What is on the industry’s radar for 2024? See what issues make DCAT Value Chain Insights’ list—more established trends and those that may be under the industry’s radar: from growth prospects in the bio/pharma market, to key factors shaping drug development, and what may on the horizon for manufacturing and the supply chain.

Industry performance trending upward
The trillion-dollar question for the bio/pharma industry is how will the industry perform in the near-term. A newly analysis issued this week (January 17, 2024) by the IQVIA Institute for Human Data Science shows market fundamentals trending in a positive direction and improving over recent forecasts. Global spending and demand for medicines is projected to increase over the next five years to approximately $2.3 trillion by 2028 (based on list price levels), representing a compound annual growth rate (CAGR) of 5–8% CAGR through 2028, a growth rate raised by 2 percentage points compared to previous forecasts. The higher growth expectations come despite lower expectations for COVID-19 vaccines and therapeutics, which had been a major boon for the industry. COVID-19 continues to have an impact on pharmaceutical markets globally, but at a level much lower than previously estimated. The lower level of vaccinations seen to date and expected through 2028 have resulted in a $200-billion reduction in the eight-year cumulative spending estimates. Despite this decline, overall, global use and spending on medicines is exceeding pre-pandemic growth rates and is expected to continue significantly above these trends through 2028, according to the IQVIA Institute’s analysis.

In the US and the EU4 (France, Italy, Germany, and Spain) and the UK, list-price growth is projected at 6-9% and 4-7%, respectively while historic data suggest net payer spending will be about 2-5% for both, according to the IQVIA Institute’s analysis. Spending and volume growth will follow diverging trends by region. The US market, on a net price basis, is forecast to grow 2-5% CAGR through 2028, an upward adjustment from the prior five-year forecast (through 2027) of -1–2% CAGR. This reflects the improved outlook for novel medicines and the expected early impact from the Inflation Reduction Act, legislation in the US that included drug pricing reforms. Spending in the five major European countries (France, Italy, Germany, Spain and the UK) is expected to increase by $70 billion through 2028, driven by new brands. Latin America, Eastern Europe, and countries in Asia are expected to return to steady growth, outpacing the global market. Japan spending growth is projected to grow -1 to 2% through 2028 as brand growth is offset by a shift to annual price cuts, according to the IQVIA Institute’s analysis.

Drug development: growth trends in therapeutic sectors and product segments
In looking at growth in key therapy areas, oncology and obesity lead growth while immunology spending has slowed due to biosimilar availability and uptake, according to the IQVIA Institute’s analysis. Many other classes will grow in mid-single digits. Demand for innovative oncology drugs will drive spending in this area to about $440 billion by 2028, more than double the current level, as broader and longer use of therapies, including 100 new drugs expected to be launched during that time. Global obesity spending is projected to grow 24-27% CAGR, reaching $74 billion in 2028 – up from $24 billion in 2023 – with some scenarios resulting in much higher or lower spending based on countries’ reimbursement decisions, which are evolving rapidly. Immunology growth will slow significantly to 2-5% through 2028 with the arrival of new biosimilars despite robust volume growth. New therapies in rare neurological disorders, Alzheimer’s and migraine are expected to drive spending growth in neurology, according to the IQVIA’s Institute’s analysis.

Another key trend is the continued rise of biologic-based medicines and specialty medicines. Biotech-based drugs will represent 39% of  medicines spending globally through 2028, according to the IQVIA Institute’s analysis, reflecting growth in traditional biotherapeutics,  breakthrough cell and gene therapies, as well as a maturing biosimilar segment. The spending on global biotech is expected to exceed $892 billion by 2028, with growth slowing to 9.5-12.5% from biosimilar savings. The outlook for next-generation biotherapeutics includes significantly uncertain clinical and commercial successes. Cell and gene therapies register high growth rates driven by wider usage and as many as 50 new therapies over the next five years, but are projected to represent only 1.5% of global spending in 2028, according to the IQVIA Institute’s analysis.

Specialty medicines, as defined by the IQVIA Institute, as those medicines that treat chronic, complex, or rare diseases and possess additional distribution, care delivery, and/or cost characteristics, which require special management by stakeholders, are expected to see continued strong growth. Specialty medicines are projected to represent about 43% of global spending in 2028 and 55% of total spending in leading developed markets.

Manufacturing and supply: what’s trending now and in the future
During the pandemic and post-pandemic, improving supply-chain resiliency and security of supply of critical medicines became a key policy focus in both the US and Europe, and momentum continues to trend to more concrete action in this area. In the European Union (EU), the European Commission launched this week (January 16, 2024) a new initiative, the Critical Medicines Alliance, a consultative mechanism charged with developing recommendations and providing advice to the European Commission, EU member states, and other EU decision-makers on how to address long-standing medicines shortages.

