Life Sciences 2024 Dealmaking Trends & Outlook
The life sciences industry experienced a turning point in 2022 after robust deal activity in the two prior years. The persistent effects of high inflation and a sluggish public market for biotech stocks carried into 2023, forcing many companies to engage in strategic and often distressed dealmaking to preserve and obtain working capital. Toward the end of 2023, however, deal activity in the life sciences industry showed renewed life, with both an active middle market for M&A dealmaking and a modest uptick in IPOs and follow-on opportunities in the public equity markets for biotech companies. Barring additional headwinds, we expect this rebound to continue in 2024. This article will take a deep dive into current trends in the life sciences industry in 2023 and for 2024.
Market Trends
2023 marked a year of gradual recovery for the life sciences industry. In 2023, market activity generally bounced back to pre-pandemic levels, though still not close to the biotech market exuberance seen in 2021. According to a JP Morgan report, there were 12 biopharma IPOs in 2023 totaling $2.5 billion raised, with the highest quarter being Q3 with $1.2 billion raised. For comparison, 2022 had 17 IPOs totaling $2.4 billion raised. The overall number of public biotech companies shrunk 3% in 2023. Follow-on offerings gained momentum in the second half of the year, giving life sciences companies much-needed capital for dealmaking and R&D. So far in 2024, there has been a rebound of biotech IPOs with seven companies going public as of February 19. We expect this general upward trend to continue in 2024, as there is a two-year backlog of biotech companies queued up to go public and an expectation that interest rates will begin to fall. Although 2023 public market activity reached pre-pandemic levels and may continue to rebound, experts are not predicting a return to the record-breaking market activity of 2021.
Historically, biotech companies have not had broad access to debt financing. Therefore, biotech companies are not typically viewed as at risk of bankruptcy. However, low interest rates in 2021 motivated many biotech companies to take on debt, and debt financing became more popular than it had been in the life sciences industry. As interest rates rose throughout 2022, debt financing in the life sciences industry pulled back in response, and that trend remained steady through 2023. The unusually high rate of debt financing in 2021 culminated in 41 bankruptcies in the biotech industry in 2023. By comparison, there were only 20 such bankruptcies in 2022 and nine in 2021. It is possible that this increase in biotech bankruptcies will continue into 2024, as valuations, equity financing, and other dealmaking activity continue to be suppressed.
Venture investment into therapeutics totaled $17.0 billion across 350 rounds in 2023, according to data from JP Morgan. Further, across all sectors, down rounds and flat rounds were more prevalent in 2023 than previous years. These depressed valuations could reflect a sluggish market, or it could represent a recalibration from overzealous 2021 fundraising. If the life sciences sector of the public markets continues to struggle, venture equity investors will likely remain cautious about their current investment portfolios and consider alternative exit strategies. Despite cautious investors, life sciences venture capital funds raised $21.5 billion in 2023. This number was a dip from the $31 and $25 billion totals in 2021 and 2022, respectively, but remains healthy compared to pre-pandemic totals, which had never surpassed $14 billion. Because venture investors are sitting on a stockpile of cash, many expect investment in biotech companies to increase in 2024. Furthermore, if the life sciences sector of the public equity market continues to rebound, we expect venture investment to increase as well.
Dealmaking Trends
Life sciences M&A transactions were higher in 2023 compared to 2022. Although the year started slowly in January and February, March through June saw steady deal activity, at which point experts began projecting that 2023 could be the biggest M&A year since 2019. The excitement dwindled, however, as the deal market slowed through the rest of the summer, culminating in a nearly dead market by late September. Optimists pointed out that a large number of biotech companies announced that they were exploring “strategic alternatives” in the third quarter, speculating that a new deal surge could be on the horizon. That speculation proved to be prescient, as there were 27 M&A transactions in the fourth quarter, bringing the 2023 total biopharma M&A upfront to $128.8 billion.
There is reason to believe that life sciences M&A activity will continue apace. It has been reported that the top 18 pharmaceutical companies have over $500 billion in “firepower” (a metric used to determine a company’s potential capital resources) available to fund transactions compared to $411 billion in October 2020. Given the abundance of biotech companies exploring “strategic alternatives,” significantly increased firepower in the industry, and the high volume of bankruptcy filings, there is promise that 2024 will continue to see an uptick in M&A deals as the “haves” seek to take advantage of the “have-nots.”
