Global public and private expenditure on healthcare exceeded USD10 trillion in 2021, making the industry one of the most important globally. Yet, the inflationary environment is threatening this development. While some of the major health trends, like shifting to healthier behaviours or adopting telehealth, are clearly benefiting from the search for newfound efficiency and cost-saving, growth in the personalisation and transformation of medical production might stall due to the high costs of initial investments and businesses being on the lookout for cost-saving options.
Inflation facilitates a shift to healthier behaviour
Even before the COVID-19 pandemic, sustained high prevalence of lifestyle diseases was facilitating a shift to reduced tobacco use, moderate alcohol intake, a balanced diet and sufficient exercising. This shift has intensified over 2019-2022 due to the growing health awareness brought by the pandemic. According to the Euromonitor International Voice of the Consumer: Health and Nutrition and Nicotine Surveys, in 2022, 75% of global respondents were already trying to quit or reduce smoking, 48% were quitting drinking alcohol and 64% wished to improve their diets.
The inflationary environment is a big push for those who plan to reduce consumption of alcoholic drinks and tobacco products to be healthier and save money. Yet, moving to a healthy diet might be trickier due to the higher cost of healthier options. Therefore, aiding consumers in their search for affordable but nutritious food and encouraging eating healthily through bundling or giving rewards could be the strategic pushes required to keep the trend going.
Personalisation takes a step back
Personalised healthcare (precision medicine (PM)), driven by the increasing prevalence and economic burden of chronic diseases and rising preference for tailored products, is penetrating healthcare systems. According to the Euromonitor International Voice of the Industry: Consumer Health Survey, 54% of industry professionals thought that personalising products is an influential future trend in 2021.
Inflation generally slows personalisation in healthcare. When faced with rising prices, patients choose cheaper non-branded products and traditional therapies. Likewise, producers reconsider pursuing costly Research & Development (R&D) against a backdrop of falling demand and increasing input costs. Yet, the shift from niche to mainstream production, evolving collaboration and extensive communication about the potential savings might act as a buffer to the inflationary damage.
Transforming medproduction pauses
The manufacturing of medicinal products is changing to embrace the benefits of Industry 4.0 as well as the transformation of the supply chains. Pharma 4.0 has gained increasing importance as a way to pull up sluggish productivity, increase efficiency and gain competitive advantage. Pharmaceuticals and medical equipment producers aim to transform the production process with automation and robotisation, cloud technology, artificial intelligence, machine learning and other digital technologies.
Healthcare manufacturing transformation is a partial solution to the inflation problem, ie greater digitalisation and broadening or shortening supply chains are the way to increase efficiency, save costs and reduce uncertainty in production processes. Yet, due to growing input prices, the investment payback periods grow longer and the profitability decreases, which might slow the Pharma 4.0 and supply chain transformation. Scenario and contingency planning, leveraging the existing technologies and striving for energy independence might be viable solutions for the major challenges posed by the inflationary environment: increasing prices of hi-tech components, soaring energy costs and lingering uncertainty.
Telehealth gets more attention as a way to reduce healthcare costs
Telehealth in its broadest sense refers to the provision of healthcare services remotely, using video conferencing, digital transmission of medical images and remote access to patient records. According to the Euromonitor International Voice of the Consumer: Health and Nutrition Survey, in 2022, 69% of respondents worldwide found virtual doctors or medical professionals trustworthy, up from 58% in 2019, which showed that the trend is gathering momentum globally.
Consumers as well as the government start to recognise digital healthcare services as a cheaper alternative to traditional health services, therefore inflation should accelerate the overall adoption of telehealth. Taking advantage of public initiatives to gain credibility, targeting a wider audience to extend the clientele pool and bundling would come as natural solutions to promoting the telehealth trend.
Sustainability is taking baby steps in healthcare
High negative impact on the environment and intensifying competition among medical companies increased the importance of sustainability strategies in the healthcare sector. Strong corporate commitments and pressure from consumers are also expected to considerably improve the adoption of a sustainable agenda in the health sector, in addition to the ambitious sustainability goals adopted by the largest medical companies.
Sustainability initiatives are especially expensive for health companies due to the complex manufacturing systems, the strong influence of external factors and the lack of room for compromises on the product’s composition. Some ways to advance sustainability at a time of rising prices could be prioritising downstream emissions, entering partnerships for recycling and upcycling, and increasing clear and transparent communication.
Navigating to success in an inflationary environment is tricky. However, inflation did not catch health companies by surprise and the majority of the top trends were already directed at reducing or containing costs. Looking for alternative raw materials, adopting more innovative production technologies, automation, digitalisation, turning to sustainability and effective communication are among the measures that will help businesses constrain costs and build resilience to cope with inflation and future shocks.
For further insight, see the report on Global Healthcare Trends: Inflation Surge or for a Consumer Health industry perspective, Democratising Personalisation in Health and Beauty and The Promise and Difficulties of Sustainability in Consumer Health.