Top 10 Pharma Trends: What's on the Horizon for 2020?

By Patricia Van Arnum - DCAT Editorial Director

December 11, 2019

What key trends or issues emerged in 2019 that are positioned to be on the industry’s radar in 2020? DCAT Value Chain Insights provides a Top 10 ranking.

Top 10 Developments from 2019 for the Industry Radar in 2020

1. Drug-pricing reform in the US. Drug pricing is on the top of the policy agenda in the US as healthcare reform is one of the leading issues for the US Presidential election in 2020. Drug pricing factors into that debate, and there already have been several legislative proposals to address ways to lower the cost of prescription drugs in the US. Suggested reforms to date have included a system of linking US drug pricing to international drug pricing for certain drugs, penalties imposed on drug manufacturers for not entering into negotiations with the US federal government on drug pricing for a specified number of drugs annually, and a proposal to establish a US federal agency overseeing drug pricing. What will emerge from these policy debates from a myriad of stakeholders, including the pharmaceutical industry, is not yet known, but it will certainly be a key issue for 2020.

2. New leadership at the FDA and EMA. Also important to the pharmaceutical industry on a policy level in 2020 will be new leadership at both the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) and what changes, if any, may be forthcoming in the policy direction of those two agencies.

In the US, the US Senate is expected to confirm the nomination of Dr. Stephen Hahn, Chief Medical Executive at the University of Texas MD Anderson Cancer Center in Houston, Texas and Professor in the Department of Radiation Oncology, Division of Radiation Oncology at MD Anderson. Dr. Hahn was nominated by President Donald Trump and the US Senate Committee on Health, Education, Labor & Pensions voted in favor of his confirmation; his confirmation now goes to the full Senate in a vote. If confirmed, Dr. Hahn would succeed FDA Acting Commissioner Dr. Norman Sharpless, who served from April 5, 2019 to November 1, 2019, following FDA Commissioner Scott Gottlieb stepping down from his post earlier in 2019.

At the same time, the EMA is moving forward with plans to find a new Executive Director. The EMA issued a vacancy notice with the Official Journal of the European Union earlier this year (May 2019) for the position of Executive Director as the term of the current EMA Executive Director, Guido Rasi, is set to come to an end in November 2020. The new Executive Director will be the fourth in EMA’s history. Rasi has served two five-year terms as the EMA’s leader from 2011 to 2014 and will be completing his second five-year term in November 2020.

3. Global pharmaceutical trade: Implications of Brexit. The pharmaceutical industry, along with other industries and the world at large, are awaiting for a decision if and how the UK would exit the European Union (EU) (i.e., Brexit). Any trade/customs agreement as part of a negotiated deal between the UK and the EU for the UK’s exit from the EU would impact the flow of pharmaceutical products and ingredients between the UK and EU, so the pharmaceutical industry is waiting to see how supply lines and requirements may be changed or not. UK Prime Minister Boris Johnson negotiated a new Brexit deal with the EU after taking over as Prime Minister from former Prime Minister Theresa May, who resigned in 2019 following several unsuccessful attempts to gain approval by the UK Parliament of her negotiated Brexit deal with the EU. Now Johnson faces the same issue as he awaits a general election on December 12, 2019, designed as a vote of confidence and signal of support for his Brexit deal. The outcome of the general election will be a crucial test on how Brexit proceeds or not and whether the UK would exit the EU with a deal or not.

An additional complication for the UK relates to the World Trade Organization (WTO), which beginning on December 11, 2019, will no longer adjudicate  trade disputes due to a delay in the appointment of judges in the trade body. Countries or trade blocs that have not negotiated bilateral trade deals containing dispute-resolution mechanisms, therefore, will have no independent means for resolving their problems with each other. The UK faces a deadline of January 31,2020 to reach a deal with the EU that is approved also by the UK Parliament for the UK to withdraw from the EU. Part of that agreement entails a 11-month transition period during which the UK would temporarily remain in the single market and the EU customs agreement. UK Prime Minister Boris Johnson’s position is that the UK and the EU will negotiate a trade agreement during that 11-month transition period.The UK and the EU have between the withdrawal date and December 31 2020 (the end of the transition period) to negotiate and ratify the full agreement on their future relationship, which should govern a vast range of areas, including trade. If an UK-EU trade deal has not been reached after the 11-month transition period, however, neither party would have recourse to an enforceable settlement mechanism for trade disputes.  A result of that would be that the UK would be trading with the EU on WTO terms, including the imposition of tariffs and quotas, from January 2021.

