Three trends to look out for in 2023

Budgetary pressures

Switzerland is home to many manufacturers of key ingredients and the post-pandemic budget cutbacks from many major nations has meant that prices of medicines, generics in particular, has not recovered to levels deemed sustainable in the long run.

While Switzerland has largely avoided the surges in energy prices and ongoing global inflation, they are nevertheless affected by the wave of budget constraints from trading partners and the continuing downwards pressure on prices. This has already led to portfolio reshuffling, and the worry here is that when a company drops an unprofitable molecule off their portfolio, it may never return.

There are some opportunities to be found, such as the price constraints set by the Inflation Reduction Act in the US look to bring the relative attractiveness of Europe up a notch, and as Switzerland’s largest trading partner, this is a positive sign for further inward investment into Swiss pharma in 2023.

Bandwidth stress

Global healthcare systems will continue to be stretched in 2023, limiting the opportunity for engagement between pharmaceutical companies and healthcare professionals. IQVIA data shows that since the pandemic, engagement swung wildly between face-to-face and virtual channels, settling with more virtual engagement than before the pandemic across most major countries.

The war for healthcare professional's attention will become even harder in 2023 as healthcare professionals deal with fragile systems, respiratory infections, and COVID aftermath. Pharmaceutical companies must unlearn their old lessons where frequency and face-to-face where key and focus on the quality of meaningful interactions when a healthcare professional’s attention is fully engaged. In this context, the channel for engagement, although still relevant, is less important than the healthcare professional’s need and the way in which that is met.

Biotech funding recovers slowly

After a record-breaking run in 2020 and 2021, biotech financing took a hit in 2022, plummeting from its previous heights. But let's not forget, the previous years were not the norm. They were an anomaly, with an influx of cash pouring into the industry following on from the pandemic. From a longer-term view, 2022 has simply restored balance to the biotech financing landscape.

The Swiss biotech industry is expected to climb in 2023, but it will be a slow process. Market volatility, inflation and raised interest rates will make investors cautious. Despite large pharmaceutical companies holding extraordinary cash piles and well-funded venture capital, IPOs are predicted to remain subdued and M&A activity low.

The biotech deals to keep an eye out on will be on either end of the risk spectrum, at the low-risk end acquisitions for de-risked, late-stage assets will keep cash-flow alive and on the high-risk end, partnerships focused on pre-clinical assets giving pharma exposure to novel platforms and future opportunities.

This has article has been adapted for Switzerland from the 9 for 2023 series, released in a three-part series every week, the first of which can be read here.