Each year around this time, on a cold, dreary night, the Ghost of Listmas Yet-to-Come visits us, clanking its fearsome chains of bullet pointed items, to prophesy what’s in store for the pharma industry on our next voyage around the sun. Here’s what trends it sees for 2018:

  • Amazon’s expected entry into the healthcare market will drive a surge of investment in digital innovation at payers like UnitedHealth-Optum, Humana, and elsewhere. Demand for digital tools will outstrip supply but create opportunities for pharmas to partner with tech companies on large-scale patient support solutions.
  • But beyond prompting a mad dash among competitors to fortify their positions, Amazon’s impact on the pharmacy/distribution business won’t really be felt in 2018. Odds are, they’ll test the waters by getting into device distribution but holding off on pharmacy while they get their footing and nail down strategy. It’s unlikely, for example, that Amazon will collect any additional U.S. state wholesale pharmacy licenses beyond the 12 it scooped up in 2017. What wouldn’t surprise us: some experimental product testing with Amazon’s new plaything Whole Foods – and perhaps, a few rumors that Amazon will acquire the OTC medicine and vitamins businesses of Pfizer or Merck KGaA, as the ‘Sell’ cycle of the OTC horse-trading game continues.
  • The use of real world data in post-marketing approvals/new indications will accelerate with FDA’s encouragement, fueling demand for data expertise within pharma and further fusing the healthtech and pharma worlds. Real world clinical trials, like Apple’s Heart Study and the dozens being run through ResearchKit, will take off in a big way. And it’s not just because a man’s life was recently saved thanks to his Apple Watch. Payers across the globe are scrutinizing pharma’s expensive new therapies, particularly when they compete closely with others in a category. If a cancer brand such as Opdivo could provide head-to-head data against rival Keytruda, for example, that might persuade a regulatory agency like the U.K.’s NICE to reconsider a prior rejection.
  • FDA’s generics push won’t put too much pressure on branded drug sales, but bigger payers, themselves under intense pressure to hold down costs, will begin to push back harder on pharmas. Benchmarked, value-driven pricing deals with robust data components will become cost-of-entry for launching pricey specialty brands, especially as miraculous and eye-poppingly expensive new treatments like Novartis’ half-million-dollar CAR-T therapy Kymriah come on line. EMA approvals will come at the cost of steep discounts, which will spill over into American drug policy debate, setting up a feedback loop that could constrain profits.
  • The new year brings new reputational risk for pharma as healthcare policy uncertainty continues in the U.S. After an aborted run at block-granting Medicare, Congress hits ‘pause’ on healthcare policymaking, digging in ahead of the midterms. Democrats, with a strong wind at their backs, will lambaste greedy Big Pharma and Trump’s broken promises to rein in drug prices (you may find yourself wondering when Alex Azar got elected president). Millions of Americans will lose access to healthcare as the nixing of the ACA’s Individual Mandate causes premiums to spike for the 2019 exchanges and CMS moves to impose work requirements and other conditions on Medicaid recipients, thereby pushing millions more out of coverage. Hospital closures and consolidations will accelerate. On the other hand, revolutionary new medical technologies like gene transfer treatments and “electroceuticals” will buoy pharma’s public image, along with company bottom lines. We're not quite at the peak of a remarkable innovation cycle, with dozens of promising and truly innovative treatments in late stage testing in oncology alone.
  • U.S. consumer advertising budgets will shift from TV to digital in an appreciable way, as foreshadowed by Allergan CCO Bill Meury, who said in a Q3 results call: “A big part of our DTC budget is national television advertising, and there are social media and other analytics techniques that are emerging, I think, that are going to allow us to do that a lot more efficiently.” DTC TV skeptics have gotten egg on their faces with similar predications – 2016 was a banner year for pharma TV advertising spend. We think this year will be different – in part because digital platforms like Facebook are finally making a serious bid for pharma ad budgets, and in part because so many of the new drugs being launched are narrowly targeted, making the shotgun blast of TV more inefficient than ever, and sometimes less effective than a more modest TV effort paired with targeted online ads.
  • Despite a cacophony of cool-but-mostly-slideware chatbots for mental health, the healthcare applications of AI and voice recognition technologies will continue to underwhelm, measured against the breathless hype around them, as developers wrestle with tricky issues around safety, privacy and liability. However, VR/AR and wearable sensors will show surprising new utility (keep an eye on Apple’s work on monitoring cardiovascular health), and telemedicine will advance, spurred on in the U.S. by Amazon/Whole Foods, CVS/Aetna and UnitedHealthcare/Optum, and in other markets organically, driven by the sheer ubiquity of mobile devices and the availability of more sophisticated sensors. Doctors the world over are early adopters and tinkerers, and medical systems that have been sitting out this wave of innovation will see virtual visits as a means of realizing cost savings and convenience for the patient.
  • The long-anticipated Proteus/Abilify mash-up was, the conventional wisdom goes, probably not the best vehicle with which to launch the smart pill. Facing generic competition in a category (schizophrenia) that’s uniquely tricky for tracking tech, the drug/device combo has an unusually steep slog up the old adoption curve. No matter – regardless of MyCite’s performance, drugmakers looking for off-the-rack digital solutions with which to differentiate their brand and impress payers will sign on with the likes of Proteus and Propeller Health in greater numbers. Expect to see some of the action on beyond-the-pill solutions to shift from respiratory to diabetes, where a number of startups are working on promising solutions, from digital patient support solutions to next-level glucose meters (e.g., MySugr, recently acquired by Roche), and established drug and device firms are investing in discovering prospective partners (e.g., Merck’s Alexa Diabetes Challenge).

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