4. Global pharmaceutical trade: China. Trade talks with China represent another geopolitical concern with potential implications for the pharmaceutical industry. While the bio/pharma industry has largely not been targeted with tariffs or other trade barriers in recent trade actions, the industry potentially has risk because of its broad global network of manufacturing sites and suppliers. An upcoming date of importance for trade negotiations between the US and China is December 15, when US tariffs are set to rise, and as the two sides work to avoid that increase in a Phase-One deal that would guarantee China’s purchases of US agricultural goods and exactly which tariffs to roll back under a new deal.

5. Drug-manufacturing quality. One of the important news stories that surfaced in 2018 and that continued in 2019 was increased focus on drug-manufacturing quality relating to company recalls and investigations by the FDA and the EMA into nitrosamine impurities into certain active pharmaceutical ingredients (APIs), most notably “sartan”-containing APIs, used in anti-hypertensive and cardiovascular drugs, such as valsartan candesartan, irbesartan, losartan, and Olmesartan, and later into prescription and over-the-counter forms of ranitidine, a H2 (histamine-2) blocker used to decrease the amount of acid created by the stomach. Earlier this month (December 2019), the FDA also began investigating the potential of nitrosamine impurities in the diabetes drug metformin. These investigations raise issues whether other drugs will become subject to further examination and how regulatory agencies will further update or refine impurity testing for chemically produced APIs.

6. Pharma innovation. The number of new molecular entities approved by the FDA is an important barometer of pharmaceutical innovation. In 2018, the FDA approved a record 59 NMEs, surpassing the previous record of 53 NME approvals in 1996 and the 46 NMEs approved in 2017. Thus far in 2019 (as of the end of November 2019), the FDA has approved 41 NMEs. So what will 2020 hold?

7.New business models in healthcare delivery. Market solutions to reduce healthcare costs to achieve a competitive advantage will continue to be an issue of note in 2020. The industry has already seen recent mega mergers and the rollout of new companies consolidating pharmacy and insurance companies, such the $69-billion merger of CVS Health Corporation (CVS), the largest retail pharmacy chain in the US, and Aetna, the third-largest health-insurance company in the US, and the $52-billion acquisition of Express Scripts, a pharmacy benefit manager, by Cigna, a health insurer, two deals completed in 2018. As those companies integrated operations designed to improve healthcare delivery, the jury is still out whether such market activity will achieve goals of improved costs, including for pharmaceuticals.

8. Changing fortunes of US generics market. Always a cost-competitive market, the generics market, particularly the US market, has seen recent restructuring due to product and cost pressures and a key issue going forward for 2020 is how the market will shape out in 2020. One new player will be the combination of Mylan and Pfizer’s off-patent and generic drug business (Upjohn), a deal announced in 2019 and expected to close in 2020 as the latest consolidated entry trying to improve its performance in generics is posing margin and pricing pressures on generic-drug companies. With other large generic companies, such as Novartis’ Sandoz and Teva also restructuring over the past several years, the question for 2020 will be can improved performance in generics be achieved?

9. Real-world data in drug development. An important issue for 2020 will be the challenge presented to pharmaceutical and life-science companies of their ability to collect and use real-world data for which patient health and outcomes data are gathered outside of randomized controlled trials. This approach is not only important for directing drug development but also a consideration as companies evaluate the use of outcome-based reimbursement models for drugs.

10. Manufacturing innovation. Although manufacturing innovation to improve cost-efficiency product yields, and cycle times is always a goal, look to see if how broader issues, such policy discussions on climate change, will further drive government requirements or business interests to achieve further reductions in carbon footprints and manufacturing innovation can support such activity.