In 2023, large pharmaceutical companies focused on pursuing a series of smaller deals or “bolt-ons” rather than “mega” deals valued over $1 billion. In the first half of 2023, M&A sellers mostly consisted of small-cap public biotech companies and private sellers. According to PwC, the proportion of M&A mega deals declined 56% since 2021’s record high, while M&A deals with values less than $1 billion declined only 20%.
Within this trend, we saw a rebound in transactions reminiscent of a bygone era, including the rare “merger of equals” of biotechnology companies, in which two pre-revenue development-stage biotech companies combine their operations to leverage economies of scale and preserve cash. For example, in July, TCR2 Therapeutics and Adaptimmune, both of which developed T-cell-focused drugs and reduced their headcounts to reduce cash burn, announced they would combine into one company for strategic purposes and to extend each company’s cash runway. Similarly, 2023 saw an increase in so-called “reverse mergers,” in which a private biotechnology company that had struggled to complete a conventional IPO instead “goes public” by merging with a dormant public company with cash on its balance sheet and no active development program. For example, Korro Bio merged into the publicly listed Frequency Therapeutics, which had shut down its lead program and laid off about half of its staff. This merger gave Korro access to public markets without undergoing a traditional IPO.
One potential reason for this trend toward smaller deals is a shift in the approach and activity of the Federal Trade Commission (“FTC”). In 2023, the FTC brought two high-profile enforcement actions: one against Amgen’s $28.3 billion acquisition of Horizon Therapeutics and the other against Pfizer’s $43 billion acquisition of Seagen. In both cases, the FTC explored nontraditional theories of harm. The FTC has departed from the traditional theories of competitive overlap to focus on pricing power as a major concern even when overlap is minimal, such as in the Pfizer-Seagen deal. Considering that transacting parties often use precedent to guide dealmaking, the possibility of nontraditional theories of harm has led to more uncertainty.
In addition to increasing enforcement activity, the FTC has proposed changes to the Hart-Scott-Rodino (“HSR”) Premerger Notification Form, which will greatly impact deal pace and compliance efforts. For transactions with a deal value above a certain value threshold, the proposed changes will require companies to produce a much broader spectrum of documents, data, and information than was previously required. It is expected that HSR notifications using the revised form will take four times as long as it used to, turning a weeks-long process into a months-long process.
This trend toward smaller transactions has root causes beyond aggressive FTC scrutiny. Commentators have speculated that smaller deals may be favored because larger companies with extensive operations and operating expenses are more difficult to efficiently integrate without losing shareholder value. To this end, many of the smaller deals completed in the current market involve targets with only pre-commercial products, which often require a less intensive integration effort. While acquiring revenue-generating businesses is still of paramount importance for large pharmaceutical companies, in recent years, acquirors have increased their focus on acquisitions of companies with pre-commercial products in the early/mid-stage of development. These R&D acquisitions augment a large pharmaceutical company’s pipeline through M&A dealmaking, which can prove to be both cheaper, and result in higher quality therapies, than internal R&D efforts.
Another factor contributing to the slight uptick in M&A activity is an increase in companies that have strategically engaged in divestitures. Large pharmaceutical companies have strategically divested assets to free up capital to invest in core focus areas and refinance the development of non-core assets. For example, Merck, Bristol-Myers Squibb, GSK, and Novartis divested their consumer groups in recent years. After completing these divestitures, all four companies completed large acquisitions, as Merck acquired Prometheus for $10.8 billion, Bristol-Myers acquired Karuna Therapeutics for $14 billion, GSK acquired Bellus for $2 billion, and Novartis acquired Chinook for $3.2 billion. In 2023, J&J spun off its consumer group and now has an additional $13.2 billion of capital from the spin-off company’s IPO.
