2025 may be a year of innovation, growth for life sciences and health care

By Jay Bhatt, D.O., managing director of the Deloitte Health Equity Institute and the Deloitte Center for Health Solutions, Deloitte Services, LP

2025 could be a year of innovation and growth for health care and life sciences organizations, according to the results of Deloitte’s annual industry outlook surveys. Executives surveyed from health systems, health plans, medical device companies, and biopharmaceutical companies cite growth and innovation as key focus areas for the year ahead. They intend to fortify their businesses and ensure their products and services are more affordable and accessible to broader populations. Our surveys also found that executives are more optimistic about their respective industries than they have been in years.

During a January 29 webcast, we will outline what life sciences and health care organizations should expect in the year ahead. Dr. Kulleni Gebreyes, vice chair and US Life Sciences and Health Care Industry leader, will moderate the session. The panel will include Pete Lyons, Deloitte’s US Life Sciences sector leader, and Alicia Janisch, US Health Care sector leader.

What to expect in health care: Two out of three surveyed health care executives say they are focusing on organic growth this year. They see improved consumer engagement, better consumer experiences, and stronger consumer trust as a key to attracting and retaining customers. In addition, more than 50% of health plan executives surveyed want to prioritize investments in transformative technologies, such as cloud and artificial intelligence (AI). Health system executives expect to remain more focused on strengthening their core legacy business technologies. Investments in technologies could help enhance consumer convenience and access to care. Alicia believes the vision for the future of health involves a shift from the conventional 9-to-5 model to a more flexible and consumer-centric approach. This evolution is driven by the need to better serve communities, improve access to health care, and enhance patient satisfaction. By broadening virtual health services, increasing office hours, and enhancing convenience, health systems and health plans might be better positioned to cater to the needs of their communities. These adaptations could help improve access to care and foster brand loyalty by appealing to consumers who value convenience and flexibility.

• What to expect from the incoming administration: The incoming administration and new Congress will likely have several priorities and issues to address, including laws and programs that could significantly affect health plans, health systems, and health care consumers. Donald Trump has indicated plans to address surprise medical billing, price transparency, and out-of-pocket costs for consumers.¹ However, the administration is not expected to extend the enhanced premium assistance tax credits, which are used to help defray the cost of health coverage purchased through the Affordable Care Act’s public insurance exchanges. Premium assistance was expanded in 2021 in response to the COVID-19 pandemic. The enhanced credits helped increase the number of enrollees to 21.4 million in 2024.² The expanded credits are set to expire at the end of 2025. If the administration opts not to extend the credits, some people will either need to transition to Medicaid or go without health coverage.³

What to expect in life sciences: Innovation was a top theme among life sciences executives surveyed. Companies that innovate are often rewarded with growth and the economic benefits that can come with it. For biopharma and medtech companies, the last couple of years have been a mixed bag in terms of innovation and growth, according to Pete. There is more optimism about the year ahead. For example, demand for GLP-1 drugs has led to substantial growth for some biopharmaceutical firms. M&A could help address needed pipeline innovation, faster commercialization opportunities, and addressing consumer’s unmet needs.

For 2025, we expect to see continued investment in oncology, rare diseases, and cell and gene therapy. About 75% of life sciences executives surveyed were positive, or cautiously positive, about the growth trajectory for 2025. This could signal a bit of a return to growth for the sector. 2024 was a challenging year for some life sciences companies when considering stock performance as a measure. The pharmaceutical index has lagged the overall performance of the market.⁴ The positive sentiment from surveyed executives and expected growth in M&A could result in a more favorable business environment for our sector.

• What to expect from the incoming administration: Trump highlighted several prescription drug topics during his 2024 campaign and through his endorsement of the 2024 Republican platform. He has promoted programs that aimed at lowering drug costs for seniors but has not explicitly endorsed the drug-pricing provisions of the Inflation Reduction Act. Instead, he has indicated a preference for revising a proposal from his first term, which involved creating a “most favored nation” model to cap Medicare drug prices at the levels paid by other countries, according to our 2025 life sciences outlook report.

Health equity may be key to growth in 2025 if integrated into the business

There is a recognition among health care and life sciences executives surveyed that in order to innovate and grow their businesses, their organizations must address unmet needs. A significant portion of the population continues to face challenges in accessing health care products and services. A majority of surveyed health equity leaders—from both health care and life sciences—expect their role will become increasingly important as their organizations recognize the link between equity and improved health and well-being.

Health care and life sciences organizations could have a difficult time growing or innovating if they are unable to successfully address health inequities. The context is broader than race and ethnicity. Women, people who live in rural areas, and those who have disabilities can face challenges in accessing or paying for health care products and services. Women, for example, are more likely than men to delay care and they also tend to spend more out of pocket for their health care.

The Centers for Medicare & Medicaid Services (CMS) recently released an updated framework to further advance health equity, expand coverage, and improve health outcomes for the more than 170 million individuals supported by CMS programs.⁵ The Health Equity Index, which projects streamlined processes and fewer administrative burdens, will mean clinicians can spend more time with patients. This could lead to a savings of about $16 billion over 10 years, according to CMS.⁶ Similarly, life sciences and health care organizations that prioritize health equity could generate substantial savings.

While there are health equity challenges facing our society, there are also potential opportunities for life sciences and health care organizations to better meet the needs of the population.

How do you think 2025 will play out? Join us on January 29^th, hear perspectives from Deloitte professionals and find out what life sciences and health care organizations should expect in the coming year, including what trends and key challenges may help participants shape their organization’s strategy.

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Endnotes:

1_{How Trump could affect social security and Medicare, Forbes, Nov. 6, 2024.}

2_{Who benefits from enhanced premium tax credits in the marketplace?, Urban Institute, June 2024}

3_{Health insurance costs will rise steeply if premium tax credit improvements expire, Center on Budget and Policy Priorities, June 4, 2024}

4_{2025 Outlook: Will pharma sector get a shot in its arm in 2025?, MSN, January 2025}

5_{CMS framework for health equity, CMS}

6_{CMS Health Equity fact sheet, CMS, December 3, 2024}

The executive’s participation in this article is solely for educational purposes based on their knowledge of the subject and the views expressed by them are solely their own. This article should not be deemed or construed to be for the purpose of soliciting business for any of the companies mentioned, nor does Deloitte advocate or endorse the services or products provided by these companies.

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