Clinical Researcher—August 2024 (Volume 38, Issue 4)

GLOBAL PERSPECTIVE

Ivor Campbell

The global landscape for medical technology, biotechnology, and life sciences is on the cusp of seismic change.

The confluence of geopolitical tensions, economic uncertainty, and evolving social values has created a complex web of challenges and opportunities for these sectors around the world.

The broad life science industry too is in the midst of a period of significant transition. While the shadow of the pandemic recedes, its effects linger in the form of a market correction and an evolving healthcare landscape.

This, coupled with looming patent expirations, the impact of new drug pricing regulations, and tighter universal regulation of medical devices, presents a complex environment for both large and small life science companies.

Amidst these challenges lies an undercurrent of excitement fueled by groundbreaking innovations in advanced therapeutics, artificial intelligence (AI), and digital engagement strategies.

Successfully navigating this new reality will depend significantly on the policy decisions of governments in the most advanced economies.

With elections this year in the United States, the United Kingdom, and India—all major players in the life sciences industry—what changes and benefits can we expect to see for companies and their investors, for healthcare providers, and for patients?

The Looming Shadow of Economic Uncertainty

A key concern for businesses is economic stability. The U.K., under a new Labour government, will likely see increased public investment in healthcare infrastructure, potentially boosting domestic medical technology and life sciences industries.

Last February, the Labour Party published its “Prescription for Growth”—an official plan for the reinvestment and revitalization of the National Health Service (NHS) alongside the country’s life science industry.

The strategy is aimed at keeping the sector competitive in a country that has recently been struggling to maintain relevance in the global medical device and clinical trials scenes. At the same time, Labour has promised to end the rolling NHS junior doctor, nurse, and senior consultant strikes that have crippled the NHS amid sluggishly rising rates of pay for staff and international competition to identify and hire the most highly skilled medical staff.

Presented by new Secretary of State for Health, Wes Streeting, the plan set the tone for the new government’s determination to make good on promises to an industry on edge.

As part of that plan, Labour has pledged to strengthen the Office for Life Sciences while creating a more certain funding environment and a more streamlined funding process.

The implementation of new, 10-year budgets for key research and development institutions to attract long-term investment is aimed at ending what Labour saw as the short-termism of its Conservative predecessor in government.

The 2024 U.S. Election: Pharma in the Crosshairs

In the U.S., both main parties are pledging to reform the pharma industry and, while their approaches may differ, both Donald Trump and now Kamala Harris are expected to focus on drug pricing and market competition, signaling potential upheaval for the industry, whoever wins.

The Democrats’ Inflation Reduction Act (IRA)—particularly its Medicare drug price negotiation provision—is being touted as a win against “Big Pharma’s price gouging.”

While the industry has criticized this as “price control,” the election of the incumbent vice-president would signal consolidation of the IRA, putting further pressure on drug prices.

Despite criticizing the IRA in the past, Trump is also prioritizing a reduction in drug costs. His previous “most favored nation” executive order—later withdrawn—aimed to leverage international prices to lower U.S. drug costs.

While drug pricing isn’t as central to Trump’s current campaign, his stance suggests a potential willingness to implement similar measures to the Democrats, if elected.

One area where the candidates disagree sharply is market competition. Harris supports “march-in rights” to allow public access to patented drugs at lower prices, a stance vehemently opposed by the industry which fears it will stifle innovation.

Conversely, Trump champions free market competition and biosimilars. His 2018 law bolstering the U.S. Federal Trade Commission’s oversight of biosimilar deals, aimed to increase competition for expensive biologics. While this has benefited some companies with robust biosimilar pipelines, others, like AbbVie, have faced market share erosion for blockbuster drugs like Humira.

In India, the recent re-election of Narendra Modi as Prime Minister for a third, consecutive term, will fast-track his stated determination to make the country the world’s third largest economy, up from fifth.

The medical technology, biotechnology, and pharmaceutical sectors will all be affected by Modi’s “made in India” policy, which aims to supercharge the country’s manufacturing base to help boost growth and create more jobs.

Projected revenues in India’s medical technology market this year are expected to top US$8.71 billion. With an anticipated annual growth rate of 7.61%, they are predicted to reach US$12.57 billion by 2029.{1}

Despite this rapid growth—a result of increased government investments in healthcare infrastructure and rising demand for advanced healthcare solutions—India’s performance is dwarfed by the U.S., whose medical technology sector is expected to generate US$210 billion this year.

Other Economic, Scientific, and Ethical Factors

Biopharma companies on both sides of the Atlantic, meanwhile, are prepared for a protracted recessionary environment in the coming 12 months.

While venture capital funding remains above pre-pandemic levels, securing financing now requires stronger clinical data and longer negotiation periods.

Private equity firms, increasingly partnering with venture capitalists, offer an alternative source of funding, as seen in KKR’s recent investment in Catalio Capital Management.

AI—both in terms of machine learning and generative AI—is revolutionizing the industry, with companies like InSilico Medicine and Relay Therapeutics leading the charge, accelerating the drug development process. AI promises to drive incremental but significant efficiency gains across operations, including clinical trial design, patient recruitment, manufacturing, supply chain management, competitive intelligence, and sales and marketing.

Meanwhile, new cell therapies are showing promise in oncology. Allogeneic therapies are gaining traction, and the application of CAR-T in autoimmune diseases is expanding. However, manufacturing bottlenecks and safety concerns, such as secondary T-cell malignancies, need to be addressed.

Across all areas, success will depend on companies being able to navigate market uncertainties, adapt to evolving regulations, harness the power of AI, and embrace innovative engagement strategies. Those which can effectively leverage these trends will be better positioned to unlock the next stage of value creation and shape the future of healthcare.

Beyond economic considerations, governments will grapple with increasingly complex ethical dilemmas that directly impact the trajectory of these industries. For example, advancements in areas like gene editing, reproductive technologies, and AI raise profound questions about their application and potential consequences.

Shifting Demographics and the Prioritization of Healthcare Spending

Globally, governments face the dual challenge of aging populations and declining birth rates. This demographic shift will force difficult choices regarding healthcare spending priorities.

Will governments prioritize geriatric care and technologies aimed at managing age-related diseases, or will they focus on preventative care and technologies promoting the health and well-being of younger generations?

The potential for a government-led initiative to incentivize childbirth through improved maternal healthcare and childcare support underlines this critical dilemma. The outcome of this debate will have significant implications for the types of technologies and research that receive government support and funding.

The Potential of Emerging Markets

While established markets grapple with these challenges, emerging economies, particularly in South-East Asia and South America, present a compelling alternative.

These regions often boast rapidly growing populations, increasing healthcare expenditure, and a burgeoning middle class with rising healthcare demands.

Governments in these regions are actively seeking to attract foreign investment and develop their domestic healthcare industries. Companies willing to navigate the complexities of these markets, including regulatory hurdles and infrastructure limitations, could find significant growth opportunities.