We have also seen increased spin-outs to new companies (“NewCo”) backed by investors. For example, Cyclerion Therapeutics sold its sGC stimulator assets to a NewCo in exchange for cash and equity ownership. Investors in the NewCo agreed to invest $81 million to develop the assets, and Cyclerion received a cash payment at closing and 10% equity ownership in the NewCo. Investors in the NewCo included current Cyclerion shareholders as well as Venrock, J Wood Capital, and Sanofi Ventures. Other companies have announced similar spin-outs. For example, Endonovo agreed to sell their medical device assets to a NewCo to be controlled by Endonovo’s current President and Chief Commercial Officer of its medical division.
Licensing deal volume continued to decline in 2023 from a slow 2022. According to J.P. Morgan, there were 495 R&D partnerships and licensing agreements in 2023, compared to 585 in 2022, 822 in 2021 and 887 in 2020.27 There were only 115 life sciences R&D licensing agreements signed in the third quarter of 2023, the lowest quarter since 2018, according to JP Morgan. This number declined to 108 licensing agreements in the fourth quarter of 2024. The volume of in-license deals in the preclinical, Phase 1, Phase 2 and Phase 3 stages has remained steady, while volume at the platform and discovery stage saw a drop in 2023.
With a down market, depressed valuations, and high interest rates, life sciences companies have been turning to creative dealmaking to obtain capital. One way to do that, while aligning with partners with synergistic capabilities in key markets, is by out-licensing products in split territory deals. These transactions are typically executed after receipt of proof-of-concept data to share the costs of expensive later-stage clinical development. Similarly, biotech companies have pursued out-licenses of non-core assets to extend cash runways.
Another trend in creative dealmaking by biotech companies has been contracting with private equity investors. Typically, health care private equity firms focus on areas of the industry with steady cash flow, like patient care. However, private equity investors have capitalized on the widening gap between available capital for clinical research and the drug candidates competing for funding, resulting in a steady rise in private equity funding in this sector. Private equity investors have shown particular interest in financing R&D when the candidate is in Phase 3 clinical trials in return for upfront payments and success-based payments, typically milestones and royalty payments.
While life sciences companies have been seeking short-term cashflow in 2023, these businesses have also been investing in their future by the increased use of AI. Breakthroughs in large language models, such as GPT-4, are reshaping human-computer interactions and once again catapulting Artificial Intelligence and Machine Learning (“AI/ML”) into the mainstream. The Food and Drug Administration (FDA) published an initial paper on AI/ML in May 2023, noting that AI/ML will undoubtedly play a critical role in drug development, and the FDA plans to develop and adopt a flexible risk-based regulatory framework that promotes innovation and protects patient safety. In 2023, the median upfront cash and equity for AI/ML-based drug discovery licensing deals was double that of 2022, making it comparable to 2021 medians. However, AI deal volume is down, as there were only 30 deals in the first three quarters of 2023 compared to 80 total in 2022, as reported by JP Morgan.
One would expect investment in AI to continue to grow in 2024. In 2022, Morgan Stanley estimated that over the next decade, the use of AI in early-stage drug development could translate into an additional 50 novel therapies worth more than $50 billion in sales. According to a comprehensive report published by the Boston Consulting Group, AI was most frequently applied to understanding diseases and small molecules design and optimization from 2018 to 2022. Design and optimization of vaccines and antibodies have accelerated rapidly, driven in part by research efforts in the context of the COVID-19 pandemic. Use of AI in biologics development is also growing, driven by increasing sophistication of AI technology and algorithms, growing computing power, increasing availability of data, and evolving discovery workflows. Safety and toxicity use cases has also shown budding growth, which may be driven by the lack of publicly available data to train AI models.
A final 2023 trend that is likely to continue is investment in drugs and other treatments for obesity, following on the recent blockbuster success of obesity drugs. Meanwhile, companies are testing obesity drugs for other indications, including Type II diabetes with chronic kidney disease, Alzheimer’s disease, and alcohol addiction. There is a large market opportunity for obesity drugs because patients need them for a long period of time, and the cost of the drug often outweighs the potential cost of long-term health effects of obesity-related diseases. Therefore, increased payor support in addition to increased consumer demand is likely to carry interest in obesity drug development well beyond 2023.
