The Economist Intelligence Unit’s (The EIU’s) latest whitepaper ‘Healthcare in 2018‘, brings together analysis and forecasts for the healthcare industry, identifying strategic business issues for the year ahead.

US(Healthcare Spending 2018≈US$3.5trn): Efforts to overturn Obamacare will still head the agenda in 2018

What happens in the US will be vital to the global healthcare and pharmaceuticals sector over the coming year. The Economist Intelligence Unit expects US healthcare spending to reach US$3.5trn, which is around 44% of the global total (based on the 60 biggest economies). Pharmaceutical spending will reach around US$444bn, or around 36% of the global total, despite efforts to rein back prices. No other market will come close: health spending in China and Japan, the nearest contenders, is less than one-sixth as high.

Whereas the Republicans spent much of their first year in office trying to draft and pass reforms to “repeal and replace” Obamacare at the national level, over 2018 they will focus on dismantling the current system from the inside. 

China (Healthcare Spending≈US$740bn): Continued broadening and deepening of the national healthcare system

It is a packed agenda in 2018 that involves implementing the numerous reforms begun in 2017 or earlier, and not all of it will work. As is usual in China, many of the reforms will be done on a pilot basis in particular regions and cities, and even when the policies are supposed to be national, implementation will vary across the country. Pharmaceutical companies will have to adapt quickly to cope with the changes and to benefit from market growth, which we expect to be around 8% in local-currency terms but just 3% in US dollar terms.

Japan (Healthcare Spending≈US$510bn): Japan’s biggest challenge: population ageing 

The government’s 2017/18 budget set out the costs of what is dubbed the “2025 problem”, the year in which the country’s post-war baby boomers will all be at least 75 years old. It calculated that social security spending on medical care will rise by over 50% between 2012 and 2025, while long-term care costs will rise by over 130%.

The government’s efforts to make the health system more efficient will lead to several changes in 2018. Management of the National Health Insurance will pass from municipalities to prefectures, and patients will be given greater rights to use private providers when needed. The government also intends to push ahead with plans to roll out health technology assessments for pharmaceuticals, in a bid to increase cost-efficiency. It will also start reviewing all drug prices annually, with the newest and most expensive reassessed on a quarterly basis.

Europe (Western Europe THE≈US$1.7trn): The road to Brexit

Throughout Europe, the effort to hold down drug prices will continue, with the focus on ensuring competition in the generics market. In western Europe, where pharmaceuticals now account for less than 10% of healthcare spending, the room for manoeuvre is getting smaller. In Central and Eastern Europe they account for over 20%, and the effort to bring that down is becoming more urgent.

The continent’s biggest challenge, however, is likely to be the Brexit talks ahead of the UK’s exit from the EU in 2019. For the pharmaceutical industry the trade talks will be crucial: although tariff barriers should not rise for most drugs
even without an EU deal, a steep rise in non-tariff barriers would disrupt trade badly.

On the back of rapidly evolving market dynamics and changing customer needs, companies need to understand the important changes that are happening in the market.

Clearstate’s market insights and growth consulting services can help companies answer key questions to develop and execute a successful growth strategy:

  • How are healthcare systems and markets evolving in different countries and regions?
  • What is the addressable market in each country?
  • What are the key policy and regulatory initiatives unfolding in each market and the implications for your business and product line?
  • What capabilities, stakeholder relationships and processes are required for successful market entry?
  • How can you differentiate your products and services to gain market share?
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