The launch of the Critical Medicines Alliance builds on other recent action by EU authorities. Last month (December 2023), the European Medicines Agency published the first version of a list of critical medicines for the EU/European Economic Area (i.e. “the Union list”), which contains more than 200 active substances of medicines considered critical for healthcare systems across the EU/European Economic Area, for which continuity of supply is a priority and for which shortages should be avoided. The list contains active substances of innovator and generic drugs covering a wide range of therapeutic areas and includes vaccines and medicines for rare diseases. It reflects the outcome of a review of 600 active substances taken from six national lists of critical medicines. The list will be expanded in 2024 and will then be updated every year.

The Critical Medicines Alliance will work on a subset of active substances on the Union list before tackling the rest of the list by pooling the expertise and resources of its members to determine how vulnerabilities in the supply chains could be best addressed. A pilot by the European Commission will first analyze the vulnerabilities in the supply chains of an initial set of 10-20 substances from the Union list of critical medicines. The Alliance’s efforts will initially focus on the outcomes of this analysis, expected to be published in April 2024. Once the pilot exercise is finalized, the European Commission will proceed with evaluating the remaining medicines in the Union list. It will then recommend priority actions for the near future and propose new tools to address the challenges it has identified. In particular, the recommendations will focus on mitigating structural risks, reinforcing supply by making demand more predictable, encouraging diversification, and boosting manufacturing.

The US is also pursuing policy and action to address the drug supply chain. In November (November 2023), President Joe Biden convened the inaugural meeting of the White House Council on Supply Chain Resilience, a cross-industry and government initiative to address the supply-chain challenges and vulnerabilities exposed during and post-pandemic and ways to strengthen US-based manufacturing and its supply chains. In all, the Biden Administration outlined 30 new actions to strengthen US supply chains and secure key sectors, which includes steps through the Defense Production Act to support US-based domestic manufacturing of essential medicines, new data collaboration to spot supply-chain risks sooner, and transportation and logistics initiatives to ensure the continued flow of supply chains. The implementation of these measures will be a key item to watch for in 2024.

Also on the horizon is how new technology, such on artificial intelligence (AI), will factor into drug manufacturing. Last March (March 2023), the US Food and Drug Administration (FDA) published a discussion paper, Artificial Intelligence in Drug Manufacturing, to outline areas for consideration and policy development identified by scientific and policy experts of the FDA’s Center for Drug Evaluation and Research (CDER) for the application of AI in pharmaceutical manufacturing. The discussion paper included a series of questions to stimulate feedback from the public, including CDER and the Center for Biologics Evaluation and Research (CBER) stakeholders.

The discussion paper is part of a larger effort by the FDA in facilitating advanced manufacturing, a term that describes an innovative pharmaceutical manufacturing technology or approach that has the potential to improve the reliability and robustness of the manufacturing process and resilience of the supply chain. Advanced manufacturing can: (1) integrate novel technological approaches, (2) use established techniques in an innovative way, or (3) apply production methods in a new domain where there are no defined best practices. Advanced manufacturing can be used for new or currently marketed large- or small-molecule drug products.

The FDA’s discussion paper outlined four key areas in which AI in drug manufacturing has the potential to be applied: (1) process design and scale-up; (2) advanced process control; (3) process monitoring and fault detection; and (4) manufacturing trend monitoring.

In looking at these potential uses, the FDA, in its discussion paper, raised five key issues to be considered from both a regulatory and user perspective and asked for input from the industry and other stakeholders. These areas include: (1) data integrity and data quality in cloud applications; (2) the Internet of Things (IOT) and data-management practices; (3) regulatory oversight of AI required in new drug or biologics license applications; (4) process control and release testing; and (5) real-time data in AI-based machine learning. The FDA extended the time for providing input on its discussion paper to November 2023.

The agency continues to address how AI in drug manufacturing may be used and regulated. Last September (September 2023), the FDA and the Product Quality Research Institute (PQRI) hosted a virtual workshop, The Regulatory Framework for the Utilization of Artificial Intelligence in Pharmaceutical Manufacturing. PQRI is a  non-profit consortium of organizations working together to generate and share timely, relevant, and impactful information that advances global drug product quality, manufacturing and regulation. The workshop aimed to facilitate interaction among AI stakeholders on critical areas for development, implementation, and regulatory consideration, including uses in process development and control, operation of pharmaceutical quality systems, lifecycle approaches, and cGMP.