2025 Outlook for US Life Sciences and Health Care

4 Nov 2024

Deloitte

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2025 Outlook for US Life Sciences and Health Care

Consumers and convergence could disrupt the status quo.

By Kulleni Gebreyes, M.D.,vice chair and US Life Sciences & Health Care Industry leader, Deloitte

About 1 in 4 consumers do not think they have access to high-quality care, and nearly half of them have skipped care in the past year, according to new Deloitte research.1 Many health care consumers have grown accustomed to gaps in their care. In some cases, a month-long wait to see a doctor has become the norm.2 Costs might keep some people from buying a medical device to monitor a chronic condition. Others might forego a prescription drug because they can’t afford it or can’t get to a pharmacy.3

Some innovative life sciences and health care (LSHC) organizations are working to fill these gaps in care through strategic cross-industry collaborations and convergence across different sectors and industries. Incumbent LSHC organizations that are unable to harness the growing wave of consumerism and convergence risk losing market share and margin. As the new national leader for US Life Sciences and Health Care at Deloitte, I want to build bridges that connect incumbent organizations to each other, to outside industries, to communities, and to human beings.

Health care consumers are more than just patients and enrollees

We live in a rapidly changing world that often disrupts traditional ways of thinking. A few years ago, my colleague Neal Batra and I met with a group of physicians and health system executives. As Neal began to talk about the expanding role of empowered health care consumers, he was interrupted by a physician. He did not like his patients being referred to as “consumers.” Back when I was an emergency physician, I would have concurred with that sentiment. Doctors are the experts who tell patients what they need to do to get better. But I have come to understand that people are more than just patients at a hospital. They are more than just enrollees of a health plan. They are more than just users of a medical device or prescription drug. We are all human beings who sometimes need health care services, medical devices, and pharmaceuticals.

Consumers appear to be catalyzing change in the life sciences and health care sectors as they look beyond traditional care models and sales channels to meet their needs. About one in four consumers (24%) are willing to switch doctors if virtual visit options are not offered, according to results from Deloitte’s 2024 Survey of US Health Care Consumers (see The growing disconnect between virtual health availability and consumer demand). And nearly all respondents who have tried a virtual visit are willing to have another. Some consumers have turned to compounding pharmacies during drug shortages or to find lower-cost options,4 or have found ways to re-program, re-use, and re-connect certain medical devices to avoid buying new ones or to reduce costs.5 In response, a few pharmaceutical and medical device manufacturers have started to sell products directly to consumers.

As convenient, affordable, and consumer-focused products and services become more prevalent, incumbent life sciences and health care organizations could lose margin if they are unable to meet consumers where they are. In 2025, incumbent organizations are likely to pay much closer attention to evolving consumer preferences and expectations. This could help drive convergence among life sciences and health care organizations as innovative companies try to fill gaps in care. According to results of our 2025 Life Sciences and Health Care Outlook surveys, more than half (54%) of executives agree that it is important to engage in strategic cross-industry collaborations and convergence across different sectors and industries.

Convergence could drive industry disruption

Across industries, incumbent organizations tend to rely on established business models and processes. But improving those models, or making the processes more efficient, doesn’t tend to move the needle when it comes to changing the consumer experience. Industry disruptions—often driven by fragmentation, friction, and a need for more affordable options—have historically occurred despite existing business models and processes.

Start-ups and organizations from outside of the life sciences and health care sectors are working to fill the gap between consumer preferences and existing products and services. Private equity firms invested about $87 billion in health care start-ups between 2021 and 2024.6 During the same period, consumers spent nearly $550 billion on non-traditional health care products and services, according to a Deloitte analysis of the Global Wellness Institute’s 2022 report.

The market opportunity to fill the gap in consumer needs could drive convergence in 2025. More start-ups could enter the space, and existing organizations might develop new products and services to satisfy changing consumer preferences. Consider this: Virtual health, artificial intelligence (AI), fitness trackers, and wearable devices appear to be driving disruption in the sector, according to the Deloitte 2024 Health Care Consumer Survey. As a result, convergence could become a major trend for life sciences and health care companies in 2025. However, a collaborator or alliance today could become tomorrow’s competition (seeMedtech’s digital innovation era).

