Future of health finds biopharma firms at strategic crossroads

01 October 2019 Consulting.us 3 min. read
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With the future of healthcare accelerating toward a prevention and digital-centered future, biopharma firms are faced with the strategic choice of branching outward from the profitable drug-centric model, according to a new report from PwC’s Strategy&.

Within ten years, healthcare is projected to be based on preventive, data and algorithm-powered solutions which are integrated into people’s daily lives, as opposed to costly reactive treatment.

The shift will entail new regulations that build frameworks for digital health systems and data sharing, a redefinition of roles for physicians, and new ways of spending for payers.

The healthcare system shift will mean that trillions of dollars are spent in different ways from today, according to a Strategy& report which polled 120 international senior biopharma executives. Less money will be spent on treatment and care, with a shift to prevention, diagnostics, and digital solutions like mobile apps and AI-enabled analytics tools.

The polled executives expect massive shifts in expenditures compared to 2018 in the areas of diagnostics (+524%), prevention (+244%), and digital health (+205%) by 2030.

How regional healthcare budgets will shift by 2030

Global healthcare budgets are projected to increase by 10%, from $10.6 billion in 2018 to $11.6 trillion by 2030. Spending per patient is expected to fall by as much as 28%, however, as the number of people of accessing healthcare increases disproportionately to budget increases.

Average net operating margins are expected to come under serious pressure as a result, declining from the current 25% to 17%, or else being completely erased.

Further pressure is likely to be exerted by tech firms, who are projected to drive the change in the overhauled healthcare market as they bring their extensive expertise in data and analytics to the market. Big tech firms have already entered healthcare with their own product developments and patents, while moving into the treatment segment with acquisitions and partnerships.

Biopharma executives, however, know the future of healthcare is coming fast, according to the Strategy& survey. Ninety-six percent agree the future of healthcare will be people-driven, preventive, personalized, digital, and integrated into daily life, while 68% think the change will be the norm in major markets by 2030.

Seventy-five percent think the shift is an opportunity for the biopharma sector if it’s willing to disrupt itself, and 85% noted all or some of the key elements of the "future of healthcare” are on their corporate agenda.

Biopharma firms are, as such, faced with a strategic decision. According to Strategy&, they can choose to remain a traditional drug manufacturer while trying to significantly improve efficiency; they can unlock new pools of value in the altered healthcare landscape, pursuing digitally enabled preventive solutions, for example; or they can take a combined approach.

If biopharma firms decide to reimagine their business, this will necessitate shaking themselves out of a complacent mindset, according to the report. This will entail hiring people with capabilities in digital health, bioinformatics, and customer experience; potentially entering co-funded and co-led partnerships; and testing and validating new strategies by using pilot programs.