In recent years, the pharmaceutical industry has grown at a rapid pace. Although the pharma industry still has its challenges, experts predict it will reach a market value of approximately $ 1.5 trillion by 2023. A rapid increase in pharma’s large market size is attributed to several factors, including the growth of diseases, affordability, consumer awareness, changes in governmental policies regarding insurance policies, and the availability of adequate treatment facilities. Here are the top 10 CDMO trends to look out for in 2023.
Drug-pricing reform in the US.
Drug pricing reform is one of the most important issues in the upcoming US Presidential election. Drug prices are the focus of the debate, and there is already plenty of legislative proposals to address the dilemma of high-priced prescription drugs in the US. Analysts also propose that the US may set up a separate department to control drug prices.
Some of the reforms suggested by the Presidential candidates include developing a new system that will link the US and international drug prices of particular drugs. Similarly, manufacturers will face penalties if they do not negotiate with the Federal government for producing a specified number of drugs annually. It is still unclear how the policy debates will turn out, but drug price reforms will be a key issue in 2023.
The emergence of a new leadership
Both the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) will have a change of leadership. Any changes in the policy direction between the agencies will also affect the future of pharmaceuticals.
The US Senate will likely confirm the nomination of Dr. Stephen Hahn, the chief medical executive, and professor in the Department of Radiation at the University of Texas. President Donald Trump and the Senate on Health and Education nominated him for the top position. Labor & Pensions has already voted in favor of his confirmation, which will soon go to the Senate for a final vote. If Dr. Hahn is confirmed, he will succeed Dr. Norman Sharpless, the acting Commissioner of FDA, who served from April 5, 2019, to November 1, 2019.
Simultaneously, the European Medicines Agency is moving ahead with its plans to find its new Executive Director. In May 2019, EMA issued a vacancy notice with the Official Journal of the European Union for the Executive Director position. It should be noticed that the term of the current EMA Executive Director, Guido Rasi, is about to end this year. If selected, the new director will be the fourth executive director in EMA’s history.
Implications of Brexit
The pharmaceutical sector and other industries worldwide are waiting to review how the UK would exit the European Union (EU). Any agreement as part of a negotiation between the UK and the European Union for the UK’s exit is likely to affect how pharmaceutical products travel between the UK and the EU. It is still unclear if supply lines and other requirements will change.
It should be noted that Boris Johnson, UK Prime Minister negotiated a new Brexit deal with the EU after former Prime Minister Theresa May, resigned in 2019. Earlier, the former PM failed to convince the UK Parliament of the negotiated Brexit deal. Because of the changing political environment, healthcare companies may not initiate large cross-border deals until new policies are in place.
Another setback for the UK government relates to the World Trade Organization (WTO) affecting the trade between the EU and the UK. From December 11, 2019, WTO stopped adjudicating trade disputes due to the delays it presented in appointing judges in the trade body. To solve the dilemma, the UK and the EU have until the end of this year, to make a final decision on their full agreement and decide the future of trade between the two entities.
If, after an 11-month transition period, a UK-EU trade deal does not come to fruition, then neither of the parties would have an alternative to an enforceable settlement mechanism for dispute resolution. As a result, the UK will need to trade with the EU on WTO terms, including the foisting of tariffs, from January 2023. These changes will also play a critical role in how pharmaceutical companies change their priorities when dealing with trade between the UK, EU, and the rest of the world.
Embracing Medical Marijuana
There are many challenges still facing the medical marijuana industry. However, legalizing medical marijuana is a stepping-stone toward revolutionizing the pharmaceutical industry. The U.S. Food and Drug Administration (USFDA) first approved Epidiolex, for the treatment of epilepsy, in June 2018. It is the first cannabidiol (CBD) medication formally marketed, paving the way for US pharma companies to find a market abroad for medical marijuana-based treatment.
