The Impact of the Top 3 Strategic Imperatives on Healthcare and Allied Industries

Geopolitical Chaos

Why

• In 2024, conflicts in Europe and the Middle East (including those around the Red Sea) continue to weigh on global supply chains.
• Reshoring and nearshoring drug and pharmaceutical manufacturing have been policy priorities for global governments. To curtail supply chain shocks, nations seek to establish strong healthcare ecosystems with active pharmaceutical ingredients, personal protective equipment, and medical equipment.

Frost Perspective

• A long-term local focus on strengthening pharmaceutical supply chains will boost talent demand and drive this sector’s overall manufacturing contribution.
• Shorter supply chains will increase efficiency for the healthcare, pharmaceutical, and life sciences industries.

Disruptive Technologies

Why

• In recent years, the main disruptors of global healthcare have been rapid digitalization and technological integration (e.g., AI Adoption). The long-lasting COVID-19 pandemic has helped virtual care and digital healthcare segments grow exponentially.
• While long-term digital healthcare policies have taken center stage globally, developing markets are lagging, as they lack information and communication technology (ICT) infrastructure.

Frost Perspective

• Digitalizing healthcare services will circumvent such challenges as worker burnout and safety, enabling inclusive healthcare access.
• Digital healthcare in developed and developing markets (e.g., India, Saudi Arabia, and the United Arab Emirates) is growing significantly. However, efforts at the grassroots level within marginalize populations will foster the development of health services. Developing markets must accelerate financial inclusivity in Latin America and Africa.

Transformative Megatrends

Why

• Most developed markets face low fertility rates and aging populations, raising the dependency ratio.
• COVID-19 has seen developing markets prioritizing universal health coverage, especially focusing on expanding healthcare access in remote and rural areas.
• Digitalization and consumerism are driving the growth of personalized and localized care-giving.

Frost Perspective

• While a growing elderly population will generate opportunities in the service economy, governments will face higher fiscal burdens as social security spending increases.
• The expansion of health services at the grassroots level among marginalized populations will foster the development of industries such as insurance, insurtech, and real estate.
• Efficient digital ecosystems will be crucial drivers of the global care economy.

The Global Economic Environment—An Overview

• In 2023, global real gross domestic product (GDP) growth slowed from 2022's 3.5% to 3.2%, owing to upbeat growth in developing markets, such as India and China, and the resilience of the US economy. In 2024, global growth will maintain a steady trajectory at 3.2%.
• Persistent price pressures warrant tight monetary policies in many nations, impacting consumption and investment streams in the near term.
• In the long run, digital transformation and rapid AI integration in the manufacturing and tertiary sectors will boost productivity. Demographic dividends and greater purchasing power in developing markets in Latin America, the Middle East, Africa, and Asia will make these nations the main drivers of global growth.
• Supply chain disruptions arising from the COVID-19 pandemic and global conflicts have tightened the focus on building local and regional manufacturing capabilities. As a result, policy and financial support has increased to localize various manufacturing sub-sectors, such as the electric mobility, semiconductor, renewable, and pharmaceutical industries. Diversified supply chains and shorter logistics and transportation timelines will benefit the long-term performance of these industries in developed markets.

Growth Drivers

Growth Restraints

• Access to Healthcare in Developing Markets: In rural and remote areas, especially in developing markets, insurance and health coverage penetration depends heavily on access to healthcare. This dependence limits the industry’s customer base and curtails these nations’ sustainable development.
• Inflationary Pressures on Healthcare Costs: In many parts of the world, elevated inflationary pressures raise healthcare service and life-saving drug costs. In low-income geographies, these pressures combine with poor healthcare infrastructure to keep costs high, impacting consumer demand.
• Shortages in Skilled Labor: Skilled labor and healthcare support staff shortages restrain global industries, particularly in the nursing and primary care segments. Such talent shortfalls will impact the long-term performance of healthcare and allied segments.
• Regulatory and Compliance Challenges: Regulatory and compliance challenges in local markets hinder innovation, R&D, and the adoption of new technologies. In such cases, patient outcome success rates decline, driving up costs for stakeholders.
• Post-Pandemic Debt Burdens: Post-pandemic, debt burdens have sky-rocketed in developed and developing markets, warranting fiscal austerity measures. The rollback of state support will impact the demand capacity of the low-income and elderly populations.