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Healthy outlook for pharma in 2022

January 6, 2022

The importance and influence of the pharma industry have grown significantly in recent years.

As coronavirus and other healthcare considerations remain a global priority, that trend looks set to continue into 2022.

The innovation and efficacy displayed by the industry in the development and distribution of COVID-19 vaccines, while maintaining supplies of most other medicines, have been central to improving the reputation and public perception of the pharmaceutical industry.

Accompanying this has been an unprecedented market growth that looks set to continue. While economists speculate this will be at about half the growth rate of 2021, it will still be faster than that experienced in the last ten years.

As a result, many pharma companies have upgraded their 2021 earnings forecasts.

However, the year ahead will not be without its challenges.

While COVID vaccine supply issues should ease as production capacity increases in Africa and India, other medicines could well experience supply chain problems due to sharp rises in shipping and delivery costs, as well as staff shortages caused by spikes in coronavirus cases.

This situation could be further exacerbated by the EU and US supply chain reliance on China, as the country continues to face production stoppages and delays caused by waves of power cuts.

These are set to continue into 2022 and, as a result, further investment in reshoring initiatives by European and American pharma companies could be required to mitigate delays.

Elsewhere, the industry is bracing itself for the potential impact of a raft of new rules and regulations.

These changes have already commenced, with the EU laying the foundations for a complete overhaul of its entire regulatory framework for pharmaceuticals.

This overhaul will encompass everything from incentivizing innovation to securing supplies and ensuring equal access.

A 12-week consultation process has just finished, and the final changes are due for implementation at the end of the year.

Outside of the EU, regulation changes are due in other countries, including Japan, where barcodes on all packaging will be a requirement, and in Taiwan, where new rules to improve traceability are being introduced.

Meanwhile, in China, the National Health Commission will continue its attempts to centralise and streamline drug procurement processes, accompanied by an increased effort to integrate telehealth into the healthcare system.

From a pharma perspective, China will be of huge interest in 2022, as the nation seeks to pave the way for greater innovation with firmer patenting rules, the emergence of bio clusters, and faster approval processes.

As a result of this, Chinese biotech companies are already growing rapidly, aided by both public and private funding, and look set to flourish in the coming months.

Tax changes will also present themselves this year, and pharma companies need to prepare accordingly.

The first of these will see further elements of the US 2017 tax reforms implemented, affecting the extent to which companies can offset their R&D expenses.

While some companies and products will innovate to circumnavigate these changes, others, such as orphan drugs, may not be able to avoid them as easily.

Further down the line is the potential implementation of a global minimum tax for multinationals in 2023. This was agreed by 136 countries in a bid to curb tax avoidance schemes which see companies strategically move their tax base to low-tax countries.

Challenges aside, 2022 is a year full of potential for the pharma industry.

The unprecedented cooperative data sharing and use of analytics tools and techniques promoted by the pandemic have paved the way for a whole new era of discovery and breakthroughs.

As virtual trials, rapid diagnostics, home testing, and the value of mRNA become the new normal, change for the better is also becoming an intrinsic part of the year ahead.

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