The Effects of the Inflation Reduction Act and Other Regulatory Matters
The Inflation Reduction Act (“IRA”) continues to be very impactful on the biopharmaceutical industry, and a few trends have emerged in response to the IRA. The IRA authorizes the United States Department of Health and Human Services (“HHS”) to negotiate prices for selected drugs that are high-expenditure, single source drugs without generic or biosimilar competition. The first group of drugs was selected for price negotiations in 2023, and the negotiated prices will apply in 2026. The IRA has reportedly had a negative impact on R&D spending and deal valuations, as biopharmaceutical companies must anticipate lower returns for investments in innovative therapies.
Single-indication, rare disease assets are unlikely to be subject to IRA price negotiations, and therefore have attracted the interest of dealmakers. For example, there is a great volume of deal activity surrounding antibody drug conjugates (“ADCs”), which are designed to target a specific type of cancer, as ADCs target specific proteins expressed on specific cancer cells and are not designed to be used across multiple indications. This means they are unlikely to be top-selling drugs that the HHS will eventually select for IRA price negotiations. The number of ADCs in Phase 2 clinical trials has increased in the last few years, and there has already been increased deal activity surrounding ADCs. For example, AbbVie purchased ImmunoGen, a biotech company focused on the development of ADCs, for $10.1 billion. The purchase was the third largest biopharmaceutical M&A transaction announced in 2023, trailing Pfizer’s proposed $43 billion acquisition of Seagen, another big player in the ADC space, and Merck’s $10.8 billion acquisition of Prometheus.
Outside the United States, the European Commission proposed shortening the period of regulatory exclusivity from 10 years to eight years for most medicines. Under the proposal, companies could extend their period of regulatory exclusivity if they market their product in all EU member states, the product is directed to diseases with unmet need, they conduct comparative trials, or they market drugs that treat multiple diseases. Industry participants have protested, emphasizing that the end of the exclusivity is the period of peak sales, and is the only real opportunity to recoup investment in R&D, marketing and sales. Similar to the effect of the IRA, this shortened market exclusivity would likely reduce the amount companies and investors are willing to invest in researching, developing, and commercializing products in Europe. The European Federation of Pharmaceutical Industries and Associations has projected that, if the proposal were to take effect, Europe’s share in global research and development could be reduced by a third by 2040. This decrease would translate to 2 billion euros per year in lost investments.
Conclusion
After the significant downturn in the life sciences industry in 2022, 2023 saw a slow rebound that appears to be accelerating. While high interest rates and other macroeconomic activity seemed to inhibit deal activity through 2023, there are increasing signs of robust M&A and licensing activity heading into 2024. With an improving public equity market for biotechs, and large pharmaceutical companies and VC funds sitting on significant cash and “fire power,” the life sciences industry has the potential to overcome headwinds like the increased FTC scrutiny, the IRA and similar government action designed to curb drug prices, and the persistently high interest rates. While the life sciences industry in 2024 is not expected to return to the exuberance of 2021, there is reason to think there could be significant improvement in dealmaking activity and value creation in 2024 as compared to 2023 and 2022.
Ref: https://www.ropesgray.com/en/insights/alerts/2024/03/life-sciences-2024-dealmaking-trends-and-outlook
7 Indicators Pointing Towards Life Sciences Growth In 2024
The year 2023 was indeed quite a challenging year for the life sciences industry, which was marked by a chilly biotech financing environment, uncertainty when it came to legislative and policy changes, as well as an unpredictable macroeconomic outlook. Yet one also witnessed many advances within cell and gene therapies, the launch of new effective drugs so as to treat patients with obesity, as well as mounting excitement when it comes to the promises of AI in terms of drug discovery as well as clinical development. Looking ahead to 2024, the leaders in the life sciences sector will be looking out for indicators of progress: signs when it comes to advancement across the eco-system that go on to suggest an enhanced as well as sustainable environment in which scientific advances can get translated to patient benefits in a more rapid and effective way. Let us look at some suggestions when it comes to what to look for as indicators of growth for life sciences in 2024.
