Heading into 2023, inflation is the top concern for the pharmaceutical industry, according to a poll of executives conducted by GlobalData Healthcare.
The survey, which was taken between Oct. 26 and Nov. 23, showed that executives placed inflation first, drug pricing and reimbursement constraints second, the Ukraine conflict third, and the political divide in the United States fourth among the top challenges hampering growth in the industry.
The idea that the pharma industry is recession-proof because of the growing demand for medicines—especially as the population ages—is being put to the test. Rising operational costs were a growing concern for industry leaders throughout 2022.
In March of last year, for example, Viatris cut its earnings projection to a range of $5.8 billion to $6.2 billion just a few months after saying $6.2 billion would be the floor.
“What really has triggered the incremental additional inflation that we saw,” Viatris CEO Michael Goettler said at the Raymond James investor conference in March 2022.
Around the same time last year, executives from Johnson & Johnson, GSK and Bayer, voiced similar concerns. Later in the year, Merck KGaA and others warned about risks from inflation.
Many months later, the same pressures remain. On Thursday, shares on the pan-European STOXX 600 slipped .2% “ahead of euro zone inflation data,” Reuters reported. Credit for a large portion of the drop went to healthcare stocks, such as Novartis and Sanofi, which were down more than 1% each, Reuters noted.
In GlobalData’s survey of industry executives, other top concerns hindering growth heading into 2023 are China, Brexit, the vertical integration of healthcare systems and patent expirations.
The firm noted that the industry will need to navigate "financial and strategic risks." Pharma companies "will need to find new ways to offset regulatory and inflationary pressures," the GlobalData team said.