The global healthcare industry gets bigger every year. The growth is not just from public sector spending. Private funding is a big part of it too. Well-being is a very big industry, and it keeps growing all the time. Here is a look at where it’s headed.
We are going to spend more on health
During the past few years worldwide expenditure on health has seen a steady rise. WHO statistics tell us that global health spending increased from EUR 6.24 trillion in 2016 to EUR 6.40 trillion in 2017. The 2017 figure represented 10% of the GDPs of all countries in the world put together. A 2020 Deloitte study on global healthcare outlook found that the health industry grew at a rate of 2.7% annually from 2014 and 2018. The study estimates that from 2020 to 2023 the industry will grow even faster, at 5% annually. Global health spending will exceed 10.2% of global GDP. This is confirmed by estimates from the WHO. That means the average person will spend 10% or more of their income on health related expenses.
How big is pharma?
It is widely known that manufacturing and selling medicines is a huge enterprise. Here is an overview of just how big. In 2019 US pharmaceutical giant Pfizer reported revenues of EUR 42 billion, with net earnings of EUR 13 billion. Pfizer employs merely 88,000 people worldwide.
In revenue terms Pfizer is closely followed by two Swiss companies. Roche reported 2019 revenues of EUR 41 billion with net earnings of EUR 11.2 billion. In the same year Novartis earned gross revenues worth EUR 38.64 billion and net earnings amounting to EUR 10 billion. There are numerous other players in the industry.
Healthcare and migrants
Several of the world’s largest pharmaceutical companies were started by foreigners. Pfizer is one of them. It was founded by German-born Charles Pfizer. 59% of all pharmaceutical companies, such as Janssen Pharmaceutica in Italy, are owned by migrants.
The Global healthcare industry continues to employ migrants in large numbers. A Brookings Institute study from April 2020 found that 25% of doctors and 17% of nurses in the US are foreign-born. A 2019 OECD study gives similar statistics for the UK, France, and much of the EU. Health sector in the UK employs 30% foreign-born physicians and 17% foreign-born nurses. France has 23% foreign-born doctors and 11% foreign-born nurses. Italy has a significant proportion of migrant healthcare professionals. The Association of Physicians of Foreign Origin in Italy (APFI) says that there are currently 37,500 nurses of foreign origin employed in private hospitals in Italy. Nurses earn up to EUR 50,000 per year, which is several times what they would earn for the same jobs in their home countries. Higher earnings allow migrant professionals in Italy to send remittances to their home countries via channels such as the Ria Money Transfer App.
The APFI further reports that there are 77,500 foreign citizens in Italy with healthcare qualifications. These include physiotherapists, pharmacists, and other healthcare professionals. 3 Italian associations working for the welfare of migrants recently urged the government update migration regulations. They want easier and faster hiring of foreign doctors and nurses in Italy to fill the widening demand-supply gap. The healthcare systems of several EU countries are reliant on overseas professionals. Without migrants they would be seriously challenged.
Increased focus on R&D
Statista Global Pharmaceutical Industry figures show that, pharma companies are pumping 20-30% of their annual profits into research and development initiatives. For 2021 experts suggest an increased focus on the development of precision medicines. According to the Precision Medicine Initiative, this is an emerging approach for disease treatment and prevention. It takes into account individual variability in genes, environment, and lifestyles.
Organizations will increasingly employ artificial intelligence (AI) to assist in vaccine development. According to Next Move Strategy Consulting the global healthcare artificial intelligence market stood at EUR 3.83 billion in 2019. The market is expected to grow at a compounded annual rate of 48.2%. It is predicted to exceed EUR 291 billion by 2030. Research is a big part of the health business. It offers tremendous career opportunities for young professionals.
Future outlook
Many pharmaceutical giants are racing to develop COVID-19 vaccines, investing big in research. Others are hoping to cash in on increased public spending. An IQVIA Institute study estimates global private health spending to reach EUR 900 billion in 2024, up from approximately EUR 804 billion in 2020. Unlike previous years drug research will become increasingly collaborative across pharma companies. The focus will be firmly on the development of new medicines.