1. Is there a possibility that the XBI Biotech Index may see a recovery of at least 20% in 2024?
It is well to be noted that in 2023, one witnessed a sustained slump when it comes to investment flows as well as financial market returns ever since the heights of 2020-2021 within the life sciences sector. This happens to be a stark contrast to the scientific breakthroughs along with the promises that have risen from start-ups and more mature firms alike. Although the broader S&P500 index went over to see a rise of almost 25% last year, the SP& Biotech Index XBI elevated less than 10%, and the broader S&P Pharmaceuticals Select Industry Index garnered just 2%. All types of biotech financing, be it venture capital investment, debt financing, as well as the IPOs, happen to be significantly down as compared to their 2020- 2021 levels. This has gone on to place significant stress on start-ups that are in requirement of financing or are looking for certain exit strategies through the public markets.
As one looks ahead to 2024, the big question is whether the XBI biotech index will see a recovery, as this is going to best reflect the support for the crucial discovery as well as the early-stage development of the next wave when it comes to innovative therapies, vaccines, cures, as well as other contributors to individual patient outcomes along with population health. There happen to be positive signals for a continuation of the recovery that went on to begin in late October 2023 because of a number of factors, which included the expected drop in the overall rates of interest, a possible soft landing when it comes to the general economy, a much more promising tech-biopharma partnership, as well as increased M&A activity.
2. M&A activity: Is the growth in M&A activity going to continue and be sustained all through 2024 at a level that’s 30% higher?
It is well to be noted that M&A was not the lifeline in the last year, as many expected, but due to a robust rally toward the end of 2023, the overall activity level for the year happened to be around 30% higher than the 2022 level. The fact is that acquisitions by larger companies having smaller biotechs, as well as mergers of biotechs, were the mainstay of the life sciences spectrum and also critical to maintaining productive portfolios in the case of innovative medicines, speeding up clinical development, and also bringing novel treatments to patients.
But the pressure from the growing interest rates, rising inflation, and concerns when it came to a potential recession, as well as increased scrutiny by the Federal Trade Commission- FTC went on to put a damper on M&A as well as deal-making during most of the last year. This was in spite of lesser valuations for numerous smaller companies, healthy financing capabilities in larger companies, and a requirement for replenishment of pipelines to minimize the impact of growing patent losses. Significantly, Amgen could claim victory when the FTC enabled it to move forward with its $27.8 billion acquisition of Horizon Therapeutics with a settlement agreement in place. There are certain analysts who believe the FTC’s decision goes on to suggest that reviews of other pending pharma deals could go on to pan out favorably for the companies that are involved, in spite of the final resolution as well as the unwinding of the Illumina-Grail merger.
3. The use of new gene therapies: Is it going to be possible that more than 2% of all U.S. patients with sickle cell disease get access to treatment with new, approved cell-based gene therapies?A bright spot when it comes to the life sciences sector happens to be the continued evolution of cell and gene therapies. It is well to be noted that CRISPR-Cas-9 editing has shown promise for treatment when it comes to sickle cell disease, as per the recent studies. On December 8, last year, the U.S. FDA went om to give its approval to two milestone treatments, which were Casgevy as well as Lyfgenia, the first cell-based gene therapies in case of the treatment of sickle cell disease in patients who were 12 years of age and older.
But the treatment of sickle cell disease with gene therapy happens to be highly complex as well as very costly. Although the therapy may be pretty effective when it comes to clinical trials, offering that promise to patients when it comes to the real-world settings may go on to face quite significant challenges. Sickle cell disease mostly affects a susceptible and underserved population having a limited and fragile access to sustained as well as quality healthcare. There are almost 100,000 people in the USA that are affected due to sickle cell disease, and there happen to be special racial and ethnic issues when addressing the disease, its aspects, as well as related comorbidities. In addition, the infrastructure that is required so as to deliver this therapy happens to be extremely specialized and is at present available at very few centers, especially at the bone marrow treatment centers that have sickle cell expertise.
Access when it comes to cell and gene therapy happens to be a critically significant challenge. There are numerous patients with sickle cell disease, including minority children in families, who are covered by Medicaid. However, a recent analysis done by the Alliance for Regenerative Medicine happened to find many hurdles when it came to accessing at the state level for cell and gene therapies in patients as well as providers, given the dearth of state resources as well as policies in this emerging field of medicine. States mostly do not have a formal Medicaid coverage policy in terms of the availability of cell and gene therapy products in the state, thereby delaying patient access while the manufacturer as well as the state adjudicate coverage. Moreover, several sickle cell patients happen to be so advanced in their disease that gene therapy is clinically not warranted.
