Our business environment
Medical technology continues to accelerate, as advanced new treatments emerge to meet the growing demand for high-quality healthcare. At the same time, aging populations are putting pressure on healthcare resources and access to healthcare remains a challenge around the world. Here are 10 major trends currently shaping our business environment.
Spending on healthcare continues to grow
The need for high-quality healthcare is more critical than ever. Globally, people live for an average of 10 years with a disease or disability, and around 1.7 billion disability-adjusted life years are lost annually to ill-health and early death. Over the next five years, global spending on medicines is forecast to rise faster than GDP in many developed countries. The price of medicines remains a key issue as increased healthcare spending and a more uncertain economic outlook weigh on government budgets.
Aging populations are fueling a rise in chronic illness
Increased longevity is one of the triumphs of modern medicine. By 2050, the UN expects there will be 1.5 billion people over the age of 65, double the current number. Aging and lifestyle changes are triggering an increase in non-communicable diseases (NCDs), such as cancer, heart disease and diabetes, causing millions of preventable deaths and putting further pressure on healthcare resources.
3–6%
Global healthcare spending
Over the next five years, spending on medicines globally is forecast to rise by 3–6%, growing faster than GDP in many developed countries. (IQVIA Institute, The Global Use of Medicines 2022)
76%
Deaths from NCDs
Globally, NCDs accounted for 75.6% of all deaths in 2019, up from 60.8% in 2000. (World Health Organization, World Health Statistics 2022)
Medical science continues to accelerate
Scientific innovation is advancing at an unprecedented rate. In recent years, new types of medicines have been approved, including RNA therapies, gene and cell therapies, and radioligand therapies, which offer targeted approaches to treating serious diseases. Because these medicines are complex, they require focused investment and expertise to bring them to reality for patients.
Access to healthcare remains a formidable challenge
Worldwide, millions of patients struggle to access the medicines they need. This may be because of cost, inequity, or structural issues in healthcare systems. While access to medicines remains an acute issue in lower-income countries, it is a problem in developed countries too, where the pandemic highlighted that deep health inequities remain entrenched. As medical science advances so should access to medicines.
10-20
US gene therapy approvals
By 2025, the US Food & Drug Administration (FDA) expects to be approving 10-20 gene and cell therapies annually. (FDA statement, 2019)
2 bn
People lacking access to essential medicines
Five billion people worldwide have access to medicines, leaving an estimated two billion without. (Access to Medicine Foundation, 2022)
Patients are moving to the center of healthcare
Patients are demanding more say over their treatment through patient representative groups and other means. In response, healthcare systems and pharmaceutical companies are moving toward a more integrated, end-to-end approach, with an increased focus on patient engagement in drug development and other areas. At the same time, patients are becoming more important as data owners – as personal data enables more targeted treatments and supports the development of new medicines.
Economic uncertainty is growing, post-pandemic
The global economy is facing considerable uncertainty, driven by concerns over rising prices and geopolitical instability. Forecasts suggest the current economic slowdown is likely to continue in 2023. In our own industry, COVID-19 also put strain on supply chains and highlighted the importance of resilient supplies of active pharmaceutical ingredients (APIs) – the raw materials used to make finished medicines.
78
Patient organizations
Membership of the European Patients’ Forum (EPF), an umbrella body of patient organizations across Europe, rose to 78 in 2022 from 13 in 2003. (EPF Annual Report 2020)
2.9%
Expected global GDP growth
Global GDP growth is forecast to slow to 2.9% in 2023. Growth in some of the world’s most advanced economies is expected to be lower. (International Monetary Fund—World Economic Outlook, 2022)
Biopharma searches for more efficiency
At a time of growing economic uncertainty, investors are looking for sustainable growth in margins and earnings. To remain competitive, pharmaceutical companies are moving to more agile, efficient business models, particularly as they invest to build specialized capabilities in R&D and manufacturing. Meanwhile, rates of return on R&D are increasing for the first time in several years, largely because of emergency approvals during the COVID-19 crisis and faster innovation cycles.
New technologies are reshaping our industry
The use of data science and technology is increasing across our industry in everything from R&D to manufacturing and marketing. While this has brought greater efficiency, it also requires new investment and skills. Importantly, new technologies are helping to close gaps between companies, healthcare systems and patients – for example, by providing insights into the social determinants of heart health, which are enabling the development of new prevention measures.
45%
Increased spending on R&D
Spending on R&D by large pharmaceutical companies increased by nearly 45% between 2016 and 2021. (IQVIA, Global Trends in R&D 2022)
410 bn
Added value in healthcare (USD)
Technology-driven innovation in healthcare could create up to USD 410 billion in added value every year by 2025. (McKinsey, The era of exponential improvement in healthcare, 2019)
Working practices are changing
Working practices are changing in many countries. Demand for new skills is increasing, especially in areas such as data science. Workforces are becoming more flexible and more diverse. This allows companies to tap into new talent pools, which is important at a time of skills shortages in many parts of the economy.
Climate change is increasingly affecting human health
Extreme temperatures and poor air quality are changing patterns of both infectious diseases and NCDs, including malaria and respiratory illnesses. Ultimately, climate change could undermine decades of progress in improving human health at a time when antimicrobial resistance is also rising. At the same time, more governments are looking to decarbonize their economies over the long-term, while companies also face increased scrutiny over the sustainability of their operations and supply chains.
76%
Employees valuing diversity
76% of job seekers and employees believe that a diverse workforce is an important factor when evaluating job offers, and nearly a third (32%) would not apply to a company that lacks diversity. (Glassdoor, 2020)
250 000
Additional deaths
Between 2030 and 2050, climate change is expected to cause approximately 250 000 additional deaths per year due to malnutrition, malaria, diarrhea and heat stress. (WHO, Climate Change and Health, 2021)