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“The industry will continue to benefit from favourable demographic and lifestyle factors, innovations and a diminishing threat from expiring patents in addition to the shot in the arm for the whole sector from the Covid-19 pandemic whose impact goes beyond the vaccines,” says Olaf Tölke, head of corporate ratings at Scope and lead healthcare-sector analyst.

Healthcare awareness among large parts of the global population has significantly increased in the course of 2020, triggered by the coronavirus pandemic. In addition, demographic and lifestyle factors – such as ageing populations, diet-related illnesses in developed countries, growing prosperity in emerging markets - continue to underpin the sector’s robust sales growth, set to run ahead of economic growth in many countries.

Tolke says the sector has learned two important lessons from the pandemic to date.

“The initial stage of the Covid-19 crisis early in 2020 abruptly highlighted the danger of being dependent on only one or very few suppliers,” he says. To be sure, the risk of individual companies’ over-dependence on suppliers in China or India did not materialise, but it was one of the factors identified in the crisis which could have resulted in much more disruption to the global healthcare sector. France’s Sanofi SA has committed to keep its sizable raw materials production for drug development in Europe, whereas some competitors remain exposed to supply-chain disruption by relying only on emerging markets for sourcing.

A second lesson learned related to the industry’s reliance on face-to-face visits between doctors and, from the commercial standpoint, the sales staff of drug makers marketing newly approved treatments, or, from the healthcare perspective, with patients from the point of view of hospital-based drug administration.

“New trends of digitisation and e-healthcare services to support patient monitoring at home will be a welcome change to less flexible pre-Covid practices,” says Tölke.

A separate lesson for the sector is the example of the pharma companies which have successfully concentrated on a few treatment areas like oncology, immunology and rare diseases, partly through targeted acquisitions. Take AstraZeneca PLC’s recently announced 39bn takeover bid for Alexion Pharmaceuticals Inc. which has focused on rare diseases and had recorded yearly growth rates of about 20% for the past five years.

“This strategy of focusing on high-growth medical areas, now complemented by vaccines, makes sense in our view from multiple angles,” says Tölke.

The approach allows companies to avoid more crowded treatment areas with strong pricing pressure like diabetes or cardiovascular drugs. The approach also enables them to realise significant growth and higher prices in a generally more protected commercial environment given the narrow range of competitors. The rare disease or orphan drug market is projected by EvaluatePharma to grow by a compound annual growth rate of 10.8% until 2026, about twice as much as the underlying pharma market.