Regular contributor Brendan Shaw looks ahead to a potentially turbulent 2025 for the pharmaceutical industry, highlighting five key trends that industry stakeholders must carefully navigate over the coming 12 months.
As pharma companies gear up for another year – a year that marks a quarter of the way through the 21st century – here are five big picture things that are likely to influence their business environment in 2025.
Donald Trump
The global pharmaceutical industry is often disproportionately influenced by what happens in the United States. However, even by historical standards, the swearing in of Donald Trump as US President this month after his historic success in being re‑elected last year will have a huge impact on the industry in 2025. Trump has already said that he will do things differently the second time around. The question will be how he will apply this in medicines regulation, policy and pricing.
A big theme coming out of the re-election of Trump is disruption, unpredictability and America first. His nominations for executive appointments in his Administration in the health area reflect this. His nominees for the Food and Drug Administration, Marty Makary, Centre for Disease Control, Dave Weldon, and Surgeon General, Janette Nesheiwat, have a science- and medical-based background and have received varying degrees of support, but have promised reform. Trump’s nomination of Robert F Kennedy Jnr as Secretary of Health was met with a mixture of alarm, disbelief and outrage in some quarters. Kennedy’s previous anti-vaccination campaigns alone, and lack of support for science-based approaches in general have concerned many.
It also remains to be seen whether Trump revisits the Most Favoured Nation drug pricing executive order from his first administration or looks at other options for pricing medicines in the US. While Trump statements suggest it is dead, it is unclear whether something like it will come in its place.
Other major developments, like the delay of the BIOSECURE Act measures, Trump and Elon Musk’s intervention to torpedo the end-of-year debt ceiling funding bill in the Congress which included drug pricing reforms, Trumps statements on pharmacy benefit manager (PBM) reforms, pre-election uncertainty about what a Trump Administration would do on medicine pricing, and even a potential one-third cut to US pharmaceutical exports as a result of Trump Administration tariff policies, all point to an uncertain period for the pharmaceutical industry worldwide.
Other Trump Administration policies like approaches to mergers and acquisitions, climate change and environmental policy, antagonism towards ESG business strategies, and hostility towards the United Nations and global policy institutions like the World Health Organization and World Trade Organization are all going to influence the pharma business environment in 2025. Watch this space.
Supply chain reforms, conscious uncoupling, and geopolitical uncertainty
The recent experience of Chinese biotech companies like WuXi AppTech and WuXi Biologics which saw their share prices surge after draft legislation for the US BIOSECURE Act was unexpectedly excluded from the list of legislative amendments in the US shows how difficult planning in 2025 will be. Chinese biotech companies like these had previously seen falling share prices until the draft legislation was suddenly left off the 2024 legislative agenda.
This year, 2025, is likely to see more back and forth in the changes and arguments around deglobalisation, regionalisation and reconfiguring global supply chains to fit with geopolitical tensions. Political and populist pressure for pharma companies to both concentrate and diversify their production and supply chains at the same time are likely to grow.
Given globalisation played such a pivotal role in increasing competition and reducing costs and prices in many industries, including pharma, one might expect there is a risk that unwinding this will have the reverse effect. The conscious uncoupling of the US and Chinese economies will likely lead to lower growth and higher inflation over the long-run – and that’s before the quite likely tariff trade wars the incoming Trump Administration will pursue next year. However, over the years the industry has shown an ability to step around political tensions between governments in the interest of building strong businesses and improving human health.
At the same time, regional centres for growth will continue to reform and grow. China’s pharma industry will recover from the country’s current investment strike, the growth in India’s publicly funded health system will help drive the growth and development of the industry there, and more countries in Europe, the Middle East and Asia-Pacific regions will develop domestic life sciences strategies to maintain and grow their own capabilities in pharmaceuticals and life sciences.
A new dealmaking boom
Like many industries, 2024 saw the global pharma industry pause its investment and acquisition activity while it waited to see what would happen with elections, wars, policy changes, international treaty negotiations and the like. Deals in the pharma industry sank to their lowest level in a decade as the industry absorbed previous acquisitions and mergers, and companies sat on the sidelines waiting to see how fortunes played out in the markets, at the ballot box, and on the battlefield.
