Key Challenges Facing the Pharma Industry in 2025

In a video interview with Pharma Commerce, Gaurav Gupta, managing director and head of R&D at Kotter, discusses the regulatory pressures and rising R&D costs impacting the pharmaceutical industry as it looks toward 2025. Gupta highlighted that many regulatory challenges, such as drug pricing pressures from the Inflation Reduction Act, will persist in the coming years. Additionally, he pointed out the growing integration of real-world evidence into clinical trials and the need for regulators to keep pace with emerging technologies like AI. Gupta believes that these trends will continue to shape the industry without major new disruptions expected in the short term.

He also comments on the steps pharmaceutical leaders should take to better prepare their teams and organizations for supply chain disruptions; specific technical and "soft" skills that will be critical for pharmaceutical leaders and frontline employees to thrive in the evolving industry landscape, and how this can help when it comes to proactivity in handling talent shortages.

A transcript of Gupta’s conversation with PC can be found below.

PC: Looking ahead to 2025, what types of regulatory pressures and areas pertaining to rising R&D costs will impact the pharma industry, and how can companies proactively address these obstacles?

Gupta: On the regulatory pressures, in many ways, it's a continuation of what we've seen over the last couple of years. Of course, there could always be something new that happens, particularly with the new administration, but I think we've already seen some of the pressures on pricing, for example, with the Inflation Reduction Act, and that's going to play out over the next couple of years in various different ways. I think that's going to continue. I think we're already seeing some new sort of thinking from regulators around things like real-world evidence and how that's being integrated into trials. We're going to continue to see that evolve.

We're going to see the evolution of regulation around emerging technologies, whether that's AI obviously being a big component of that, but also other new technologies. I think that's always a constant—as the technology develops, the regulations have to step in and keep up. I think we're going to continue to see that over the next couple of years. I don't know that there's—at least at the moment—anything significant that we can forecast that's all that different from what's already been happening. I think it's going to be a continuation of that.

On the R&D costs, it’s a similar story because the underlying dynamics haven't changed. The underlying dynamics still drive some of the same challenges probably more so around where to invest, and what’s the right sort of allocation of R&D resources, whether that's thinking about white space versus existing areas; thinking about target population, smaller target populations, which has sort of been a trend that's been going on for a little while now; thinking about even things like digital therapeutics, or AI and technology, and how much are we investing in that, versus investing in that versus investing in traditional drug development. I think that the big question will be, where do you allocate your resources? There's no question that there's going to be an increase in R&D spending. I think that's been consistent for the last 20 years at this stage.

I think that's probably where you're going to see some of the decision making, and I do think, to your question surrounding if those are connected: I think what's connected is that both of those create a level of sort of uncertainty in decision-making because we don't have all of the information that we're going to need to decide what we should be doing on the regulatory front, or what we should be doing on the R&D front. I think that the skillset around how you make decisions in an uncertain world, and how you make decisions with incomplete information is probably the key to success for most leaders and most businesses.