The pharmaceutical industry plays a crucial role in human well-being. Investment in research and development is one of the factors that has made it possible to increase life expectancy while also reducing the costs of many sectors of health systems. In addition, pharma activities contribute substantially to the world economy. As reported in our previous article on pharmaceutical R&D spending trends, in 2019, the global pharmaceutical industry had the second-highest R&D intensity.
Influence of COVID-19 on pharmaceutical R&D spending:
In March 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic. At that time, worldwide lockdowns implied that both R&D researchers and clinical trial participants remained at home, and pharma companies like Pfizer announced the postponement of ongoing clinical trials, although many companies adapted by moving to decentralized clinical trials. Now, as we are going through the third year of the pandemic in 2022, its impact on the pharmaceutical sector can be better understood.
The Global Trends in R&D 2022: Overview through 2021 report points out that the pharmaceutical sector has made innovative contributions to COVID-19 through vaccines and therapies. Moreover, the pharma sector was remarkably adept at adapting its activities to the new scenario. In 2021, 84 novel active substances (NASs) were launched worldwide. This represented twice as much as five years ago. The United States launched 72 NASs in 2021, remaining the country with the highest number of launches. A total of 44 from those 72 NASs were described by the FDA as first-in-class, while 40 were indicated for the treatment of rare diseases and classified as orphan drugs.
More than 6,000 products are currently being evaluated in clinical trials worldwide, representing a 68% increase over 2016. Oncology is the field with the largest number of investigational therapies, representing more than 40% of the pipeline. Venture capital deal activity and investment flow in the United States accelerated in the past two years. In 2021, there were over 2,000 deals valuing $47 billion. Investments in R&D by the top 15 pharmaceutical companies represented a record: more than $133 billion, up from more than 44% in 2016.
Other pharma R&D spending trends:
The Global Medicine Spending and Usage Trends: Outlook to 2025 report suggests growth of the global medicines market at 3%-6% CAGR by 2025, reaching around $1.6 trillion in total market size by 2025, excluding spending on COVID-19 vaccines. Oncology, immunology, and neurology are key areas that are expected to contribute the most to growth over the next five years, predominantly by a continuing flow of new drugs that will offset the losses of exclusivity caused by patent expiries over the next decade. Oncology and immunology are forecast to grow by 9%-12% CAGR by 2025, driven by significant increases in new treatments and drug use.
Besides the new pandemic-imposed challenges, the pharmaceutical industry will still deal with others that preceded COVID-19. According to Industry Trends Pharmaceuticals 2022, the aging of the global population is a major trend that will continue independent of the pandemic. The WHO estimates that there will be more than 2 billion people aged 60 and over by 2050. A consequence that the health systems will have to face is the increase in chronic and neurodegenerative diseases. The neurology field expects to include new therapies for migraine, potential treatments for rare neurological disorders, and potential therapies for Alzheimer’s and Parkinson’s disease.
Another expectation for the coming years is continued growth of biopharma, with China emerging as a major player. By 2026, it is predicted that most of the ten top-selling drugs will be biologicals, and together, they will be worth more than $127 billion. The protein-based candidate Novax alone could move $5 billion in 2026. Moreover, the biopharmaceutical company AbbVie is predicted to overtake Roche and become the largest pharmaceutical company by sales in 2026.
Two major changes and three new pharma playing fields:
Looking a little further ahead at pharmaceutical R&D spending and envisioning new pharmaceutical playing fields, some companies have already recognized the impact of two leading changes: downward pressure on prices and the move toward prevention, diagnosis, and real cures. The increasing demand for healthcare in a scenario of lowering budgets, along with more transparency on drug prices demanded by patients, insurers, and governments, guides the former.
The latter, in turn, refers to a movement toward applying new and disruptive technologies that could become available to patients, thus empowering them to become more involved in their own care. Consequently, the focus would change from symptomatic treatments to prevention and earlier diagnosis. Such changes require increased emphasis on collaboration and partnership.
The Pharma outlook 2030: From evolution to revolution report suggests that pharmaceutical technology, genetics, and immunotherapy are three new “playing fields” that will rise in response to that disruption. For example, the world recently witnessed the approval of the first COVID-19 vaccine, based on mRNA technology, due to a partnership between pharmaceutical giant Pfizer and immunotherapy-focused BioNTech.
Pharma R&D joins with high tech:
In addition, the partnership between pharmaceutical companies and high tech businesses is already a reality. An example of this was the 2016 statement by Sanofi and Verily of an investment of approximately $500 million in a joint venture to combine devices, software, and medicines that aim to fight diabetes. Also, in 2019, Novartis and Microsoft announced their collaboration to use data and artificial intelligence to discover, develop, and commercialize medicines. And last year, Boehringer Ingelheim and Google Quantum AI revealed a collaborative agreement for R&D.
These examples illustrate how software is becoming more and more important in our lives — a reality that the pharma industry cannot postpone.
