The end of global pharma products? Framing the consequences of global uncertainty

Geopolitical uncertainty and different regional approaches to drug approval and reimbursement regulations are challenging the traditional model of developing and commercialising global products. While most pharma companies currently operate with separate US and international commercial arms, supported by global functions, the differences of how regions approve and pay for medicines is only growing. In this blog, Hanno Ronte, partner at Deloitte with extensive experience shaping pharma strategies and a deep understanding of global market dynamics, explores how pharma execs can balance global coordination with regional responsiveness to navigate this evolving landscape. The blog examines the forces driving this change, its impact on business models and how to build resilience across key functions.

The regionalisation landscape of drug launches

The traditional pharma business model, predicated on global product development and marketing, may be under pressure. Geopolitical tensions, diverging regulatory landscapes, and persistent cost pressures are creating unexpected challenges and business volatility. About one-third of life sciences execs interviewed for our Global Life Sciences Outlook expressed concern about potential changes to US regulations in 2025, while 37 per cent were apprehensive about global regulatory changes and geopolitical uncertainties. Protectionist policies, tariffs and trade wars are incentivising local manufacturing, while variations in regulatory requirements for clinical trials and drug approvals are creating distinct regional markets with differences in clinical trial designs, the level of evidence needed for approval, and the types of endpoints considered. Consequently, less than half (48 per cent) of novel active substances (NASs) launched 2014-2022 were approved by the three major markets of US, EU and Japan.¹ Notably, nine per cent of NASs were only approved by the US, see Figure 1.²

Figure 1. NASs approved by the US, EU and/or Japan from 2014-2022

Source: IQVIA Institute, Oct 2024

Additionally, the number of NASs receiving EMA approval within two years of FDA approval has been decreasing over the past 10 years, see Figure 2. This illustrates the increasing complexity of navigating multiple regulatory environments.³

Figure 2. EMA approvals from 2014-2022 following an FDA approval

Source: IQVIA Institute, Oct 2024

Note: *The 2-year look forward for the FDA 2022 column in the chart is incomplete as approval data goes through 2024 August.

Distinct regional features across US, Europe, Japan and China

The United States represents the largest and traditionally most attractive pharmaceutical market, but its complexity remains significant.⁴ Traditionally, the FDA has relied heavily on placebo-controlled trials; however, this is decreasing in some therapeutic areas such as oncology, due to ethical considerations and the availability of effective standard-of-care treatments, leading to a greater use of active comparator trials.⁵ The US drug pricing system is a complex interplay of market forces, government regulations and private insurance negotiations, often resulting in high drug prices and accessibility challenges for many Americans. Regulatory pressures on pricing (including the 340B Drug Pricing Program and the Inflation Reduction Act's impact on Medicare negotiation power and potential price caps), coupled with tariffs promoting domestic manufacturing, are creating an uncertain environment that may impact innovation by potentially reducing R&D investment and slowing drug development.^6,7

In contrast, the European Union's pharma market prioritises value-based pricing and has varied reimbursement requirements across member states. The EMA is actively working to harmonise regulatory and reimbursement processes, through the new Health Technology Regulation (HTAR) and the revision of the EU pharmaceutical legislation, but navigating the complex regulatory pathway remains a challenge.^8,9 The emphasis on cost-effectiveness, often demonstrated through active-comparator trials (especially in later development phases), means that only truly innovative medicines with clear superiority over existing treatments are likely to gain both regulatory and reimbursement approval. This approach, while aiming to ensure affordability and accessibility for European citizens, can reduce the number of products launched, particularly impacting smaller companies and those developing 'me-too' drugs.

While initially reliant on foreign expertise, China's growing scientific capabilities and manufacturing infrastructure are increasingly challenging the dominance of Western pharma companies. This rapid transformation is driven by substantial government investment, a strategic 'China for China' approach prioritising domestic drug development and production tailored to the specific needs of the Chinese population and strengthened data privacy and export related regulations.¹⁰ The level of innovation within the Chinese pharma industry is also evolving, with a growing focus on developing novel therapies and local R&D activities alongside the production of generic drugs.¹¹ There is therefore a need for intricate pricing negotiations with the government and to cultivate strong relationships within the complex mix of public and private entities in China’s healthcare system.

Japan represents a sizeable pharmaceutical market but presents unique challenges for drug developers and marketers.¹² The regulatory landscape is exceptionally stringent, demanding rigorous clinical data, lengthy review processes, and specific documentation. Except for orphan drugs and those addressing high unmet medical needs, local clinical trials are typically required. Like Europe, approvals are outcome-focused with value-based pricing and reimbursement models. Navigating the Japanese market requires a tailored approach that considers the formal, hierarchical structure of the healthcare system and the importance of building strong relationships.

Three potential futures for pharma

As a result of these diverging regional requirements, Deloitte envision three potential future scenarios:

1. The winner-takes-all global products market - only highly differentiated products that meet the most stringent and widespread global requirements will succeed. This means fewer products, but each with superior clinical evidence, highly differentiated and broad applicability.
2. Regionally tailored products - pharma companies maintain global functions (R&D, business development, M&A, supply chain), but develop and commercialise distinct products tailored to specific regional needs and regulatory environments.
3. A fully regionalised industry - pharma companies largely operate as regional entities, each with its own clinical development, supply chain and commercial strategies, optimising all processes for local markets. Global functions may be retained, but with a significantly reduced scope.

Building geopolitical resilience: a checklist for pharma executives

The implications of responding to the growing difference in regional requirements could be profound and present critical questions for pharma executives across R&D, commercial, supply chain and corporate functions.

• R&D: How is our R&D portfolio structured to balance global opportunities with regional needs? Do we need a single evidence package or tailored submissions for each region? How are we mitigating diverse pricing pressures and the impact of health technology assessments in key regions?
• Commercial: How do pricing and reimbursement strategies vary across countries? What is our optimal launch sequence considering regional variations and market access challenges? How do we adapt our go-to-market models for each region (for example sales rep focus vs. medical affairs)? What is the role of global marketing in a regionally fragmented world?
• Supply Chain: Will tariffs and ‘local made’ requirements impact our manufacturing footprint? Should we prioritise global plants, regional facilities, or a combination, to ensure supply chain resilience? How do we balance scale with national proximity?
• Corporate Functions: What are the tax implications of regionalisation and different supply chain set-ups? Where should we hold our intellectual property to optimise protection and tax efficiency? What are the implications for transfer pricing, given regional variations? Which functions should be global, regional, or local?

Conclusion

Variations across the globe in regulatory requirements, pricing, market access and competition could mean that the era of a truly global pharma product portfolio is drawing to a close. Pharma executives need to consider how they can adapt effectively, embracing both global coordination and regional responsiveness. However, fragmentation raises questions about access to innovative treatments. A thriving future hinges on the industry's ability to navigate this complex landscape and ensure patients worldwide have access to the innovative treatments they need.