As some of these 2024 uncertainties get resolved one way or another, 2025 is likely to see a renewal of investment and corporate activity in the pharma industry and broader life sciences sector. Some of the changes flagged above (eg. Trump Administration attitudes to M&A rules, changing geopolitical opportunities) might spur renewed dealmaking in 2025. A swathe of patent expiries in many significant revenue earners for major pharma companies, combined with a high number of new novel drugs coming on the global market in 2024, and more exciting trial results and innovations in areas like cancer, obesity and schizophrenia will help drive a lot of this.
The year of reckoning in global health policy and business?
This will be a busy year in the politics and business of global health. It could prove to be an inflection point in the pharma industry’s business environment. 2025 will see the return of the draft global pandemic treaty to the World Health Assembly for debate and (possible) finalisation in May. Arguments about how the pharma industry supplies the world with medicines – new, old and tired arguments – will be debated again. Around the same time, the WHO’s Model List of Essential Medicines will be updated, highlighting issues in access to new medicines in non-communicable diseases.
Closely following these will be the fourth UN High Level Meeting on Non-Communicable Diseases at the UN General Assembly in September, where world leaders will come together to renew commitments to address NCDs (and probably also reflect that the world is failing to meet its targets here). This Meeting will place renewed focus on NCDs following the Covid pandemic. Given that the world is not on track to meet its Sustainable Development Goal Health targets (Goal 3), some stakeholders may be looking for someone to blame for this. Here’s a tip: pharma companies should watch out.
All of this points to a year where global attention will be on how to get more medicines to more people in more countries and the role the pharmaceutical industry plays in this. While constructive engagement with the industry is the obvious path to greater success here, not everyone is convinced, so the industry will need to have its own constructive ideas. There is an opportunity here for the industry to lead in this space, and a risk if the industry ignores the issues or is not active in the discussions.
AI in pharma becomes the norm
Artificial intelligence (AI) is becoming ubiquitous in the pharma world. Through 2025, boardrooms across the industry will be deciding how AI will change the business models of their companies. AI provides commercial opportunities and threats in clinical trials, drug development, business management, financial management, compliance and risk management, sales and marketing, manufacturing and production, or supply chain management. The opportunities for using AI in a pharmaceutical company are many and varied. Recent examples like the use of AI in data mining in drug development in deep learning systems to identify halicin as a new antibiotic in clinical trials, or in supply chain management to minimise drug shortages all illustrate the point.
As the pharma industry only knows too well, with technological change comes disruption. How pharma companies navigate this and play to their advantages will be important to their future commercial success. 2025 is likely to be the year when some of these issues start to get real. Companies that can capitalise on their strengths in things like big data, AI, analytics, genomics and personalised medicine will have a competitive advantage during 2025.
One real question that may emerge from the wholesale adoption of AI in so many functions of a pharmaceutical company is: If so much can be done by AI, what is the role of humans? If precision, timeliness and accuracy can all be done better by a machine learning system, what value can humans add? Could an entire pharma company just by run by AI systems?
Human intelligence is more important than AI in pharma
Yes, human intelligence is the unexpected ‘sixth’ of five factors to watch in 2025 for pharma.
Arguably, 2025 will be the year that human intelligence proves just as important as any artificial intelligence in the pharmaceutical industry. A few months ago John Kay eloquently articulated the crossroads the pharmaceutical industry finds itself at in 2025 (along with many other business sectors). Pharma is an industry where businesses have saved millions of lives and improved the lives of billions, but it risks losing public trust through its own actions, missteps, and lack of visibility.
It will be the industry’s use of human intelligence in navigating these challenges in 2025 that could set the industry on a path to take its rightful place as a leading source of social and commercial success in the world. Coming to the table to redress some of the gaps identified in the 2024 Access to Medicine Index report at the end of last year could be a good place to start. Inserting even more humankind into pharma business models might prove to be good for profits and competitiveness as well as patient outcomes around the world.
At a time when so many industries, organisations and institutions across the world are losing people’s trust, the pharmaceutical industry has the chance to be a no-nonsense, open and constructive example of credible social and business development in the 21st century.
I have no doubt pharma companies can do this, given the human skills, talents and leadership the industry has in its people. While technology matters a lot, it is the industry’s people that are perhaps its greatest asset.
Happy new year, and all the best for 2025.
Brendan Shaw is Principal of Shawview Consulting and Adjunct Professor at the Sydney Pharmacy School, Faculty of Medicine and Health, University of Sydney.
