2024 Outlook Pharma and Biotech Cheat Sheet

By ZAGENO

January 9, 2024

We read up on the outlook for the life sciences industry in 2024, so you don’t have to.

The stakes are high for the healthcare and life sciences industry as the new year begins. Experts expect 2024 to be a wild ride of M&A activity for biotech and a year of painful transitions for global pharma. To save you time, we’ve put together a quick cheat sheet on the 2024 outlooks for pharma and biotech organizations for your reference as you bravely venture into a new year.

1. Biotech/biopharma 2024 industry outlook overview

2023 saw a healthy 38% and 45% growth in deal value for biopharma and biotech, respectively, from 2022, despite a slight decline in deal numbers. As financial markets continue to recover, experts predict a busy 2024 for deal markets, with increased competition and evolving drug pricing regulation.

  • Financial performance. Drug pricing scrutiny from regulators and the public, health equity initiatives, and rising operational costs will continue to place pressure on the bottom line.
  • Market access challenges. Regulatory reforms, especially the Inflation Reduction Act (IRA), will continue to pose market access challenges, impacting gross-to-net pricing. Complex supply chains will obscure visibility into downstream inventory, potentially leading to stockouts and lost sales.
  • Digital transformation. Post-pandemic, the virtual customer engagement shift is here to stay, driven by staffing shortages and increased workload demands. AI-driven transformation of drug discovery, clinical trials, and patient engagement will take center stage.
  • Generative AI. Over 90% of biopharma leaders expect generative artificial intelligence (AI) will influence their organizations, with a focus on task automation, reimagination of supply chains, and compliance support.
  • Market activity. With the financing market covering and many late-stage assets in play, biotechs will become increasingly attractive to pharma as targets for mergers and acquisitions (M&A). Recent EU approvals of key deals may signal things to come in the US.
  • Workforce dynamics. While the talent shortages brought on by the pandemic are easing, the capability to attract and retain certain types of scientific talent is a critical competitive advantage.
  • Innovation investment. Executives will continue to prioritize investment in innovative products, though slightly less than 2023. Following up on 2023’s groundbreaking developments, the cell and gene therapy (CGT) market is forecasted to grow by 20% year over year, hallmarked by a massive increase in clinical trials and subsequent launches.

2. Pharma 2024 industry outlook overview

Experts predict a year of painful transition as the pharma industry faces significant shifts and volatility due to regulatory reforms, increased payer influence, diminishing physician decision-making, and shifts in customer engagement. Intensifying changes and pressures have severely impacted the traditional commercial model and the industry must adapt to survive.

  • Decision-making shifts. Healthcare delivery consolidation will continue to increase due to hospital M&As, further shifting drug purchase decision-making dynamics from physicians to C-suite executives and integrated delivery networks (IDNs).
  • Competition for high quality assets. M&A activity will intensify as pharma continues to fiercely compete to acquire innovative, commercially viable products amongst changing regulatory landscapes and steep patent cliffs. Product-wise, 2024 is expected to be biologic-focused, as opposed to small molecules.
  • Hybrid physician engagement model. Post-pandemic, physicians are now comfortable with and sometimes prefer a hybrid model for engaging with pharmaceutical reps. Agile pharma companies will need to find the right mix of digital and face-to-face as they engage with healthcare providers, which will differ according to location, provider, and therapeutic area.
  • Regulatory impact. The Inflation Reduction Act (IRA) in the U.S. along with similar regulatory changes in Europe will force pharma to re-examine almost all aspects of their business, starting with portfolio impacts, pricing strategies, R&D investment strategy, and collaboration with both patients and payers.
  • Population health management. Expect continued growth of healthcare stakeholder influence, specifically payers. This shift requires an increased focus on population health management, in which products and services are better aligned with the broader goal of improving health outcomes.
  • ESG considerations. While the EU has been taking an increasingly regulated approach to Environmental, Social, and Governance (ESG) issues, the concept has become increasingly politicized in the U.S. The upcoming presidential election in the U.S. promises to further complicate pharma’s approach to ESG initiatives.

In navigating these complex landscapes, the decisions that the life sciences industry make in 2024 will set the tone for the latter half of the decade and beyond. It is becoming increasingly clear that what worked in the past will not work in the future, and new models are needed.

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