AI. Drug pricing. Groundbreaking science. M&A deals. The New Year is right around the corner, and that means it’s time to take stock of 2023 and look to where biopharma is headed in 2024.
Shankar Narayanan, CEO of the marketing consulting firm Real Chemistry, has a unique and expansive view of the industry. With clients in many facets of the healthcare arena, Narayanan needs to be attentive to the directions in which the industry is shifting.
One of the common threads moving into 2024 is “making science more accessible,” Narayanan said.
“From a marketing perspective, it’s no longer just ‘go to my website’ or ‘read my product information in the medical magazine in the doctor’s office,’” Narayanan said. “The accessibility of medical information and making it easier to consume in a timely, bite-sized way, are important trends that will accelerate into 2024.”
Of course, so many aspects of the industry intertwine, and making medical breakthroughs like gene therapy or CRISPR more accessible requires a holistic view, Narayanan said.
Here, Narayanan discusses his expectations for 2024.
This interview has been edited for brevity and style.
PHARMAVOICE: What are some of the major turning points you witnessed this year in the biopharma industry and wider healthcare arena that you think will carry forward into 2024?
SHANKAR NARAYANAN: There are a handful that come to mind. [This year] was obviously the big year for the [Inflation Reduction Act], and we will be talking about that in 2024 as one of the most impactful events. The continued softness in the biotech market is a phenomenon that we keep a close eye on — it’s something we started seeing in 2022, and it sustained through this year. And of course, you can’t have any discussion about 2023 without a real discussion about AI. The emergence of generative AI and the first full year it has been a mainstream phenomenon lead into real work in healthcare, as well. And lastly, GLP-1s feel like a once-in-a-decade type of scientific advance and could drive the industry forward for the next 10 years or longer. And while it will have a significant impact on the biopharma industry, it’s also going to be much more impactful across the broader economy in a way we typically don’t see.
“My hope is that the discussion and the dialogue in this election year are balanced and focus on pricing impacts. With this legislation in place, we have a very specific, tangible framework for drug pricing, and so I think that will essentially take some decisions.”
Shankar Narayanan
CEO, Real Chemistry
Treatments like gene and cell therapies that address a smaller population are becoming more commonplace. How do you see that changing the business model in biopharma over time?
First of all, CRISPR is an exciting technology, and cell and gene therapies I would put in the same category. Especially in monogenic conditions where they can make a difference, they will start to have a real impact. The industry has grown — if you look at the top 10 revenue producing therapies in the biopharma industry in 2000 vs. 2020, revenues have increased about three or four times, but the number of patients being treated is [much smaller]. So if we have seen a change in the last 20 years, therapies are getting more expensive and more targeted. These new therapies continue that trend, and it’s a path the industry has been on for years.
Speaking of those prices, do you see the drug pricing issue taking a hard turn in the 2024 election year?
It comes down to the Inflation Reduction Act. That is such an overwhelmingly important piece of legislation for this industry, and that impact on pricing and innovation is what we’ll still be playing through. I’m not a political pundit, so far be it from me to comment on what will get airtime, but we can certainly say the IRA’s impact on drug pricing will remain front and center in all discussions going into the election cycle. At the end of 2020, the U.S. pharmaceutical industry was a $525 billion industry, and the IRA impact would be to the tune of almost 40% or 50% reduction in overall industry revenue, and also a double-digit reduction in industry R&D. How do we prioritize? How do we invest? My hope is that the discussion and the dialogue in this election year are balanced and focus on pricing impacts. With this legislation in place, we have a very specific, tangible framework for drug pricing, and so I think that will essentially take some decisions.
There’s a lot of optimism in the industry, and I wonder if there are any areas where you might be a little more skeptical about the outlook?
Back to some of the big trends, AI is one of those that is like the Bill Gates quote: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10.” AI might be one of those things where we might be overestimating a bit how much things will change in the next three to six months. Top tier companies would take the approach of saying, let’s quickly have a portfolio of initiatives for how we experiment with what AI can do for us — some will move faster than others, but the experimentation will be in place. Right now, I see a lot [trying to] revolutionize medical and legal review. There’s a lot of opportunity there to streamline and get things approved faster, but I’m not expecting [medical and legal review] to be revolutionized by 2024. My view on AI is it’s not like other pieces of software where you can expect something to happen and it will happen — it’s a bit of a long and winding road, so you may need to take a few more twists and turns along the way.
In what areas do you have a rosier outlook?
As science gets more complex, making that science accessible becomes more important. That is an area where we’re starting to make real progress. COVID was helpful in making sure disinformation can’t become front and center. We found different channels to engage with patients and people. Whether it’s the metaverse, gaming or the role of celebrity or influencer — all of these things are becoming really important. The work we did with Kareem Abdul-Jabbar on Eliquis, or Michael Phelps and Pink on Paxlovid, those are just some examples of the larger trend of making medicine more accessible.
You mentioned biotech softness as a continuing trend in 2024. Is there anything happening now to suggest a turnaround next year?
Investments are being prioritized for companies that are later-stage, so data will be the key. If you have good science and good data, you will see more dollars flood that space. At least for the next 12 to 18 months, in our expectation, the funding for early-stage science will still be challenging. The risk tolerance is a little lower right now, but there will always be exceptions. The Flagships and other bigger venture funds will continue to invest, but even there, you’re seeing a little bit of a step back in terms of the scale and scope of what they’re investing in, and that will probably continue for the next year or more.
Do you think we’ll see more aggressive dealmaking in 2024 or would you expect pharmas to remain cautious?
I expect M&A to continue to accelerate into 2024. We had a record year in 2020, and then things got really quiet in 2022. But we’ve had some deal activity in 2023, so my expectation is yes, it should. ADC and KRAS (cancer therapies) are interesting technologies on the oncology side that are getting a lot of attention, and people are moving into that space pretty aggressively. And cash is not a problem for many of the big biopharmas, so they can afford to be aggressive.
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