2024 Global Pharma Outlook Looks Challenging For Pharma Cos.

Certain tectonic shifts in the healthcare market have gone on to push the pharma sector toward painful transformations in recent years. It is indeed quite evident that the traditional commercial model has gone one be upended permanently. In 2024, one can as well expect economic pressures, making industry-wide changes in competition as well as market expectations, and, at the same time, tightening of the global regulatory environment to intensify.

Apparently, addressing these issues goes on to require an immediate shift to a new market-driven model; however, as history continues to suggest, this happens to be much easier said than done. The recently released Numerof & Associates 2024 Global Pharma Outlook underscores some of the major areas wherein pharma companies will go on to face immense challenges as they principally rethink old assumptions about their present business model.

One significant challenge is the growing consolidation when it comes to healthcare delivery. Out of the over 6,000 U.S. hospitals, just 1,500 go on to function independently as of today. An increase in mergers and acquisitions- M&A has gone on to create certain fewer but bigger and more complex as well as powerful healthcare systems, thereby shifting the power dynamics of drug purchase decision-making.

Physicians who at one time happened to be driving those decisions are, to date, just one voice within the room. C-suite executives as well as population-based decision-makers- PBDMs, who are a part of the cross-functional committees within huge integrated delivery networks- IDNs, now happen to be holding the clout. This has indeed added to the emergence of a new approach so as to managing large enterprise accounts.

The 2023 Commercial Model Report survey determined that commercial leaders happen to be building more experienced account teams, which are led by National Account Managers, Strategic Account Directors or Key Account Managers. These leaders, along with the teams they orchestrate, go on to bring the advanced skill sets needed to engage IDN administrators and, at the same time, answer a range of pointed questions, right from pricing considerations to reimbursement assurances to also demonstrating the value of the product relative to competitors and articulating the evidence of improved clinical outcomes evidence over the present standard of care. This new approach when it comes to strategic account management happens to be very much a work-in-progress since organizations struggle to sync internally on an approach that’s optimal. As told by one of the respondents within the survey, it feels radical, and far from smooth, as this apparently turns the entire organization upside down.

Rising hospital consolidation has also gone on to prompt other alterations at the customer level. Not just the customer looks out far different than only 5 short years ago, but the ways in which manufacturers go on to engage their customers have also altered quite dramatically. When COVID-19 hospital lockdowns had forced the sales teams to communicate by way of Zoom calls as well as email, many executives went on to think that it would be a setback, but a temporary one. But even as hospital access has gone on to resume quite largely, continued staffing dearth’s and rising workload demands have gone on to place a premium on physicians’ time. Lower access has apparently also forced manufacturers to rethink their approach to customer engagement.

Although in-person meetings are still going to be important when it comes to certain scenarios, virtual engagements are here to stay. The Commercial Model report also found that in most companies, 50-70% of the customer engagement now takes place virtually. Although this has given rise to omnichannel as well as other novel forms when it comes to engagement, such as enhanced digital marketing as well as data analytics capabilities, customer engagement is pretty difficult. As per one of the survey respondents, the genuity of the digital happens to be a moving target, and that they are not confident that they happen to be really reaching the targets they need to be at effectively with this kind of format.

As developers go on to think strategically when it comes to how they manage large enterprise accounts as well as engage with customers, functional complacency has also been shattered due to rising regulation.

It is well worth noting how price regulations in the Inflation Reduction Act- IRA in the U.S., teamed with sweeping regulatory industry reforms throughout Europe, have gone on to force manufacturers to re-examine certain core assumptions when it comes to their approach to R&D, market access, portfolio pricing, budgets, as well as underlying costs. In regards to the IRA, organizations are indeed waking up to the hard, novel reality that they will have broad, downstream effects on their portfolios. Although the product will likely not be subject to the IRA in the near term, it is sure going to catch up very soon in terms of the negotiation process, opined one of the survey respondents. And, while pharma organizations have already filed court challenges to the IRA, fallout from the law is already underway. And the sector must brace for more pushback from the lawmakers, other stakeholders who are on the pinnacle of the IRA victory, and also regulators, as all of them continue to try to rein in big pharma.

For some years, the influence when it comes to an array of healthcare delivery stakeholders has been rising. It is well to be noted that the power has increased as drug purchase decision-making goes further away from the physicians. Payers and providers happen to be holding the line when it comes to healthcare costs by saying no to fresh products and price rises. They happen to also be demanding that manufacturers put forward hard economic as well as clinical data in order to justify any alterations to the bottom-line impact. In 2024, pushbacks when it comes to drug prices will go on to continue to intensify as far as payers, pharmacy benefit managers- PBMs as well as consumers are concerned, who happen to be taking on more of the cost burden since health insurance premiums keep skyrocketing.

The pharma backdrop happens to be more volatile than ever before since the regulatory requirements go on to raise the cost as well as the time required to create new products, payers across the world clamp down when it comes to new products, the clout of physicians diminishes, and public distrust within the industry and government scrutiny touch altogether new highs. Collectively, these elements will go on to have quite prominent implications when it comes to commercial strategy in the time to come.

It is well to be noted that the manufacturers must go on to think of new ways when it comes to all three pillars of commercialization, which are product development, getting the products reimbursed at a price that is profitable, and also market adoption. One of the commercial leaders in the survey said that mastering these pillars holds the key to success and that the market looks to have scientific proof of value, and one needs to engage the large and organized customers in a strategic way, in a more sophisticated fashion, so as to be successful.

However, just as one did not get to this position overnight, shifting to a new model is indeed going to be a slow and bumpy journey. As the survey revealed, one of the prominent hurdles for executives is often showing their own senior leadership the effect of their novel commercial approaches as well as making the case as to why they should go ahead with building on the alterations that are already in progress.

It is well to be noted that the old commercial model happens to be rapidly becoming obsolete. In an industry that goes on to recover from long-standing self-inflicted wounds and apparently, in a way, was not able to capitalize on the historic achievements during the pandemic due to Operation Warp Speed, failure to shift and progress to a new strategic as well as an integrated approach is going to continue to have consequences that look quite devastating.