Every industry goes through trends and the pharma industry is not immune to its own shape shifting trends either. However, not all pharma industry trends are created equal and some of them have broader industry wide impact while others are more like short term fads. Pharma industry trends in the 2020s are being shaped by a number of underlying forces that have been in place for more than a decade now and were accelerated by COVID and other recent developments:
The pharmaceutical industry has been gradually focusing its disease state strategy on more complicated diseases for which there are few to no treatment options available. During the 2000s, dozens of new drugs for difficult to treat cancers, immunology related conditions like MS, RA, PSO, PSA, UC, CD etc. were introduced. More recently, pharma companies have been focusing on even smaller, orphan and rare conditions because it is easier to get market access for orphan/rare drugs and the cost of therapy is significantly higher.
As the industry focuses more on rare and genetic disorders, drug discovery has become complicated and multidisciplinary in nature, requiring experts from biology, chemistry, genetics, computer science, data science, and many more disciplines to work together!
Such multi-disciplinary drug discovery is expensive and as a result, pharma companies have been shifting drug discovery to a shared risk model, moving their R&D operations to cities with a strong presence of academic research institutions and expertise in translational medicine. Building an R&D infrastructure in-house for the future of drug discovery is simply not a smart investment for pharma companies anymore, which is why they are all pursuing a shared risk drug discovery model.
The pharmaceutical industry has gone through major shifts in clinical trials strategy and implementation lately, with significantly greater focus on designing clinical trials around the needs of the patients. All pharma companies are trying to increase diversity, equity and inclusivity in trials, structure trials to capture patient reported outcomes PROs), provide more transparency to patients during the registration process, and ultimately improve patient experience during the clinical trials. Most clinical trials now include complicated protocols because many primary and secondary endpoints are involved and the patient inclusion/exclusion criteria are very specific.
Pharmaceutical companies are waking up to a new commercialization model that requires them to compete against many more competitors than ever before and to sell to customers who are difficult to reach and even more difficult to persuade.
Pharma’s battle against payers continues to intensify as pharma companies keep pushing for expensive therapies for highly specialized conditions and payers continue to grapple with exploding total cost of care. As a result, pharma companies have been experimenting with creative reimbursement strategies and even implementing pay-for-performance market access programs.
Despite operating in a reasonably recession-proof industry, pharmaceutical companies still face tremendous pressure from investors on Wall Street.
Even though the pharmaceutical business is very high margin compared to most of other industries, many pharma companies have not been able to deliver top line and bottom line growth expected by investors and are now resorting to massive cost cuts and restructuring efforts to right-size the business.
Compared to other large industries like financial services, the pharmaceutical industry was late to adoption of digital transformation technologies. However, most large pharma companies have now implemented digital workflows across the entire value chain, resulting in significant cost savings and improved speed-to-market in drug discovery and commercialization. Commercial teams have led the way in implementing digital transformation strategies, followed closely by the clinical teams. Digital readiness is a must-have core competence for almost any world-class commercial team, especially since pharmaceutical brands have been forced to shift their go-to-market strategies from HCP personal promotion to omnichannel marketing.
While the healthcare industry has been one of the top use cases of AI in general, the pharmaceutical industry was slow to adopt AI as well, especially at an enterprise level.
Now, AI is being leveraged across every functional area within a pharmaceutical company, with use cases ranging from AI assisted drug discovery, AI simulations of clinical trials, AI generated content for medical and scientific affairs, AI summarization of clinical trial results, AI enabled salesforce optimization, and much more!
The conventional pharma commercial model is no longer effective in today's rapidly changing healthcare environment. The customer for pharmaceutical companies has evolved from an independent physician running a small practice to large hospital networks and IDNs employing hundreds of HCPs. The distribution and delivery of pharmaceuticals has also changed dramatically because of the growing use of specialty pharmaceuticals for rare and orphan conditions. On the other hand, new direct-to-consumer selling and distribution models are also being explored in large disease states like weight loss and obesity.
Best-in-class pharma companies are getting ahead of the pharma industry trend of customer centricity. Historically, drug development and commercialization were manufacturer-centric processes and were driven by revenue and profit growth.
With the growing scrutiny on pharma by the Congress and pressure from investors on social responsibility, pharma companies have been implementing a new patient centric culture that percolates through the entire organization. By putting patients at the center of organizational decision making, pharmaceutical companies are trying to ensure that the drugs that they bring to market are indeed improving patient care and resulting in better outcomes for both patients and healthcare providers without substantially increasing cost of care.
Pharma companies are realizing that focusing only on the treatment (pill, injection, infusion) is no longer sufficient to stand in the market and is also a major missed opportunity to add more value to customers. Whether its companion diagnostics, precision medicine, digital health tracking devices, Internet of Things, or patient care coordination apps, the most innovative pharma companies are experimenting with new ways to change the value equation of their product offering and move beyond the pill.
While the FDA has been encouraging and even demanding real-world evidence on drugs for a long time, pharma companies are finally viewing RWE as not only an FDA requirement, but also a source of competitive advantage in the future.
Brand teams with more/better RWE data are able to differentiate in the market with vs. competitors. Some brands have even been allowed to get RWE based messaging/claims in the core vis aid or even the label.
The COVID pandemic caused structural shifts in the medical field, changing the HCP provider landscape permanently in many ways. Pharma companies had to adjust their business and GTM models to align with the HCP landscape of the future. Several new pharma industry trends are emerging as a result and best-in-class pharma companies are trying to get ahead of the curve on these emerging trends.
On one hand, pharma industry trends have been shifting towards rare and orphan drugs which go through specialty pharmacies, on the other hand, almost every pharma company is also pursuing the obesity market and is trying to build a direct-to-consumer ordering, shipping, and payment processing infrastructure for their obesity drugs. Once the direct-to-consumer infrastructure is in place, pharma companies will potentially leverage it for other drugs also because it will be the fastest way to recover their capital investment. The rise of a direct-to-consumer pharma industry trend will potentially shift the balance of power in the life sciences industry.
The blockbuster drugs of the 21st century have all been multi-indication drugs like Keytruda, Humira, etc. Finding new indications for a class of drugs is a robust LCM strategy for pharma and has solidified as a long-term pharma industry trend that every major drug is pursuing.
In some cases, modifying drugs that have been around for decades to improve their safety, efficacy, or bioavailability has also become an reliable pharma industry trend (e.g. antibody drug conjugates).
Oncology is leading the charge on commercialization of precision medicine. Many biomarker-based cancer drugs have been brought to market and companies are exploring the option of custom manufacturing RNA based treatments for each patient based on their unique profile.
The digital health revolution is still in its infancy and in the future, pharma companies will experiment combining their medications with digital monitoring tech, internet of things based tracking of compliance and adherence, patient care team coordination platforms, real-time medication alert apps, predictive patient risk mitigation systems and more.
Digital health will bring in a new era of personalization in medicine and will simultaneously improve outcomes and reduce healthcare costs. Best-in-class pharma companies will capitalize on this pharma industry trend and evolve their business models to go beyond the pill.
Pharma industry trends are shaking the entire life sciences industry and are leading to fundamental shifts in the entire value chain – from translational medicine to drug discovery, from clinical trials to commercialization, from drug manufacturing to shipping and distribution – every aspect of the business is evolving rapidly. After decades of investing in topline growth through launch of new drugs, pharma companies are now focusing aggressively on cost reduction and efficienct go-to-market models that are more sustainable as their disease state focus shifts to specialty, rare and orphan conditions.
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01 Feb 2024
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