Challenges facing the pharmaceutical industry and expectations for the year

The pharmaceutical industry grappled with significant challenges in 2022 and 2023, including post-pandemic market corrections and macroeconomic pressures, resulting in one of its worst performances in decades. Capital raising became arduous, impacting transactional activity across the board.

As we enter 2024, the industry faces unprecedented challenges amidst high market volatility driven by capital dynamics, geopolitical issues, inflation, and economic uncertainties. Key concerns include talent competition, politicization of drug pricing, health-related litigation, diversified clinical trials, carbon footprint, and the growing pressure for environmental, social, and governance (ESG) commitments.

However, despite these hurdles, optimism pervades the industry for 2024, with a focus on transactions, innovative therapies, partnerships, and resilience through contractual mechanisms. Success in navigating these challenges will require adept maneuvering in the dynamic landscape ahead.

Major pharmaceutical companies are also doubling down on research and development efforts, particularly to counter the loss of market share due to expiring patents. Oncology remains the most active area for clinical trials, followed closely by gene therapies, orphan drugs for rare diseases, and treatments for obesity.

Moreover, innovations in in vivo therapies are anticipated to undergo testing, primarily for cancer and autoimmune diseases.

Spin-offs have been notable, with companies divesting consumer health divisions to streamline operations.

Partnerships, licensing agreements, and divestments are seen as promising investment strategies, while attention to contractual mechanisms in supply networks has heightened due to recent disruptions and shortages.

On the regulatory front, efforts in Brazil focus on drug pricing and preventing anticompetitive practices. Globally, there has been a push for equitable access to technological advancements and enhanced patient data confidentiality and security.

The themes of Technology, Artificial Intelligence (AI), and Digital Transformation are also set to maintain their prominence throughout 2024. This sustained focus reflects the industry’s trajectory and anticipates continued trends, with significant investments expected to flow into these sectors.

The healthcare landscape has undergone profound transformation thanks to innovative technologies such as personalized medicine, health virtual assistants or BOTs, digital twins, and the integration of the Internet of Things (IoT) into wearable devices and telemedicine. Particularly noteworthy is the revolutionary impact of 3D printing technology, which has revolutionized medical tool production and facilitated organ fabrication, highlighting the breadth of ongoing digital innovations.

AI is poised to be at a critical line in shaping healthcare trends, with the rise of generative AI expected to have a substantial impact in 2024. This relies on the fact that this form of AI promises to democratize access to various applications, streamline implementation processes, and provide personalized recommendations while ensuring patient privacy through synthetic data for medical algorithm training.

However, the global emergence of AI, including generative AI, brings with it both opportunities and challenges, particularly regarding patient data confidentiality, privacy, and security, so ensuring equitable access to technological advancements is essential to prevent disparities in medical care and treatment access.

The good news is that regulatory efforts are evolving worldwide to address the rapid pace of technological advancement. In Brazil, for example, legislation such as the Artificial Intelligence Legal Framework Bill aims to establish comprehensive standards for AI deployment, emphasizing individual rights and risk mitigation.

Regulatory bodies like Anvisa are actively integrating AI into their activities to enhance regulatory processes and safeguard public health. Indeed, Anvisa has been proactively working to enhance the reputation of the Brazilian regulatory environment globally, participating in bilateral, regional, and multilateral forums to promote regulatory harmonization and convergence. By endorsing the concept of “regulatory convergence,” Anvisa has positioned itself as a leading authority in global drug regulation, with its technical expertise playing a pivotal role in advancing global initiatives.

As the industry navigates these changes, adaptation, strategic partnerships, and regulatory compliance will be critical for driving innovation and ensuring the development of safer and more effective products.

Lastly, but certainly not least, it is essential to highlight the growing influence of China on the global stage, especially within the life sciences and healthcare sectors. As the balance of power shifts towards China from Europe, driven by sustained double-digit growth rates in the pharmaceutical market and substantial domestic Research and Development (R&D) efforts, China emerges as a significant player. With an impressive 12.9% Compound Annual Growth Rate (CAGR) in R&D spending, China is poised to surpass Europe’s expenditure within the next decade or possibly even sooner, according to some indicators.

Notable examples that underscores China’s appeal to global pharmaceutical players include AstraZeneca’s $1.2 billion acquisition plan for a Chinese cell therapy biotech company and Bayer’s and RTW Investments’ equity investment in a clinical-stage Chinese company. These deals highlight the attractiveness of China as a strategic market for pharmaceutical companies seeking growth opportunities. Collaborating with China could unlock significant opportunities for growth in Brazil, paving the way for mutually beneficial partnerships in the future.

 

For further information, don’t hesitate to reach out to our team.

Bruna B. Rocha, Partner, Life Sciences, Healthcare, Cannabis

> bruna.rocha@cmalaw.com

Juliana Marcondes de Souza, Associate, Life Sciences, Healthcare, Cannabis

> juliana.marcondes@cmalaw.com

Victoria Cristofaro Martins Leite, Associate, Life Sciences, Healthcare, Cannabis

> victoria.cristofaro@cmalaw.com