A time of transition for the pharmaceutical industry – Globally

Author Oumama Syassi
February 11, 2018

With 2018 well underway, now is a good time to briefly cast our eye back to 2017 and consider where the pharmaceutical industry stands – as well as what comes next.

In prominent locations such as the USA and UK, uncertainty within the industry remains. In the US, for example, a review of healthcare provision has large-scale implications and the instability may well hamper spending on research and development.

However, some of the biggest stories in the sector over the last 12 months are in mergers and asset swaps, technological advances, and the emergence of the Middle East.

Mergers and asset swaps

There have been big deals between pharma companies, the standouts being Johnson and Johnson’s acquisition of Actelion and Gilead Sciences’ purchase of Kite Pharma. But 2017 primarily saw recently merged or acquired businesses getting to grips with how to extract the best value from their new operations.

The trend of asset swaps is likely to grow. Following the GSK and Novartis swap – where GSK acquired the bulk of Novartis’s vaccine products in return for GSK’s oncology portfolio – this movement has continued. One notable swap that finally went through during 2017 was Boehringer Ingelheim’s acquisition of Sanofi’s animal care subsidiary in exchange for the German company’s consumer healthcare business unit.

The asset swap has several advantages over traditional mergers and acquisitions (M&As) and there is great excitement within the industry about what the future holds.

In M&A, the trend is towards focusing portfolios. This will increase in 2018 with companies continuing to shore up their core competencies while divesting assets that are outside this area.

Advances in technology

2017 was a year of breakthrough technology in stem and gene therapies such as the launch of Novartis’ CAR-T cell therapy for cancer treatment. The pace of change in oncology is accelerating – great news for patient treatment, although it also comes with the warning of cost and option implications for the care community in funding these expensive treatments.

To meet this challenge, drug companies have been working on new ways of contracting for values or outcomes. The idea that you pay per pill is diminishing. In the future, it is more likely that users will pay for quality or value.

For example, in an ongoing experiment, Novartis has said that patients will only pay for CAR-T therapy where the treatment works – both an amazing change and bold statement.

Although the rhetoric remains way ahead of the action, the evidence suggests that it is becoming more scalable and mainstream. More of Big Pharma is starting to invest in alternative pricing approaches to demonstrate value. The most exciting example in the last year was Pfizer making palbociclib available for free while additional data was collected to achieve NICE approval.

Big Pharma is moving away from the top-down marketing approach and is engaging patients. Everyone wants to be patient-centric because the industry is recognising that people are more than just patients, i.e. they have a life outside their disease. As part of this drive, Sanofi has appointed a chief patient officer and I expect various others will follow this trend.

Moving forward, the technology convergence we have seen will increase. The FDA has now approved the first pill that can digitally track a patient – the so-called ‘smart pill’.

On the one hand you could argue that innovation is increasing. On the other, if you look at New Molecular Entities (NME) that are not a derivative of an existing and previously FDA-approved substance, the number has in fact dropped over the past couple of years.

Middle East emergence

Overall the Middle East has been investing heavily in its healthcare capacity – including in Saudi Arabia as part of its broader reforms. Probably the most exciting news in the region came late in 2017 with the launch of the Dubai Industrial Strategy. As part of this initiative, the region hopes to draw US$2.5 billion in investments to the pharmaceutical industry over the next five years as it increases efforts to attract major pharmaceutical companies to set up facilities in the area. GSK has already announced plans to manufacture three drugs at the new facility in the UAE.

This confirms the position of Saudi Arabia at the heart of the life sciences sector. The 2014 inauguration of a Sanofi manufacturing plant in the King Abdullah Economic City (KAEC) was a landmark moment for the company’s expansion into the Middle East. That growth is continuing, with further research into innovative new medication to help treat diseases such as diabetes, hypercholesterolemia and rheumatoid arthritis.

After almost two years of economic downturn, the META region (Middle East, Turkey & Africa) is beginning to see an uplift in the economy, especially in the life sciences sector.

There is a new level of confidence and we forecast that the market in 2018 will return to more consistency in Q3/Q4 at around 8-12 % growth (versus the historical double-digit growth in markets such as Saudi Arabia).


The future is generally very positive for the industry. In the near-term, there are some excellent drugs in the pipeline that will significantly improve patients’ lives, with wider access to a larger patient pool thanks to some very interesting industry programmes. The one remaining caveat is that of affordability.