How to embrace the uncertainty of geopolitical developments in health sciences and wellness

Today’s major current geopolitical developments are impacting the healthcare ecosystem in all kinds of ways. However, in my opinion, the main topics highlighted in the EY 2023 Geostrategic Outlook report are compounding pre-existing issues within the sector.

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Take pharmaceutical production, for example, which often begins in low salary countries like India of China. The products need to be shipped to multiple countries, but the pandemic disrupted the supply chain to such an extent that important medicines weren’t reaching their intended destinations. The result? Medicine and medical device shortages.

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This turbulence within the global eco-system has been deepened by the emergence of the China-Western decoupling (China has introduced a rigorous price policy for import products; in some areas products are sold for 80% lower, a number which i have heard from a CEO of a big Pharma. It’s also been exaggerated by the war in Ukraine due to fractured international relationships and supply chain breakdown. Broadening sanctions are set to extend the impact across operations, services, and products over the coming months.

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Meanwhile, an increasingly fragmented global economy is leading to more restrictive regulatory environments —?hampering the way we secure, share and use patient data to provide better care. In fact, restrictive regulatory, trade and investment policies have supplanted ongoing COVID-19-related issues as the key reason for altering international investment plans, as indicated by 28% of all respondents of our CEO Outlook Pulse study.

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Becoming more self-sufficient

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As companies face greater supply chain disruptions, structurally higher prices, and continue to operate within increasingly “unfriendly” foreign markets, my first recommendation to European life science and healthcare companies is to try and become more self-reliant wherever possible. This may not always be easy, but it’s a good way to increase resilience within a volatile world:

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-??????Can you afford to develop your own products in high salary countries?

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The biggest lesson from the global COVID-19 pandemic is that regions or even countries must become more self-reliant. People have to have access to affordable medicines independent from global disruptions. For pharma companies, this means investments in highly efficient country operations, close to the market. Governments are required to attract these investments with tax releases and payers need to incentivice this efforts. Only if the health care ecosystem is collaborating on this common goal it will happen. As a side effect it will also improve the carbon footprint of the industry.

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There’s a focus on self-sufficiency at a company level that’s ahead of those within other industries – and I believe that’s a good thing. Yes, it’s true that resource costs can be higher, but self-reliancy can help to combat many of the known medical and pharmaceutical supply problems in the world today.

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-??????Work within supportive regions

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It’s important for European health care organizations to reduce reliance on traditional supply chains. Looking toward regions where there are better conditions in terms of funding, support, and access to resources is recomendable. Which countries are developing their economies? Thorough assessment of the ones that provide the prerequisites to grow is key for success.

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-??????Look for markets that allow data transfer

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With respect to life sciences, the regulatory landscape is heavily focused on regulations, guidelines and policies impacting pre-market submissions and commercial launch approvals for drugs and medical devices. At the same time, we see upcoming regulations impacting how clinical trials are being conducted in the EU.

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A powerful example is coming from the pharma and biotech sector, where companies are reimaging cancer care with personalized, cell-based treatments today. However, transferring post development data from patients back to suppliers and insurance companies is proving to be difficult but a necessary pre-requisite to determine wether patients achieve the promised outcome or not.

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Health care companies therefore prefer to research in legislations that encourage and support data transfer –?even if that means moving away from traditional locations.

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Despite the need for greater self-reliancy, it must be clear that there’s no need for health care organizations to totally face the challenges on their own. Collaboration is not only important but vital to create a competitive edge and succeed in today’s challenging environment.

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Where once, “big pharma” saw a handful of organizations delivering about 90% of the world’s medicines, the situation is now being turned on its head. Small and agile companies are overtaking established enterprises in terms of revenue in a matter of few years because of their use of technology and their collaborative approach to innovation –?and it’s crucial that we’re aware of this.

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Let’s continue the conversation

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My reflection on today’s geostrategic developments and how they are affecting European health care organizations is part of a series of articles, where six fellow industry leaders also reflect their own industries. My colleagues Axel Preiss and Cédric Foray already published their insights. If you’ve found these insights on geostrategic challenges useful, then watch also back our recent webcast Embracing Uncertainty: No regret actions for C-level executives.

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If you have any questions about any of the points raised here or want to share your own reflections, please reach out – it’d be great to hear your thoughts.

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The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.