The pharmaceutical sector emerges into 2021 with exciting prospects. The race for a COVID-19 vaccine has stimulated innovation across the industry, but the sector has been building momentum for years. Prior to the current pandemic, the UK health and pharma industry was growing at an annual rate of 8.4% as seen from 2015 to 2020. R&D plays a massive role in this growth; with annual pharma R&D spending in the UK climbing by 6.9% from 2018 to 2019, compared to an increase of 3.3% for R&D spending across industries.
2020 was an even bigger year than expected with the pharma sector thrown into the limelight as a potential saviour to the pandemic. Funding was channelled into pharma in record amounts, supercharging R&D activity. Public confidence is high in the industry; our recent research report based on a survey of businesses across the globe, the International Innovation Barometer (IIB), has shown that those within the pharma sector remain positive about their ability to drive forward R&D spend. In this research, conducted in May last year, 59% of respondents in the pharma sector expected their R&D budgets to either somewhat or significantly increase over the next three years.
One thing is certain; pharma has entered into 2021 with a greater presence and with more funding than before. For a long time, the sector has struggled with its image; some seeing it as a giant industry that puts profits before people. The success of COVID-19 treatments is changing this narrative and provides the pharmaceutical sector with wider investor interest and public support to use as a foundation for greater innovation for the future.
The cutting edge of pharma knows no bounds, but there are several key trends likely to define the sector in the near future.
Collaboration will be even more important
The last five years have seen increasing demands for firms to pool resources. To improve or develop products in the modern world is increasingly technical and demanding, leading to more complex developmental activities as well. At the same time, economic and regulatory pressures are squeezing margins. Developing a new drug or treatment from scratch has historically been an incredibly expensive and long process, often taking years – if not decades – before a company sees the fruits of its labour. Collaboration not only allows the burden of costs to be spread across multiple companies, but the pooling of expertise and knowledge leading to faster breakthroughs.
The growing necessity of collaboration can also be linked to the changing nature of the sector. The pharma industry encompasses a wide range of disciplines and companies are specialising to a greater extent than 10 years ago.
Over the course of the past year, we have seen numerous partnerships, including many public-private initiatives. One of the largest of 2020 is the Gates Foundation’s COVID-19 Therapeutics Accelerator, a public-private initiative, that shares data to accelerate development of treatments.
The effectiveness of such collaboration is evident in the vaccine development timeline. By working closely with several parties and authorities, numerous stages of development took place simultaneously to speed up the process without compromising on safety approvals. This both sped up the overall process and reduced the overall cost for businesses. To be rolling out a vaccine for a virus only discovered a year ago already is a phenomenal result and provides a blueprint for future innovation.
Big tech is here to stay
Big tech is slowly infiltrating all industries, and pharma is no exception. It has been building a presence in the sector over the past few years and this is certain to accelerate. With technology playing an increasing role in pharma, whether that’s through machine learning or big data, big tech firms have a lot to offer pharma companies, many of which might not have the technology infrastructure or capabilities to implement within the scientific applications.
Advances in technology such as are coming to fruition in pharma applications and many organisations are looking to implement technology to make subsequent R&D activities more efficient. Technologies are being deployed across a number of areas, whether that be speeding up drug discovery, reducing R&D costs or lowering failure rates in clinical trials. When Novartis and Microsoft announced their partnership, they stated that its aim was to ‘leverage data and AI to transform how medicines are discovered, developed and commercialised’.
Big tech is here to stay in pharma, but how the relationship between big tech and big pharma plays out in the future has yet to be determined.
Digitalising the patient experience
Like all sectors, pharma is slowly but surely digitalising its services. This change is affecting the entire healthcare ecosystem from diagnosis, to treatment, drug research and management of chronic conditions.
The digitalisation of care offers a more personalised and holistic experience for patients. Due to wearable technology, patients can get real-time updates on the status of their health, enabling them to then seek care immediately. This provides better level of care in comparison to regular GP check-ups, which may discover health risks later adding risk to the patient.
COVID-19 has accelerated the digitalisation process. As GPs have had to keep physical visits to a minimum and phone calls are often inefficient, many practices have enhanced their online and video conferencing services and the NHS now allows consultations through its health service app. This makes the journey from diagnosis to treatment both faster and much easier. A pioneer in this area is Babylon, the interactive health service application that now delivers 4,000 clinical consultations a day and serves more than 4.3 million members worldwide.
Digitalisation is slowly revolutionising the healthcare experience, with many areas of development still to be completed. In the UK, for example, communications between GP, specialists and patients are still often conducted via letter. Further time and effort into digitalisation will accelerate the application of game-changing technology to offer greater care to a wider population.
Sustainability and ethics must be a priority
As companies face pressure from consumers and governments, sustainability and ethical practices are now on top of the agenda for all industries. Not only is this an environmental imperative for pharma firms, but a business necessity.
The pharma sector faces growing demand to address environmental problems, such as reducing the amount of waste, limiting the use of single-use plastics or fossil fuels, as well as complying with new standards around chemical sourcing and waste from development.
The sector has come a long way in this regard, with companies doing a lot more in response to criticism that they’re not doing enough for the environment. The International Innovation Barometer (IIB) has shown that the pharma industry is investing significantly in sustainable innovation, with 18% of respondents dedicating 26-50% of their budget on sustainable innovation, which is compared to an average of 14% across all sectors.
Take GlaxoSmithKline for example. Since 2010 it has reduced its carbon emissions by 34%, water usage by 31% and the waste sent to landfill by 78%. This change has been driven by implementing new waste management systems for carbon neutrality and using more green chemistry, for example, the use of using greener solvent and emphasising catalysis and enzymatic chemistry. Significant strides have also been made when it comes to ethical practices, such as phasing out animal testing in non-medical settings, with higher standards of public and regulatory scrutiny.
However, there can be no denying that there is more to be done. Although this is a challenge for the sector, it is also an opportunity. By leading from the front on sustainability, firms will not only enhance their reputation with their public, but also official regulatory bodies that they work closely with.
The frontiers of pharmaceuticals grow increasingly exciting. Innovation often facilitates further innovation, and the boundaries of the standard pharmaceutical process are being pushed to new points. The sector has newfound importance and growth at a time when the market is opening up to new avenues of research – whether that be using AI to reach new solutions faster or study of previously undocumented hallucinogens to treat mental health.
R&D has always been the beating heart of the pharmaceutical sector. The greater focus on sustainability and the development of several COVID-19 vaccines will likely see a different focus for Pharma R&D in 2021 but also a different perception.
Naomi Ikeda is manager, Innovation Incentives, at Ayming