Return to Blog

5 challenges facing the pharmaceutical industry in 2021

Blog By Duncan Khoury – 14 May 2021

The pharmaceutical industry has certainly had its challenges in the past year. The global pandemic created an unprecedented demand for vaccines, shut down many clinical trials and resulted in a global PPE shortage. And now, almost midway through 2021, the industry is still scrambling to catch up. 

Although pharmaceutical companies have developed and begun to roll out a range of vaccines, this new phase doesn’t mean anything is settling down in the industry. Rather, 2021 has delivered its own set of challenges. 

Below are five of the most significant. 

Challenge #1 – Limited clinical trials during the pandemic 

For pharmaceutical companies running clinical trials for anything other than COVID-19 vaccines, the pandemic caused huge interruptions. For some more fortunate businesses, the impact was only temporary, and trials have since restarted. Unfortunately, however, thousands of trials worldwide have had to be postponed or discontinued altogether. 

Because new drug approvals depend on successful trials, this has meant the loss of a staggering amount of research, drug development and money. As a result, both the industry and those who fund it have suffered financially. 

Companies in the pharmaceutical industry are now looking to either restart or recreate trials with less face-to-face interaction. Virtual technology that will enable study completion is available, but it comes with a cost – significantly lowering or even erasing profit margins.

Challenge #2 – The cost of innovation and fast evolution

The demand for innovation spiked intensely in 2020, creating a huge financial impact across the entire industry. 

Healthcare providers and pharmaceutical developers who didn’t deal directly with COVID-19 found securing government or philanthropic funding difficult. And even organisations that focused on more directly dealing with the pandemic will feel the financial strain of innovation well into 2021 and beyond. 

The need to throw everything available at the crisis led to vaccines being developed much quicker than usual, but that speed came with a cost. Many pharmaceutical companies now find themselves dangerously low on working capital due to necessary spending on innovation and fast evolution. 

Challenge #3 – Supply chain disruptions

Just as with all industries, supply chain disruptions have emerged as one of the pharmaceutical industry’s biggest challenges in 2021. 

With a heavy reliance on China for raw materials, and on India for generic drug production, the industry is now experiencing huge supply shortages. According to the US Food and Drug Administration’s Center for Drug Evaluation and Research, China and India, combined account for 31% of FDA-registered facilities around the globe. And with both countries having been hit so hard by COVID-19, the supply chain worldwide is struggling. 

Additionally, pharmaceutical production overall has been affected by resource issues. More specifically, however, over 50+ countries have limited or embargoed PPE exports, which has deeply impacted those companies that rely on offshore products. 

Challenge #4 – Cultural focus on prevention, rather than treatment 

Generally speaking, the cultural shift towards a focus on preventing, rather than curing, many diseases is great news. However, for the pharmaceutical industry, it means a serious drop in funding, both government and otherwise. 

As new developments in ‘lifestyle cures’ such as elimination diets and increasing physical activity become commonplace, consumers are moving away from medication as the primary treatment for disease. With this trend comes lower medication turnover and more roadblocks to securing desperately needed funding. 

Challenge #5 – Developing new cures for presently incurable diseases

Identifying cures for presently incurable diseases such as cancer, Alzheimer’s and epilepsy is a challenge that the pharmaceutical industry has always faced. Quick solutions are extremely rare, and research and development is a long game. 

Here in Australia, the Morrison Government pledged $5.9 million to fund stem cell research last year. This was part of a $150 million commitment over nine years, showing just how big a drive is needed in this area. But developing new and innovative treatments requires continuous – and substantial – investment. Without it, the goal of discovering cures that work well enough to earn strict regulatory approvals will be difficult to achieve.

The answer is often to strengthen cash flow

Although these challenges vary significantly in their roots, exploring healthcare finance solutions could make a difference in addressing and overcoming all of them. 

Access to strong and reliable sources of cash flow can be a make or break for pharmaceutical companies. Talk to us about establishing a Trade Finance facility, exploring Debtor Finance or securing your supply chain with our highly innovative Supply Chain Accelerate solution. 

Get in touch today.


Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.