Dr K Ramadas
India’s pharmaceutical sector’s growth has been phenomenal in the last several years. Very soon, India will become the world’s pharmacy industry.
Pharmacy is one of the key sectors of industry that’s sharping the healthcare in the world and the role of India in ensuring its sustainable growth in the coming years. At the same time, it is essential to take a close look at the challenges faced by pharmacy sector in India in 2025.
Transformative technologies, a shifting US policy and regulatory agenda and changing societal expectations are reshaping how value is created. The pharma sector is not immune to the forces of disruption. Once again, the sector delivered lagging shareholder returns in 2024. The often-heard refrain of “we just need to execute” falls short of this moment’s demands, according to a recent study by the global consulting agency, PwC.
A look at pharma’s recent performance underscores the need for bold action. PwC’s equal-weight index of 50 pharma companies analyzes the sector’s total shareholder returns performance relative to the S&P 500 Equal Weighted Index. From 2018 through November 2024, the PwC pharma index returned 7.6% to shareholders, compared with more than 15% for the S&P 500. Over the last year, this dynamic became even more pronounced with the PwC pharma index returning 13.9% compared to 28.7% for the S&P through November 2024.
Further, since 2018, an increasingly limited set of companies have influenced positive returns in the pharmaceuticals sector. Within the S&P 500, the so-called “Magnificent 7” accounted for 40% of the increase in value since 2018. In the pharma industry, this dynamic is even more stark with just two companies accounting for nearly 60% of the increase in value growth among the 50 pharma companies analyzed by PwC. For those outside of this group, 2025 is the year to consider what changes could finally disrupt this dynamic.
Macro and micro forces are driving a surge in scientific breakthroughs, while innovations and the pace of business is accelerating. Amid these disruptive forces and the ongoing value creation challenges facing the sector, it’s no wonder CEOs are questioning whether their business models are built to last
Future shape of health
Curing disease will continue to be highly valued. Major advances in our understanding of biology, combined with the explosion of emerging technology, means there are exciting new possibilities as health risks are detected, interventions are personalized and care is delivered. Transformative medicines are making strides in once-challenging areas like obesity, and new approvals in categories like Alzheimer’s disease are bringing hope to patients. However, ongoing affordability challenges and persistent disparity in outcomes can drive the system toward new approaches.
Across the health ecosystem, value creation is moving in the direction of prevention, with more focus on addressing the risk factors of health decline; personalization, with data-driven, customized treatments based on factors like genetics and behavior; prediction, with active analysis of well-being and early intervention to improve health outcomes and point of care, with more accessible and convenient settings for delivery of care.
As shifts in the broader health ecosystem unfold, five immediate dynamics stand out in determining the pharma business model of the future: Exponential impacts of AI. Transform how work is conducted and how decisions are made. Results can include better predictions, faster actions and greater outcomes. AI can help power the organizations of the future.
Rapid acceleration in what we know about human biology. Data plus computing power have unlocked a deeper understanding of the human body. This deeper understanding will enable better understanding of risk factors, uncover new pathways to treatment and can drive discovery of breakthrough medicines.
Continued push to cut drug prices. Around the world, including the premium-priced US market, efforts are intensifying to help reduce the price of medicines. The mechanisms to exert pressure include direct government intervention like the Inflation Reduction Act and competitive pricing strategies in the commercial market, leveraging the increased number of treatment options.
Empowered consumers. Many consumers view their health as a top priority because of its impact on personal finances and quality of life. In the future, consumers will be better equipped with their own data, like genetic history or biomarker data from wearable devices and tools like ChatGPT, to shape their decisions. Their role in decision-making and their expectations for value will increase.
Crisis as a way of life. A next era of volatility in the world unfolds, thanks to cyber attacks, geopolitical unrest, natural disasters and societal polarization among the trends driving a new era of global volatility.
These trends will happen amid a changing policy landscape in 2025, shaped by the new administration. Given the size and profitability of the US market, strategic planners will be well-served by analyzing the policy positions of the incoming Trump administration for the potential of health policies, tariffs, taxes and M&A oversight to accelerate change.
(Dr K Ramadas is senior journalist based out of Hyderabad, India. He covers for Excel India the coming FIP (International pharmacy congress) 2025 to be held from August 31-September 3, 2025 in Copenhagen, Denmark).
