Global healthcare spending to fall in 2023 in real terms — report
GLOBAL healthcare spending, public and private combined, will rise by just 4.9% in 2023 — not enough for an actual increase in real terms, given high inflation and slow economic growth, according to a forecast by the Economist Intelligence Unit (EIU).
“With the cost of staff and treatments rising, healthcare spending will fall in real terms, making it harder for providers to tackle the backlog of non-COVID care,” said EIU healthcare analyst Aakash Babu in a statement. “Drugmakers will also see higher costs for staff, as well as active pharmaceutical ingredients (APIs) and other supplies.”
In its Healthcare in 2023 report, the research and analysis division of The Economist Group said that governments will face new challenges as the pandemic slows and the focus tilts away from coronavirus disease 2019 (COVID-19).
Aside from increased yet still insufficient healthcare spending and higher drugmakers’ costs, key trends to watch out for in 2023 include continued digitalization of healthcare, patent cliffs for drugs, and measures to control pharmaceutical pricing.
These patterns are an estimated continuation of 2022, with 2023 being the second successive year of real-terms funding declines.
Governments will be pushing down on pharma prices, while some companies face patent expiries, potentially spurring mergers and acquisitions in the sector, added Mr. Babu.
RISK MITIGATIONIn the Philippines, supply chain challenges have been felt from geopolitical issues involving Russia and Ukraine, the zero-COVID policy of China, and high inflation.
The Pharmaceutical and Healthcare Association of the Philippines (PHAP) has implemented risk mitigation strategies, including close monitoring of companies providing direct materials, contract manufacturing, and logistics to constant reviews of safety stock levels for medicines, vaccines, and diagnostics.
“Instituting risk mitigation strategies could help ensure medicine availability in the country and minimize the impact of any price movements,” PHAP said in an e-mail interview with BusinessWorld.
“We have exerted efforts to mitigate the impact of supply chain disruptions, absorbing additional expenses without passing these on to patients as much as possible.”
PHAP added that the government must ease the impact of supply chain disruptions by expanding pooled procurement, price negotiations, and multi-year contracts and partnerships with the private sector.
Meanwhile, the digitalization of healthcare is expected to continue, with more investment going into the health startup space, said Mr. Babu of EIU.
He told BusinessWorld via e-mail: “This could be prominent in markets like Asia and the Asia Pacific, who have been early adopters of the trend. However, the use of health data will come under stricter regulation in the US, Europe, and China.” — Brontë H. Lacsamana
