Breakthroughs or bottlenecks? Pharma industry outlook, trends and strategies for 2025

As we enter 2025, should the pharmaceutical industry prepare for a period of tech-powered transformation or one weighed down by gridlock and burdensome regulations? On the one hand, the case for optimism is clear: Given advancements in technology and disease understanding, we can imagine a world in which drug manufacturers and health systems harness today’s wealth of data to fuel unprecedented levels of scientific innovation and personalized care. On the other hand, the case for pessimism is arguably just as clear: Onerous and cost-motivated policies limit access to innovation and prevent us from fully harnessing data, tech and AI.

The near-term will likely include elements of both of these scenarios, but stakeholders across the ecosystem can focus on what it will take to achieve a science- and tech-enabled utopia. And while no one can predict the future, we can examine the trends shaping it—just as we did last year—and the strategies pharma companies are using to push the industry forward.

Numerous forces are propelling our industry toward a future where data, AI and technology drive new levels of scientific innovation, care efficiency and care personalization. Two trends predominate:

Scientific advancements. The industry is experiencing an unprecedented time of data-driven scientific breakthroughs. Whether through advanced genomic sequencing, AI, transcriptomics or other omics, we can identify previously undiagnosed conditions and gain a much deeper understanding of the biology of disease. New studies, for example, reveal how genomic sequencing can identify conditions not typically found in standard newborn screenings. Much of this is driving personalized treatments and precision medicine, offering hope to patients across the world. Last summer, promising trial results for Vertex’s cell therapy for Type 1 diabetes hinted at the potential of curative therapy, with some patients even reaching insulin independence 12 months after administration. And that’s on top of growing investments in anti-aging technologies and pathways, such as epigenetic reprogramming and stem cell treatments, which target aging as the root cause of many conditions. 

Acceleration of results through technology. Longitudinal, multimodal data, generative AI and machine learning help enhance care efficiency, deliver personalized medicine and reimagine drug discovery and development. Spending on AI in healthcare is projected to reach $188 billion by 2030, representing a 37% compound annual growth rate from 2022. It’s hard to argue with investing in gen AI when you see it can diagnose cancer with 96% accuracy or that it outperforms nurses on critical tasks at a fraction of the cost. While more needs to be done to ensure patient safety and enable broad adoption, AI’s potential is incredible.

What could derail pharma companies and health systems from taking advantage of these advances in science and technology? Market access challenges, geographical variations in how health data is regulated and AI trust and safety issues—to name a few elements. Broadscale validation, transparency standards and other safeguards will need to be in place to build public trust in AI and ensure its safety.

Longstanding and emerging challenges threaten to counteract the positive trends propelling the industry forward. Three stand out:

Demographic shifts. By 2050, the world’s population aged 60 and above is projected to double to 2.1 billion. This will increase health expenditures as a share of gross domestic product (GDP). In the EU, for instance, spending on healthcare, long-term care and pensions is projected to rise from 24.6% in 2019 to 27% in 2040.

Overburdened health systems. The world faces a projected shortage of 10 million healthcare workers by 2030, resulting in increased pressure on existing healthcare workers and a decline in patient experience. The 2025 ZS Future of Health Report found that in four of the five countries for which we had year-over-year data—the U.K., Germany, China and Japan—the proportion of primary care providers (PCPs) and internal medicine practitioners who see more than 100 patients each week rose, in some cases significantly. It also revealed that only 29% of healthcare consumers across seven major healthcare systems said they feel cared for after healthcare interactions in 2024—compared with 37% in 2023.

Regulatory, policy and reimbursement challenges. Cost-motivated regulations like the U.S.’s Inflation Reduction Act (IRA), the European Commission’s revision of the EU’s general pharmaceutical legislation and more continue to put downward pressure on pharma’s revenues. The IRA alone is projected to drive a 31% decrease in U.S. pharmaceutical company revenues through 2039 and lead to 135 fewer new asset approvals as provisions change the cost-benefit analysis of development. Meanwhile, roughly 50% of U.S. pharma companies say they won’t work with Chinese firms in areas like clinical development, following proposed legislation meant to encourage domestic operations.

