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Impact of Politics on the Pharmaceutical Industry

Impact of Politics on the Pharmaceutical Industry

April 28, 2017

The global pharmaceutical industry is currently in a dynamic state due to the rise in the number of partnerships, mergers, and acquisitions that have taken place in the past few years. Therefore the recent political changes across the globe are set to make things more uncertain.

The US may be seeing major changes under the leadership of the new Government. We can expect to see a number of changes, such as the repeal of Obamacare, reduced taxes and regulations, and lowered drug prices based on the promises made by the Trump administration. Though it remains to be seen as to which promises will actually be upheld by the Government and how they will affect the industry. Analysts in the industry remain optimistic and predict that there could be positive manifestations. For example, Trump administration’s stand on the escalating drug prices will probably lead to the introduction of measures to help bring down the prices.

Ripple effects, although small, can already be seen in the industry, even before any Government mandated regulations have been introduced. Many pharmaceutical companies such as the ones listed below have announced that they would be making efforts to combat the extreme increase in drug prices. Although it will be a long road until definite effects, depending on the Government regulations that are implemented, are felt across the industry.

  • Launch of Emflaza, a drug indicated for Duchenne Muscular Dystrophy manufactured by Marathon Pharmaceuticals and costs $89,000 has been put on hold due to the backlash received from the public as well as the Government
  • Late last year, Allergan CEO, Brent Saunders announced that the company will be more responsible towards keeping the prices of life-saving drugs affordable
  • Following Allergan’s footsteps, Novo Nordisk also vowed to keep their annual price increases in check and will try to limit them to single digit percentage increases
  • Early this year, Abbvie promised to keep their drug price increases under 10 percent
  • Eli Lilly is taking small steps towards limiting drug prices by offering a discount plan for insulin. The company mentions that they are working to find creative solutions to limit drug prices

Apart from US, UK and Europe are facing their own challenges with Brexit. Actual effects of Brexit still remain to be seen. Until things are finalized, it can be expected that companies will put their growth plans, partnerships, and any other investments on hold for the time being which may lead the industry to stagnation. The pound faltering and losing its value will be one of the main factors affecting the pharmaceutical companies both big and small. It could be while before we see definite strategies and measures taken by the pharma companies to combat the aftereffects of Brexit.  Other countries such as France, Germany are also set to have elections which will only add to the uncertainty and unstable atmosphere globally. The Brexit may however provide the British pharmaceutical industry with an opportunity to establish themselves as a strong industry. At the same time it could leave the British population without access to new and life-saving drugs manufactured by European originators in the event that drug control and import regulations are made more stringent. Another troubling factor for the British pharma industry is that it is relatively small as compared to EU and if the European Medicines Agency (EMA) decides to move their current headquarters from UK, UK will lose their EMA membership and may have to invest money to setup a new regulatory body. This may also lead to delayed drug approvals and imports, thereby leading to drug shortages.

The global pharmaceutical industry therefore will witness many changes and it will be interesting to see how different companies across the globe manage these uncertain circumstances.

TCI has an extensive background in the pharmaceutical and life sciences industry and would be pleased to discuss any specific needs that you may have.  To discuss potential projects, please contact:

Sanchi Datt
Senior Research Analyst
(703) 531-0255