Outlook for the global life sciences sector in 2024

Global drug spending is rising with a shift toward expensive specialty drugs. Governments are implementing price controls to manage costs, raising concerns about reduced investment in research and development in the pharmaceutical sector. The US Inflation Reduction Act (IRA) allows Medicare to negotiate drug prices, which could impact innovation around the world. Governments are exploring alternative models to ensure all patients have access to essential therapies, while supporting innovation for truly novel medicines.

Key takeaways:

Rising costs and changing spending patterns: Global drug spending is accelerating, driven by both population growth and growing demand for expensive specialty drugs

Global push for affordability through price controls: Affordability concerns are prompting governments around the world to impose tight controls on drug prices.

US price cuts raise innovation concerns: U.S. drug price negotiations raise concerns about a potential decline in research and development investment from pharmaceutical companies struggling with lower profits. Some say this could stifle innovation, others point out that R&D spending is not tied solely to the number of new drugs and may even encourage a focus on truly novel discoveries rather than incremental improvements.

Finding the balance: Affordability, innovation and patient access: Pharmaceutical companies face the challenge of developing strategies to ensure product profitability while maintaining price constraints. The government should address issues such as the high costs of developing treatments for rare diseases and streamline the lengthy drug approval process.

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