With all these variables in mind, let’s explore the strategies the industry is using to overcome these headwinds and push toward the optimistic future state.

Whether it’s innovations in novel modalities and mechanisms of action (MOAs), breakthroughs in therapy areas with high unmet needs or changes to commercial strategies, most pharma pipelines and portfolios look much different today than they did as recently as a couple of years ago.

Novel modalities and MOAs. Pharmaceutical companies are increasingly adopting new modalities and MOAs, as firms focus on diverse and robust portfolios to redefine standards of care. Over the past two years, each of the world’s top 15 pharma companies has announced investments in emerging modalities, exemplified by a 40% increase in first approvals for novel modalities in 2023. Emerging modalities driving this surge include fusion proteins, oligonucleotide therapies, multispecific antibodies, antibody drug conjugates, radioligand therapies, oncolytic viruses and more. One exciting example: Precigen is preparing to launch the first nonsurgical treatment for recurrent respiratory papillomatosis.

Targeting TAs with high unmet needs. Drugmakers are increasingly shifting focus to therapy areas (TAs) that are broadly perceived to have high unmet needs, with about half of the 10 largest pharma companies focusing on TAs beyond core areas such as oncology and immunology. Whether it’s next-generation Alzheimer’s drug candidates, sustained advances in weight management, assets targeting Lp(a) in cardiovascular or promising mRNA-based cancer vaccines, pharma companies are expanding beyond the TAs that have sustained their business models in recent years.

Evolving pipeline and launch strategies. To prioritize specific therapy areas and their broader goals, some pharma companies are cutting assets in their pipelines and reducing costs. For example, Roche recently announced its intention to trim the number of disease areas it targets to 11, with particular focus on five—including cardiovascular, renal and metabolic diseases; immunology; and ophthalmology.  

At the same time, the industry is working to reduce its reliance on blockbusters and to sustain revenue in a difficult environment. They’re accomplishing this through the usual route of big acquisitions as well as cultivating an “always be launching” mindset. Take GSK, which expects to launch 12 new treatments in 2025.

Pharma companies are investing heavily in data and AI to foster innovation and reduce drug development costs and timelines, with 85% of biopharma executives saying they plan to invest in data, digital and AI in R&D for 2025. It’s easy to understand their outlook: One top-10 pharma company expects to save roughly $1 billion in drug development costs over five years, per a ZS analysis. Positive examples abound:

• Amgen has doubled its clinical trial enrollment speed using a multimodal, data-driven machine learning tool.
• BMS is using AI and machine learning to advance protein degradation science.
• Sanofi is collaborating with OpenAI and Formation Bio to develop an AI tool that reduces patient recruitment timelines “from months to minutes” by speeding up recruitment strategy and content creation.

Pharma companies are continuing to focus on making clinical trials more inclusive through investments in community-based clinical trials, decentralized clinical trials and workforce education. Promising examples include BMS reporting that more than 60% of its active research sites are in highly diverse communities, and Moderna and Sanofi achieving 80% patient diversity after successfully deploying an online platform to enroll diverse patients for vaccine and COPD trials.

Supply chains and manufacturing haven’t traditionally been seen as a significant strategic concern for pharma, but the outlook is changing as the industry confronts shrinking profit margins and evolving geopolitical threats in an interconnected world. Pharma companies are optimizing their supply chains and building resilience using technology, especially AI. More than 85% of biopharma executives we surveyed say they are investing in data, AI and digital tools in 2025 to build supply chain resiliency. And 90% of these executives said they are investing in smart manufacturing to increase supply chain efficiency—Amgen and Roche are just two prominent examples.

Amid the unpredictability of shifting global economic dynamics, pharmaceutical companies are focused on self-sufficiency and growing their footprint in emerging markets primed for growth. Proposed legislation and other concerns are forcing companies to strengthen their domestic manufacturing and diversify their supply chains.

