Sherri's State of the Industry Address

Good afternoon, Network.?

As we are now officially into the second half of the year, I thought I would share with you some thoughts and insights on what I am seeing and hearing about the second half of the year for our industry. It's a long blog, but informational.?

RECESSION PROOF?

·??????First, the pharma industry is still said to have a recession-proof business model, simply because people do not choose when they get sick.

·??????The average person in the U.S. spends around 3.67% of their personal income on prescription drugs per year.?

·??????It is expected that globally, people will exceed USD $1.5 trillion in spending on medicine!

·??????We are fortunate we are in the industry we serve.

INDUSTRIES CURRENTLY BEING HIT THE HARDEST

Those that are less fortunate in 2023:

·??????real estate

·??????construction

·??????manufacturing

·??????retail

·??????leisure and hospitality

CHALLENGES WE ARE FACING IN PHARMA/BIOTECH/DEVICE

That’s not to say that pharma/biotech/med device will not or has not faced any challenges in 2023. We have and we will.?

Our challenges?

·??????high inflation

·??????talent shortages

·??????rising capital costs

·??????pressures on consumer spending

·??????challenging foreign exchange impacts

·??????the Inflation Reduction Act

·??????lack of funding

·??????and ongoing FTC scrutiny of transactions?

FUNDING

Let’s talk about funding a bit. Investors are steering funding towards high-quality companies and assets. Companies seeking funding need to have a solid business plan, a strategic vision, and a proven innovation (this is the hardest part).?The digital landscape will remain hot. Investments will be targeted at technologies that have a proven impact and that can be scaled. Funding rounds will be smaller from what we saw over the past couple of years. Start-ups need more reasoned expectations and will need to pursue multiple rounds of funding to support their efforts.?

TECHNOLOGY – MACHINE LEARNING & ARTICIAL INTELLIGENCE

Technology will be used to advance care delivery and drug development. Pharma companies have tapped into machine learning and artificial intelligence to improve their understanding of biology and disease states and to design more targeted therapies. Using AI in R&D can also speed up the time it takes to get drugs into clinical trials. Plus, AI and analytics will also enable clinicians to be more efficient and drive better patient outcomes.??

VIRTUAL HEALTHCARE MAKING A COMEBACK

Virtual HealthCare visits will also be a thing this year. While it was big during COVID, it has cooled off somewhat, but the tools offer greater convenience and allow greater efficiencies. Consumers have also come to expect the option of virtual visits in addition to in-person visits. Telehealth will be resurrected.?

AREAS OF EXPANSION FOR 2023

Areas expected to expand this year:?

·??????cell therapy

·??????gene therapy

·??????neurology

·??????obesity

·??????oncology

·??????Alzheimer’s

·??????biosimilars

·??????artificial intelligence

·??????machine learning

·??????market access roles

·??????customer experience roles

·??????digital transformation

AREAS EXPECTED TO DECLINE THIS YEAR

Area expected to drop off this year:?

·??????infectious disease (back to pre-COVID levels)

·??????funding

ALZHEIMER’S

Another area to watch this year is Alzheimer’s. Alzheimer’s costs to healthcare worldwide is a staggering $1.3 billion in direct and indirect costs in 2019, according to the World Health Organization. It is expected to balloon as high as $2.8 billion by 2030 due to the number of people living with dementia as well as higher healthcare costs.?

VALUE-BASED CONTRACTING

Other areas of impact this year include Value-Based Contracting.?Payers and Providers have faced a slow and inconsistent history with value-based contracting, but at this point, there aren’t many other levers to pull as a means of addressing cost and utilization. You can expect to see more of this to start taking place, as well as preferred provider relationships using their existing networks in a different way, i.e., new referral patients within a specialty, entering a joint venture around a specific service line or technology, and creating a differentiated patient experience. Considerable growth will also continue in Medicare Advantage as beneficiaries move out of fee-for-service Medicare.?

New and innovative contracting models should also start showing up in pharmaceuticals. Some companies have tried implementing these models previously, but it’s not really caught on or been very successful.?Companies will continue to look for ways to minimize risk and get therapies to patients.?

THE INFLATION REDUCTION ACT

The legislative changes allowing Medicare to negotiate prices of certain drugs (beginning in 2026 for Part D and 2028 for Part B) have biopharma facing an uncertain financial year ahead but hasn’t dimmed their optimism, and positive developments are on the way that could affect a wide range of therapeutic areas.?

BIOSIMILARS

Reports indicate that the market for biosimilar drugs to treat cancer, inflammatory diseases, diabetes and more will continue to expand, resulting in lower prices as more pharma patents expire and competitors hit the market. The FDA approved 8 adalimumab biosimilars (Humira), with most expected to launch within a year, and 20 biosimilar versions of other branded products since 2015, across a range of categories.?

MERGERS & ACQUISITIONS TO PICK UP

I think we will also see a surge of M&A activities in the second half of the year. New rules in the US and other countries will force pharma companies to develop new pricing strategies and adjust their budget allocations.?

THE JOB MARKET

Lastly, the job market. As most of you are aware, this year has been a drier job market in our space than we have seen over recent years. I think for us it’s been a combination of the Inflation Reduction Act and companies waiting to see what happens with it, the rising interest rates (making it hard for some people to relocate), lack of funding, etc. Hopefully the worst of it is over and we will start to see improvement.?

If you have any recruitment needs, please reach out to me. I’m happy to help.

Sherri Kemp

[email protected]

972-668-9871