth opportunities. Alzheimer’s disease is characterized by high unmet need and a 99% clinical trial failure rate over the past two decades. Disease-modifying treatments, such as Eisai’s Lecanemab and Eli Lilly’s Donanemab, both of which are projected to achieve blockbuster status by 2028, go beyond addressing symptoms to actually slowing disease progression. Investment in CNS therapies will continue and also expand beyond anti-amyloids into vaccines, stem-cell therapies and treatments focusing on tau aggregates.
- Innovation in cardiovascular disease treatment will expand to new realms. Despite a wealth of effective treatments, CVD remains one of the most common causes of global mortality. This highlights the need for additional focus on early diagnosis and intervention as well as continued innovation, especially in tailored therapies. Four CVD trends will emerge or accelerate in 2024: better use of digital health and AI for preventive and primary care; continued use of precision medicine to deliver customized treatments; identification of new molecular drug targets, such as Lp(a) levels for CVD, to detect disease earlier; and drug repurposing, as exemplified by early trials showing clinical benefits for GLP-1s beyond obesity and diabetes.
- Drug companies will continue to shift toward personalized cell and gene therapies. Precision medicine, with its more than 3,500 drugs in development, will remain a focal point for pharmaceutical innovation. Germany’s ambitious project to leverage whole-genome sequencing in routine healthcare, the rise of mRNA vaccines and next-generation therapeutics incorporating CRISPR technologies hint at where the field is headed.
Creating stability through near-term efficiencies and cost optimization
Cost optimization has resurfaced near the top of pharma’s priority list, forcing difficult decisions to prune pipelines, reallocate budgets, restructure teams, reduce headcount and more. Pfizer and Sanofi, for example, have both announced ambitious cost-realignment strategies aimed at saving $3.5 billion and $2.5 billion, respectively, by 2024. J&J Innovative Medicines, meanwhile, is discontinuing multiple clinical programs to narrow its focus on only its most pivotal ones and accelerate their time-to-market.
Pharma companies will continue to look to disruptive technologies, such as generative AI, blockchain, immersives and others, to create efficiencies along the value chain and across internal functions. BMS and Exscientia offer a blueprint with their generative AI-designed molecule, EXS4318, which shrunk drug development time by 70% by entering Phase 1 trials in 11 months—compared to industry benchmark of four years. Novartis’s investment in the AI company YSEOP aims to streamline clinical trials through automation, highlighting another area ripe for disruption.
Maintaining relevance by reimagining customer engagement
While the growing use of omnichannel engagement, increased collaboration between medical and commercial, and heightened focus on patient engagement are not new, the future of customer engagement is here. Moving forward, key differentiators will include dynamic customer targeting, hyper-personalization and tailored patient experiences.
While pharma companies already have made strides revamping their customer engagement strategies, they must continue to pioneer new approaches to respond to evolving customer needs and preferences. Pharma’s commercial model of the future will trade product centricity for true customer centricity, based on three pillars:
- Context relevance. Customer insights are the fuel that powers behavior-changing personalization. Companies need to sharpen their capabilities around collecting insights and using them to inform marketing materials and services that meet customer needs.
- Reimagined marketing. Companies must move from a rep-centric model to an organization-centric one where they use insights drawn from every customer touchpoint to map unique customer journeys driven from the center.
- An “unbundled” rep. The sales force represents one of the pharma commercial organization’s most expensive assets. Moving forward, companies must be extremely choosy with how they deploy reps, reserving them only for those customer interactions where they can bring the most value—while using other channels for everything else.
Fostering partnership through deeper relationships across the healthcare ecosystem
Given the volume of stakeholders and growing complexity within healthcare’s ecosystem, pharma’s one-stakeholder-at-a-time approach to building relationships is obsolete. The physician is no longer the ultimate decision-maker in a healthcare ecosystem in which patients, payers, integrated delivery networks and others play an increasingly influential role. There’s a glaring opportunity for pharma to play a bigger role connecting disparate stakeholders across healthcare systems. By articulating a compelling value proposition for individual stakeholders, and adopting a holistic approach to engaging them, pharma can increase trust among actors and deliver greater impact.
Maintaining relevance by contributing to broader healthcare and societal priorities
Observers have for years derisively, though not unfairly, labeled the world’s healthcare systems “sick care” systems. This is now changing, with systems’ growing focus on wellness, mental health and prolonging not just lifespan but “health span.” In response, the pharma industry must continue its growth “beyond the pill” by boosting investment in three areas:
- Prevention. By prioritizing preventive medicine, pharma can contribute to arguably all five of healthcare’s “quintuple aims”: advancing health equity, improving provider experiences, reducing healthcare spending, improving population health and enhancing patient experiences. Current collaborations, such as Novartis and The Fred Hollows Foundation’s Avoidable Blindness program, provide strong cause for optimism.
- Health equity. The health challenges women and other disadvantaged groups face exert a profoundly negative effect on society, underscoring the urgent need to address health disparities. Pharma should embrace the Smile Foundation’s AAA framework for health equity, commit to providing high-quality care to all groups and align with the World Health Organization’s holistic definition of health. Pharma companies already are promoting greater fairness in healthcare through efforts to diversify clinical trials, close education gaps and improve access to medicines and vaccines. This must continue.
- Sustainability. Initiatives, such as GSK’s that advances propellant technology for inhalers, highlight the industry’s commitment to reducing its carbon footprint and making healthcare more sustainable. This also must continue.
Failure to evolve will compound pharma’s public trust deficit
The pharma industry faces legitimate challenges. While there will always be a market for new, innovative medicines, failure to evolve will limit these innovations’ reach and impact. Evolution will mean prioritizing customers, understanding (and responding to) their needs and continuously driving value across an increasingly diffuse healthcare ecosystem. Despite headwinds, 2024 could mark the start of a pharmaceutical renaissance that sees the industry become the true agents of a healthier, more connected world beyond medicine.
Add insights to your inbox
We’ll send you content you’ll want to read – and put to use.