It is well to be noted that the FDA approval when it comes to the first cell-based gene therapies in terms of sickle cell disease goes on to represent a phenomenal breakthrough for patients suffering from this rare disease. Being the first approved medicine in the U.S. to make use of CRISPR gene-editing technology, this nod may also go on to hold exciting promises when it comes to other diseases. For the life sciences industry, these novel treatments go on to offer a test case for the pace with which revolutionary treatments go on to reach the patients who will benefit from them. In this regard, tracking the number of patients in the sickle cell population who will get access to the CRISPR technology as well as achieve the advantages of the therapy in the first year will happen to be a marker of growth.
4. Reimbursement when it comes to transformative drugs: Will broader reimbursement of novel breakthrough drugs for the treatment when it comes to obesity bring a growing patient access?
2023 went on to see a dramatic rise in the novel diabetes drug GIP as well as the GLP-1 receptor agonists when it came to weight loss therapy. The nod along with the launch of novel medications for the treatment of obesity happens to be an inflection point when it comes to rethinking the safeguard as well as the treatment of obesity as an intricate, heterogenous, chronic multidisease that’s associated with other critical health conditions. The field happens to be very competitive, with over 143 new molecules in active clinical development as well as more than eight global pharmaceutical companies working with their versions of GLP-1’s and GIP receptors, such as oral formulations that will go on to replace the injectable route of administration. A minimum of six large clinical trials on obesity drugs are anticipated to have results reported in the coming 12 months.
Payers as well as employers happen to be concerned when it comes to the potential for increased costs due to the demand for these novel obesity treatments. Employers in the U.S. anticipate the biggest ever jump in healthcare costs in a decade, as per Mercer, Aon, and Willis Towers Watson, the healthcare benefits consultants who happen to be seeing employer healthcare costs between 5.4% and 8.5% this year. While the surge in costs is explained by numerous factors, employers as well as their benefits consultants point to the rising demand for expensive obesity treatment drugs as well as the wider availability of high-priced gene therapies. Of the forecasted 8.5% surge in employer healthcare costs in 2024, Aon expects that the 1% increase in costs happens to be coming from drugs for obesity treatment only.
Some payers, such as Medicare, do not go on to reimburse drugs when it comes to the treatment of weight loss, but the growing body of evidence in terms of outcomes benefits from the use of GLP-1’s for the treatment of obesity is going to potentially lead to a law revision that doesn’t allow Medicare from reimbursing weight loss drugs. In a recent study that happened to be published in the New England Journal of Medicine, a leading GLP-1 drug, semaglutide, was found to slash the rate of heart attacks by 28% in patients who happen to be already taking statins and other medications in order to prevent heart problems. The drug also decreases the rate of cardiovascular-related deaths by 15% and strokes by 7%.
5. AI adoption when it comes to life sciences innovation: Will a minimum of 30 drug candidates with AI platforms go on to advance in clinical development?
The explosive focus on AI also happened to impact the healthcare eco-system, with revived predictions that AI will go on to revolutionize healthcare delivery along with life sciences R&D.
AI will undoubtedly have a significant and growing role when it comes to life sciences R&D, innovation of the product, and commercialization, but the evidence of a positive effect at scale on life sciences still happens to be in its infancy. Moreover, as more research happens to be conducted and the opportunities and challenges are better gauged, numerous challenges are growing to the top of the discussion, such as the issues around cultural as well as racial bias when it comes to the development and deployment of algorithms, issues when it comes to algorithmic hallucinations, and general concerns in terms of the safety of AI in terms of therapeutic interventions.
The positive evidence when it comes to the value of AI and machine learning has been most convincingly given in diagnostic medicine, especially where machine learning happens to be superior to the clinician in performing screening of huge amounts of visual imaging datasets when it comes to ophthalmology, dermatology, as well as pathology.
For the life sciences sector, there happens to be emerging evidence in terms of the value of AI in terms of clinical development, specifically when it comes to enhancing operational efficiencies with regards to study design site identification as well as patient recruitment, clinical monitoring, pharmacovigilance, and patient care.
