In the second part of our examination of issues that will shape the course of 2022, we’ll update the ongoing impacts of the pandemic, which have, as they did in 2021, a pervasive effect on both pharma and healthcare issues, with themes we highlighted at the beginning of 2021 continuing their impact.
Big Tech makes significant healthcare moves
That Big Tech is planning significant moves into healthcare in 2022 is not a new phenomenon. However, what makes 2022 different in this respect is Big Tech’s positioning to ride the trends of healthcare digitisation, remote delivery and data utilisation, which have been started or accelerated by the COVID-19 pandemic.
With former Johnson&Johnson CEO Alex Gorsky, joining Apple’s board in November 2021 the links between tech and pharma will be ever closer in 2022. This move is sign of a more collaborative approach that is likely to be more productive than past efforts to “disrupt” healthcare, where Big Tech’s lack of domain expertise in healthcare led to some missteps.
Technology companies have made considerable strides in ever more sophisticated and consumer-friendly health monitoring devices, something anticipated to accelerate with new digital technology launches in 2022, and the pandemic has undoubtedly accelerated their adoption. Bringing this together with the growing digitisation of healthcare at a structural level, and Big Tech will find a substantial and sustainable role in the future of health.
Medicine budget constraint, structural fund largesse
IQVIA Institute models global cumulative spend on COVID-19 vaccines to be a base case of $251bn to 2026, with spend on COVID-19 treatments, including the new oral agents and treatments of post-viral syndromes, likely to add significant incremental spend. The period 2021-2025 was always going to be one of relatively low loss of exclusivity cost relief, with 18% of, combined with unprecedented levels of COVID-19 related spend, medicines budgets will be challenged for years to come.
Governments are, however, earmarking structural funding for healthcare system change that will reshape and digitise health systems. The EU4Health 2021-2027 budget earmarks €5.3bn to, among other actions, strengthen health data and digital transformation across the EU.
Such investments seem tiny compared to the massive sums that will be spent on COVID-19 vaccines, but they have the potential to speed the digital maturation of European health systems significantly. In the US, the Biden administration proposes massive healthcare funding investment, including expansion of Medicare and Medicaid, but with no clearly adoptable plan to manage down medicine costs.
Healthcare systems reshape to digitise
The pandemic sharply accelerated progress towards digitisation of healthcare, from remote care to digital monitoring and data collection. Consequently, 2022 will be the year in which the real impacts of the acceleration of digitisation will start to become apparent.
Whilst direction is common digital maturity varies significantly by country. A recent IQVIA evaluation of the relative digital maturity of different European and Middle Eastern Health systems found that while there was a weak general trend towards increasing maturity with increasing GDP/capita, there were clear standouts above and below the line. Early, national-level policy making, followed through with structural investment and local implementation is the formula that brings about the best results.
As the full fallout from the pandemic hits health systems in the form of squeezed budgets, patient backlogs and serious resource shortages, we should expect to see concerted efforts aimed at a leap in digital maturity. In 2022, digital transformation may offer the only way for stressed health systems to move towards a sustainable, post-pandemic future.
RNA Therapeutics come to the fore
For the decade to 2020, RNA therapeutics made few headlines, few deals and little revenue compared to Cell and Gene Therapies. However, introduction of mRNA COVID-19 vaccines transformed the fortunes of the whole sector, as they demonstrated that mRNA therapeutics were manufacturable, deliverable, and safe at an unprecedented scale.
Dealmaking in RNA Therapeutics rose 13-fold from 2019 to 2020. Top 20 pharma such as Sanofi have made significant bets on RNA acquisitions and RNA Vaccine players Moderna and BioNTech now have billions of their own in cash to fund development projects using their RNA technologies beyond COVID-19 vaccines and into non-vaccine areas.
A promising but hitherto slowly evolving technology is now turbo-charged to shake up the vaccines field, which would have significant impact in oncology, rare disease and high prevalent, primary care conditions. 2022 may see further deal-making, although valuations will be high. This year will also see the key RNA players future strategy take shape, and the long-term impact of RNA across therapy areas become apparent.
The new reality for innovative launch
In our nine for 2021 predictions, we called out post-pandemic launch as a key area of concern. We saw the pandemic trigger environmental challenges, including reduced opportunities to prescribe new products and less interactive engagement between pharmaceutical companies and healthcare professionals to learn about new launches being significant inhibitors of launch uptake.
Analysing the first six months of innovative launches entering the top eight markets of the US, China, top five Europe, and Japan during 2020 and the first quarter of 2021 shows this concern was justified. Most primary and specialty care innovation entering in this period did not perform as well as the pre-pandemic benchmark of the first six months launch performance.
Orphan medicines were more resilient in 2020, outperforming pre-pandemic benchmarks, although the much smaller Q1 2021 cohort did less well. There’s nothing to suggest that the 2020/2021 cohort of launches are inherently lower potential than those of earlier years – they simply came into the market at a uniquely challenging time.
Unfortunately, IQVIA’s analyses of more than two decades of launches suggest that the first six months of a launch’s commercial life disproportionately influences its subsequent commercial performance. As such, 2022 will provide the first data read out on whether pandemic launches can recover from a lower than expected first six months is available.
As health systems continue to face significant financial and operational pressures, which are directly and indirectly related to the pandemic, 2022 will define a new reality for innovative launches that will stay with us well into this decade.
Pharma’s Battle Chest
The most interesting events of 2022 may be in Pharma’s investment choices to prepare for the coming changes to healthcare. Many companies have a considerable battle chest to spend – by one estimate, 18 pharma majors accumulated a total of $500bn cash by the end of 2021. But what will they do with this in 2022?
A single answer is not necessarily immediately obvious. Acquisitions in hot areas are expensive; large to large mergers don’t solve fundamental issues, share buybacks and dividends are safe but don’t prepare a company for future challenges or growth.
We’ve already seen bolt-on acquisitions, led by AZ’s massive $39bn acquisition of Alexion, which closed in 2021, and 2022 is likely to bring more bolt-on acquisitions. What will matter is not so much size as the quality of investments. If the quality of opportunity is not there at the right price, though, will pharma instead opt for share buybacks, as showcased by BMS’s proposed $15bn share buyback plan?
Pharma’s 2022 investments are likely to be increasingly digital: these may not be the largest investments, but they may be the most crucial, laying the foundations for increased convergence between molecular therapeutics and digital. For example, Biogen’s December 2021 investment in the digital health company TherPanacea, to find digital health tools for neurological conditions.
It is highly likely that 2022 will be a pivotal year for the pharmaceutical industry as it lays the foundations to thrive in a radically altered future.
This is the second of a two-part article, to read the first instalment ‘Nine for 2022: International issues that are compelling, new or changed in 2022’, follow this link.
About the author
Sarah Rickwood has 30 years’ experience as a consultant to the pharmaceutical industry, having worked in Accenture’s pharmaceutical strategy practice prior to joining IQVIA. She has wide experience of international pharmaceutical industry issues, having worked for most of the world’s leading pharmaceutical companies on issues in the US, Europe, Japan and leading emerging markets, and is now vice president, European thought leadership at IQVIA, a team she has run for twelve years.
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