“We’ll be prepared to address any political changes that occur in Washington, D.C., to protect the continuity of our supply,” one executive at a large pharma company told us.

Pharma companies continue to invest in customer engagement transformation and shifting from a siloed strategy to a whole-system one. Nearly every pharma company expects to invest in data, digital and AI for commercial and medical operations in the near future. Those investments will largely focus in two areas:

1. Omnichannel and hyper-personalized engagement. Why omnichannel and hyper-personalization? Because it works: Dynamic, targeted calls are twice as effective as other types of calls, leading to a 5%-10% lift in top-line brand sales. As one pharma executive told us, commercial teams no longer have to guess the right topic when engaging HCPs—instead, data drives relevant and personalized conversations. Companies like Takeda are successfully using data and AI to customize next best actions, while companies like Pfizer are using gen AI to create personalized content and more.

2. Medical and commercial collaboration. Organizations are increasingly investing in nontraditional roles, with 60% of pharma executives saying field medical excellence positions are their top priority. And many are also investing heavily in professionalizing medical operations teams.

In addition to efforts to improve HCP engagement, pharmaceutical companies are slowly but surely shifting from a one-stakeholder-at-a-time engagement model to one predicated on engaging multiple stakeholders across the healthcare ecosystem.

Notable examples include:

• A new research alliance between the Broad Institute, Massachusetts Institute of Technology, Harvard and Novo Nordisk aims to identify novel therapeutic targets for Type 2 diabetes and cardiometabolic diseases.
• Pfizer partnered with the American Cancer Society to launch “Change the Odds,” a three-year campaign to address disparities in cancer care by enhancing access to screenings, clinical trials and patient support in underrepresented communities.

There’s been much talk of pharma’s trust deficit with healthcare consumers, but our Future of Health Report reveals that consumers are open to pharma-driven digital patient engagement to improve care. No wonder seven of the top-12 pharma companies announced digital investments in patient support between 2023 and 2024.

Pharma is focused on engaging patients across the life cycle and developing tools for prediagnosis, screening and diagnosis, treatment and ongoing care. And perhaps more than ever, pharma recognizes the benefits of engaging directly with patients for an end-to-end digital healthcare experience. Pfizer launched its digital platform PfizerForAll to connect patients with HCPs, find and book vaccine appointments, receive at-home tests and medications and more. LillyDirect, meanwhile, includes home delivery of some Lilly medicines (including GLP-1s) through third-party pharmacy services.

While tech, data and AI will drive pharmaceutical innovation in 2025 and beyond, companies recognize that talent will also play a key role. According to ZS’s survey of 127 technology executives at multinational biotechnology, pharma and life sciences companies:

• More than 60% view upskilling and AI literacy programs as vital to boost gen AI adoption.
• About 70% plan to invest in AI literacy and training programs for their broader workforces in 2025. AstraZeneca, Merck and Johnson & Johnson are already pursuing these types of investments.

It would be an understatement to say it’s an interesting time to work in pharma. The political landscape in the U.S. will be defined by uncertainty, so pharma should focus on what’s within its control. There’s cautious optimism for mergers and acquisitions after a down year in 2024. Companies should continue to operate with an “always be launching” mentality to combat pressure on revenues, and they should continue to invest in tech and AI that drives R&D innovation and lessens health system burden.

Peering further into the future, look for scientific breakthroughs to enhance prevention, extend life and perhaps even deliver the Holy Grail of healthy longevity. And innovative multistakeholder partnerships—such as these between Lilly and the U.K. government and Pfizer and UT Southwestern Medical Center—will prioritize innovation and prevention while broadening engagement across the patient journey. 
 

Pharma’s challenges are real and significant, but there’s ample reason to believe we’re moving closer to a tech- and data-powered healthcare utopia rather than a cost-constrained and gridlocked healthcare hellscape. Time will tell. But when we pair committed, talented people with rapidly evolving technologies, we can engage better with patients, stakeholders and customers, steady our supply chains, optimize our portfolios and develop therapeutic innovations that extend healthy life for people around the world.