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VideoKPMG 2024’s Biopharma Strategy Outlook Report
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KPMG recently released their 2024 biopharma report detailing the state of the industry, market conditions in 2024 and trends to help pharmaceutical leaders shape business and operational strategies in the future. Within the report, KPMG identifies several areas of note, both when it comes to existing and potential challenges and opportunities.
Biopharma Industry Challenges
The report outlined several challenges facing the modern pharmaceutical industry in 2024 and beyond. Some of the key issues noted in the report include the following:
- Discounted prices: The Inflation Reduction Act (IRA) is set to reduce drug prices starting in 2026. Some of the first negotiated price discounts concern top “blockbuster” drugs — defined as drugs with $1 billion or more in revenues.
- Patent losses: Approximately $59 billion in sales will be at risk in the coming years as some 190 drugs will lose their patent exclusivity by 2030. Of those 190 drugs, 69 of them are considered blockbusters.
- Increased competition: Around 300 “junk” patents, some of which are connected to top blockbuster drugs, are set to be challenged by the Federal Trade Commission (FTC). The result could be an increase in generic competition, prompting pharmaceutical companies to seek new revenue sources.
- Higher interest rates: The previous low-interest market of years past was a driving factor in funding early-stage biotechs and innovation. Now that higher interest rates are a reality for the biopharma industry, this will inevitably manifest as a higher cost for executing deals and bankrolling future innovations.
- Lower growth rates: The environment for active available drugs has contracted. Consequently, growth rates for the global pharmaceutical pipeline have trended towards growth rates in the low single digits.
- Limited deal flexibility: The FTC will continue to scrutinize the biopharma industry to prevent perceived monopolistic practices. This could limit or restrict the parameters of certain deals, potentially leading to increased prices and restricted patient access.
Biopharma Industry Opportunities
Conversely, the report also outlined a few of the potential opportunities the biopharma industry could enjoy, given certain economic factors, resource allocations and proper levels of effort. They include:
- A drop in interest rates: Lower interest rates could be on the horizon, which could lead to a lowering of capital costs. This could, in theory, enable larger entities to explore a wider array of deals. While key indicators suggest that an interest rate reduction is coming, it is by no means assured.
- Cutting-edge treatments: Both precision medicine and advanced therapeutic deals have been important areas of focus for the pharmaceutical industry, and the opportunities they represent are likely to continue into the future. The report states, however, that, while 2023 saw 30% of deals representing these categories, the first six months of 2024 saw these deals account for only 19% of the whole.
If you need assistance in navigating the quickly shifting landscape of modern biopharma, contact Weaver today. Our knowledgeable professionals can help set you and your business on the right course for future success.
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