The Economist Intelligence Unit’s (The EIU’s) latest report ‘Healthcare in 2019‘, brings together analysis and forecasts for the healthcare industry, identifying strategic business issues for the year ahead.

Trade tensions and political pressures will fail to derail long-term progress in the healthcare and pharmaceuticals
sector.

In 2019, political events of the past two years will continue to bring considerable uncertainty to the global healthcare sector. In the US, efforts to rein back state involvement in the health sector mean that from January 1st it will no longer be mandatory for individuals to buy insurance. In Europe, Brexit is likely to bring disruption to pharma markets, healthcare recruitment and research in the life sciences. And in nearly every market drug pricing will remain under pressure from strained healthcare budgets.

 

However, none of this will prevent healthcare spending and pharma sales from rising in most markets, although the market will be weighed down by weaker economic growth. EIU forecasts healthcare spending will climb by 5.1% worldwide in nominal US dollar terms, down from 8.2% growth in 2018. This will include a 5.7% rise in spending on pharmaceuticals in 2019, down from 6.3% in 2018.

 

Vulnerable to disruption 

Global trade tensions will not target the sector specifically—most developed markets maintain zero tariffs on pharmaceuticals, while even emerging markets keep them low. Nevertheless, the industry has not been entirely sheltered from the US-China trade tensions. (see report on What the US-China Trade War Means for MedTech)

Brexit, meanwhile, still poses considerable risks for the UK’s healthcare sector and its important life sciences industry. The European Medicines Agency will move from the UK capital, London, to the Dutch city of Amsterdam by the end of March 2019, and there remains huge uncertainty about how regulations surrounding drug approvals, clinical trials and drug safety will change.

The biggest trade risk, however, is the indirect one: whether a global trade war will slow the world economy. Many governments, particularly in the euro zone and in commodity-dependent economies, are only just emerging from a period of austerity that obliged them to rein back healthcare spending. Expenditure carried on rising regardless in nominal terms in most countries, but often failed to keep up with increasing demand for care. The strains on public health systems are still clear, meaning that there is limited room for more cost-cutting measures. This is particularly true in countries struggling with population ageing, including Japan, South Korea and most of western Europe.

Universal pressures 

While the US will move away from universal healthcare, many other countries, including South Africa, Oman, India and Nigeria, will seek to widen and deepen their public insurance systems.  South Africa is aiming to pass its long-awaited law on a national health insurance system in 2019, with a view to rolling it out by 2025. Oman’s government
has also said that it aims to introduce mandatory health insurance this year, although it will struggle to implement this by January as hoped. In Nigeria, the government approved a basic public health package in 2018 and will start to roll this out during 2019. It is aiming for universal healthcare by 2030.

China, meanwhile, long ago set itself some ambitious health goals for 2020, by which year it aims to provide “safe, effective, convenient and affordable” healthcare to all residents. In 2019 it will scurry to implement yet more far-reaching reforms in an effort to promote this ideal.

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.

EIU Healthcare’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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To speak to EIU Healthcare’s consulting team on how we can help you grow your business, please contact us at cs-info@clearstate.com.