But there are also some dominant barriers to broader adoption when it comes to AI in drug discovery as well as in development concerning key factors like understanding the biology of disease, issues when it comes to data quality, AI tool challenges like bias in algorithms, along with the dearth of capabilities in making use of AI.
As of date, no new drug has gone on to get developed and approved on the basis of fully AI-generated drug discovery, but the pipeline of drugs when it comes to development with AI-associated platforms happens to be growing. In 2023, a minimum of 19 drugs happened to be in clinical development attributed to AI, and a few of these drug candidates may very well be advancing within the clinical pipeline in 2024.
6. Bipartisan legislation: Will the average patient out-of-pocket drug cost per retail prescription be reduced by more than 10%?
The 2024 presidential election may as well be the first since 2008 when it comes to healthcare reform as well as the Affordable Care Act- ACA. As one can anticipate pretty close election results, probably with politically divided executive as well as legislative branches and the full execution and implications of the IRA of 2022 still building up, further major health policy changes may appear to be unlikely.
Rather, significant legislation should be anticipated with regards to pharmacy benefits management, where there is a broad bipartisan agreement in place. The legislation, which goes on to have several different proposals, will impact how pharmacy benefit managers- PBMs negotiate price discounts along with drug manufacturers. The intent of the legislation is to shed light when it comes to complex pharmaceutical supply chains as well as the role that PBMs go on to play as intermediaries when it comes to drug manufacturers and patients. The hope remains that drug prices will be lowered by increasing transparency, passing on the discounts to plan sponsors as well as/or patients, and reducing out-of-pocket costs when it comes to beneficiaries, as prices will get tied to net prices instead of list prices.The success of PBM legislation will go on to be evaluated on the basis of whether it decreases drug prices for patients, as increased transparency in as well as of itself does not lead to an enhancement in the supply of drugs to patients. Apparently, in 2022, the average final cost per retail prescription happened to be $9.38, whereas 1.9% of all patients went on to pay over $1,500 out-of-pocket for their prescriptions. Uninsured patients paying cash for a branded drug spent an average of almost $88.71 per prescription.
7. Disruptors in delivery when it comes to primary care: Will more than 30% of primary care physicians be employed by corporate entities by the end of 2024?
The primary care landscape, which goes on to account for almost $260 billion in yearly healthcare spending, happens to be ripe for transformation, pushed by the progress of direct-to-consumer telehealth and vertical integration when it comes to the retail healthcare sector, as well as the rise of payviders, which happen to be integrated financing as well as delivery systems. It is well to be noted that traditional offerors happen to be under pressure from the new disruptors such as Amazon, CVS Health, Aetna, UnitedHealth Group/Optum, Humana, the Walgreens Boots Alliance, as well as Walmart, and also tech companies like Apple and Google/Alphabet, which have all staked their claim when it comes to primary care and happen to be making use of their platforms in order to expand their services. As part of this particular shift, the number of primary care physicians who were employed by corporate entities is indeed increasing, from July 2020 to January 2022. The percentage of physicians employed by corporate entities has gone on to grow from 15.3% to 21.8%.
There are certain health insurers that happen to be expanding into home care services, helped by advances when it comes to digital health as well as logistics technology, as the main element when it comes to transforming the delivery of care. By combining home health, pharmacy, as well as primary care services, the companies take up the home as a more convenient setting when it comes to individuals, which potentially can go on to lower costs as well as offer a powerful touchpoint in order to gauge as well as manage the holistic health in case of an individual. This also reflects a common belief that home health can very well be the next frontier in the value-based medicine evolution.
While nobody will be able to forecast what will happen to the life sciences vertical in 2024, these seven areas may go on to offer useful signals to the sector. It is very important that life sciences leaders go for innovation, not just when it comes to R&D along the product level but throughout the entire life sciences enterprise, and also discover new business models, collaborations as well as partnerships.
It may not come as a surprise that important events and issues will most likely occur that are not addressed above, but the more the life sciences industry is well prepared for tackling the trickiest known issues, the better the industry is prepared so as to navigate the unknown issues.
Ref: https://www.worldpharmatoday.com/news/7-indicators-pointing-towards-life-sciences-growth-in-2024/