Consumers may be catalysts for change

Life sciences and health care organizations are beginning to pay closer attention to the needs, goals, and expectations of consumers, according to our research. Historically, getting a prescription, or access to a medical device, has almost always required a doctor’s visit followed by a trip to the pharmacy. However, as consumers become more comfortable buying their clothes, cosmetics, and groceries online and banking online, they could start to expect the same convenience for prescription drugs and medical devices. Consider these examples of how consumer preferences are disrupting the life sciences and health care sectors:

Convergence in health care: Last July, Humana’s CenterWell division said it would lease clinical space in retail stores in four states. The clinics, which are slated to open next summer, will provide primary care services targeted at older adults.7 In 2023, Atrium Health (part of Advocate Health) said it had partnered with Best Buy to enhance its hospital-at-home program. Under the arrangement, the electronics retailer will set up monitoring technology and help patients understand how to operate the digital medical devices.8
Direct-to-consumer (DTC) sales in life sciences: DTC drug sales have been around for several years. However, a rapidly expanding digital sales landscape, combined with increased adoption of virtual health, could push DTC from beyond the fringes of pharmaceutical sales in 2025.9 Early this year, Lilly announced a portal through which patients can purchase certain medicines directly from the manufacturer—often at a price lower than traditional channels.10 Consumers can connect to online pharmacists, and have medications delivered directly to their homes. A few months later, Pfizer launched its PfizerForAll portal where people who suffer from migraines and other conditions can schedule a virtual visit with a doctor, discuss treatment options, and have medications delivered.11 On the medical device side, Dexcom, a manufacturer of glucose monitors, recently released an over-the-counter continuous glucose monitor that can be purchased without a prescription. The device is aimed at consumers who don’t take insulin.12

Women’s health may be a growth opportunity

Women’s health is another area where consumers appear to be pushing back against the status quo. I am seeing changes in consumer products as well as in research and development...and the momentum appears to be growing (seeWhy US women skip or delay health care). Leaders of life sciences and health care organizations should evaluate existing models of care that are tied to a one-size-fits-all model based on historic data from male test subjects. More than 60% of women’s health-focused companies were founded in the six years leading up to 2022.13 Over the past decade, there has been a 1,000% increase in the number of businesses in this space.14 In addition, some companies—from outside of the life sciences and health care sectors—are beginning to focus on women’s health (see Women’s health investment trends). Moreover, some employers are challenging their health plans to develop coverage options that address the specific health needs of their women employees.

Conclusion

The life sciences and health care sector has long been focused on improving health outcomes, experience and reducing costs in the system and for consumers. Although there has been progress, the data suggests there is more work to do. To get there, health care organizations should also look for opportunities to keep up with changing consumer preferences and needs by helping to ensure that care is convenient and affordable for everyone. In the year ahead, a growing number of consumers is likely to expect more from the industry, which could push some organizations to think outside the box. Some of the most innovative consumer-focused solutions could come out of collaborations or through relationships with organizations that operate outside of life sciences and health care. Industry leaders will need to be bold, exercise leadership, and grow an operation that can meet the moment of the consumer.

Acknowledgments

Thank you to our Deloitte Health Equity Institute and the Deloitte Center for Health Solutions Managing Director, Dr. Jay Bhatt, and Deloitte Consulting Principal, Andy Davis, for their analysis and suggestions. We would like to acknowledge the team from the Deloitte Center for Health Solutions, including Wendy Gerhardt, Richa Malhotra, Madhushree Wagh, Maulesh Shukla, Leslie Korenda, Hemnabh Varia, and Christine Chang for their management, research, analysis, and interpretation of the multiple insights included in the outlook. We would also like to thank Brian Rush and Chris Kottenstette for their actuarial analysis of consumer spending trends in health care.