HUMAN HEALTH

Human health industry essentials.  
Fast growing industry, ripe with opportunities.

Human Health is a $1 trillion sector.
Human Health can be divided into a number of segments such as Pharmaceuticals and Medical Devices which are growing and are projected to continue to grow at a rate of 4-10% over the upcoming years. Each of these segments poses specific challenges and opportunities, although there are some overarching transformational themes spanning across the entire Human Health spectrum.

Key transformational themes we see for Human Health

Key trends ripple across all segments, leading to specific challenges and opportunities.
Ageing population
It is estimated that by 2025, over 25% of the world’s population will be over 50 years old. This will lead to prevalence of key related diseases or conditions in the areas such as Cardiovascular, Oncology, Diabetes or Brain degeneration, with large unmet needs.
Cost pressure
At the current pace, healthcare spend is projected to outpace GDP growth. This will put more pressure on Human Health as payers are looking at ways to reduce cost. Human Health companies are not only pressured to reduce price for their drugs, but are also challenged to show more value from their drugs.
Ageing population
It is estimated that by 2025, over 25% of the world’s population will be over 50 years of age. This will lead to prevalence of key related diseases or conditions in the areas such as Cardiovascular disease, Oncology, Diabetes etc, all with significant unmet needs.
Cost pressure
At the current pace, healthcare spend is projected to outpace GDP growth. This will put more pressure on Human Health as payers look for ways to reduce costs. Human Health companies are not only pressured to reduce prices for their drugs but are also challenged to show more value from their drugs. 
Need for more data and insights
Human Health is undergoing the digital transformation experienced by other industries as well and the need for data and insights is expanding across the entire value chain.
Growing complexity vs declining productivity
Complexity is growing across all segments and all therapeutic areas whereas R&D productivity has been gradually declining, with new launches reporting decreasing year-on-year performance.  
Need for more data and insights
Human Health is undergoing the digital transformation experienced by other industries as well and the need for data and insights is expanding across the entire value chain.
Growing complexity vs. declining productivity
Complexity is growing across all segments and all therapeutic areas whereas R&D productivity has been gradually declining, with new launches reporting decreasing year-on-year performance.  

Oppurtunities

How Human Health companies respond to the challenges they face.

Opportunities

How Human Health companies can respond to the challenges they face.
Strategic acquisitions to drive innovation
Human Health companies continue to consolidate their position and acquire strategic players, especially targets that will strengthen the core areas of growth and innovation or key geographical presence.
Streamlining operating model and organisation
Increasingly, Human Health companies pursue operating model changes (e.g. deep focus in select therapeutic areas) and organisation redesign to adapt to new market realities and better support the delivery of their strategy.
Strategic acquisitions to drive innovation
Human Health companies continue to consolidate their position and acquire strategic players, especially targets that will strengthen the core areas of growth and innovation or key geographical presence. 
Streamlining operating model and organisation
Increasingly, Human Health companies pursue operating model changes (e.g. deep focus in select therapeutic areas) and organisation redesign to adapt to new market realities and better support the delivery of their strategy. 
Targeted near term growth
Human Health players position themselves for near-term growth through launch excellence, emerging market growth and building capabilities in new areas such as analytics and digital.
Longer term growth strategies
Human Health players need to increasingly rely on partnerships and external collaboration to develop innovative technologies, but also refocusing their portfolio on core growth areas.
Targeted near term growth
Human Health players position themselves for near-term growth through launch excellence, emerging market growth and building capabilities in new areas such as analytics and digital.
Longer term growth strategies
Human Health players need to increasingly rely on partnerships and external collaboration to develop innovative technologies, but also refocusing their portfolio on core growth areas.

How to move forward?

Fast changing landscape has created challenges but also opened up opportunities for companies active in this sector. This is an exciting and unprecedented time for a Human Health player and Stonehaven Consulting is distinctively positioned to partner with clients and support on creating growth strategies.

Pharmaceuticals

The Pharmaceuticals sector, mainly including prescription drugs, has grown at a robust rate over the past 10 years and is expected to continue to do so over the next 5 years. The segment size is currently $700m+ and is expected to grow at more than 6% annually over the next five years, with a lot of growth being driven by specialty products, especially in Oncology. We see few key trends continuing to shape this segment and drive future growth. 
Focus on high return areas
Concentration on traditionally high return therapeutic areas such as Oncology and on age-related diseases.
Externally generated pipeline
Companies increasingly relying on R&D partnerships and deals, especially at earlier stages.
Data and value-based results
Proof of efficacy and drug safety are no longer sufficient. High hurdles now set to differentiate from existing standard of care.
Next frontier technologies
Emergence of new, disruptive technologies such as gene therapies, nanotechnologies, bioelectronics.
These trends will force Human Health companies into being more agile and into thinking more clearly about how and where they want to compete.
Our Role
Stonehaven Consulting has worked with Pharmaceuticals clients of all sizes to advise on topics related to partnerships, M&A strategy, geographical strategy or therapeutic area focus.

Medical Devices

The overall Medical Device market has grown very slowly for the last 5 years, mainly due to spending cuts, suspended investments and price pressure. Moving forward, the segment is expected to recover and grow at approximately 5% annually for the next 5 years, mainly due to demographic changes, expanding into new geographies and replacement of equipment. Some of the trends we think will shape this segment over the coming years are:
Buyers consolidation
Move to competitive tendering and group purchasing with consolidated hospitals buying power.
Price pressure
Increased focus on price and cost effectiveness rather than “quality at any cost”.
Data-based effectiveness
Many products without clear clinical differentiation are 
at risk from more cost-effective alternatives.
Vertical integration
Supply chain partners are evolving into competitors and are increasingly consolidating, especially in emerging markets.
These trends result in increasing pressure on Medical Devices players to find new growth avenues and operate in a leaner, more cost-effective way.

Our Role

Stonehaven Consulting has served some of the largest Medical Devices companies in the world, on a variety of strategy, M&A and operations related topics to overcome challenges posed by increasing cost pressure and competition through consolidation, vertical integration in target geographies and streamlining operating model to support the effective delivery of strategy.

Key Contacts

Matthias Hofer
Managing Partner
Juerg Baggenstoss
Partner
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