Such is the impact of the legalization that the cannabis market is expected to surpass $55 billion by 2024. This potential also forces companies to invest money into researching new marijuana-based treatments. Here are some of the other major deals that describe how the environment for CBD is changing:
- In December 2018, Tilray Inc., a Canadian cannabis company, collaborated with Novartis’ Sandoz AG and became part of Novartis’s network.
- In March 2019, US-based Farmako imported 50 tons of medical cannabis from the European market for the next four years after securing a contract with Pharmacann Polska, an EU company. Similar contracts will likely take place in 2023.
Importance of emerging markets
Historically, pharmaceutical companies wanted more control over the uncertainty faced by these companies due to saturated US and European markets. Hence, several pharmaceutical companies focused their research programs targeting developed countries only. However, recent changes in the pharmaceutical sector have resulted in the emergence of new markets.
The opportunities in the emerging markets are attributed to a combination of high population and low healthcare availability, which is a viable opportunity for the global pharma industry to invest in a new sector. Due to their unique demographics, these emerging markets have significant potential, which has already led to creating new products for opportunistic pharmaceutical companies. As of 2023, emerging markets are now the fastest-growing sector, and this trend will likely grow in the coming years.
The role of Artificial Intelligence
Artificial intelligence (AI) is rapidly becoming the driving force behind the new research undertaken by pharmaceutical companies. Since its widespread availability, AI has been instrumental in the future development of drugs.
Recently, many doubted the efficacy of artificial intelligence and its use in pharmaceuticals. Experts also questioned its benefits, and others feared the potential dangers of implementing it in the healthcare sector. Gradually, companies have started to understand its potential, and their research departments are working hard on how to use AI for a better quality of products.
Artificial intelligence applications in the pharmaceutical industry include data entry, lab test analyses, and evaluation of healthcare systems for errors or inefficiencies.
New business models.
Reducing healthcare costs is among the primary concerns of the pharmaceutical industry. In the recent past, mergers and acquisitions have helped companies to adapt business models that can help them solve the dilemma.
The merger of CVS Health Corporation (CVS), the biggest retail pharmacy in the US, and Aetna, a prominent health insurance company in the US, is an example of such business models. Similarly, the acquisition of Express Scripts, a pharmacy benefit manager by Cigna, a health insurer, suggests a changing paradigm regarding M& activity in the sector.
While it is still too early to predict if the consolidation will lead to a reduction in reducing healthcare costs, the trend is expected to continue in 2023.
Change in the US generics market
Pharmaceutical companies will require restructuring due to the pressures of increasing costs in 2023. As the United States has always been a strong player in the generics market, dealing with cost pressures will be a key issue in 2023.
A prominent business partnership in this landscape is Mylan and Pfizer’s off-patent and generic drug business (Upjohn), a deal announced in 2019 and expected to come to fruition in 2023. Both these companies are trying to improve their performance in the generics market as the pricing pressures continue to rise on generic-drug companies.
Companies such as Novartis’ Sandoz are also restructuring to increase their respective market shares in the generics market; however, the question remains, will this lead to improved performance in the generics market?
Availability of Real-world data for drug development
Another important issue for 2023 will be pharmaceutical companies’ ability to use real-world data for which patient data is collected outside randomized controlled trials. This approach is important for drug development because it evaluates if outcome-based reimbursement models can succeed.
Personalized Medicine and Value-Based Healthcare
Personalized medicine has the potential to revolutionize the healthcare and CDMO industry. The introduction of diagnostic and informatics approaches has enabled scientists to understand the molecular basis of disease, particularly the genome. A detailed account of an individual’s genetic make-up can help research-oriented healthcare companies to include or exclude a specific individual on a timely basis.
Ultimately, it will lead to faster and smaller medical trials leading to lower research costs. Pharmaceutical companies are in better shape to develop medicines for individual patients based on the patient’s genome.
There is no doubt that the concept of personalized and precision medicine is a new research endeavor that can offer products tailored to individual patients. It allows companies to increase care quality rather than focus on quantity.
These advances and trends will contribute to the growth of the global CDMO industry. Considering the mentioned trends, 2023 can prove to be an important year for the healthcare industry.