2025 Healthcare Outlook: Uncertainty and Innovation

For the healthcare sector, 2024 was a tumultuous year. Among other challenges, blockbuster drugs continued to come off patent, scrutiny of healthcare costs intensified, and healthcare reimbursement rates declined. Consequently, healthcare was the worst performer among all S&P 500 sectors for the second year in a row.

For 2025, the Trump administration and its controversial healthcare nominees are contributing a healthy dose of uncertainty to the mix, as is the interest rate environment. At the same time, the outlook for therapeutic innovation remains bright.

In this blog, we leverage proprietary expert interviews from the AlphaSense market research platform to understand the top trends shaping the healthcare landscape in 2025.

Policy Uncertainty 

The Trump administration and its slate of unconventional healthcare nominees, including  Health and Human Services nominee, Robert F. Kennedy Jr. (RFK), have clouded 2025 visibility for the healthcare sector and generated a mix of expectations for healthcare systems and providers, health insurers, and biotech/pharma companies. Below, we cover the likely effects of expected policies on these three groups.  

Healthcare Systems and Providers

Experts expect the Trump administration to cut Medicaid funding to help pay for an extension of the Trump tax cuts (set to expire at the end of 2025), as well as Trump campaign pledges to eliminate taxes on tips and overtime. 

“Making a substantial cut to Medicaid would help [Trump] institute his no-tax-on-tips [pledge]. Maybe he does a political calculation that yes, it may be unpopular to cut some areas on Medicaid, but it’s going to be so popular to get rid of taxes on tips that [it will] outweigh the negative publicity around Medicaid.”

 — V.P. of Government Relations with a large U.S. Health System   

Medicaid cuts would likely hurt healthcare systems and providers because Medicaid represents a substantial group of covered patients. The Trump administration is also expected to pay for tax cuts by letting the Biden administration’s enhanced Affordable Care Act (ACA) subsidies expire at the end of 2025, which would further reduce the pool of covered patients for healthcare systems and providers. 

Health Insurers 

Experts anticipate the Trump administration will lessen regulatory pressure on Medicare Advantage, which would be positive for commercial insurance companies that run Medicare Advantage plans. 

However, Trump’s support for pharmacy benefits manager (PBM) reform is considered a negative for the industry. This is because PBMs operate as middlemen in the prescription drug supply chain, and most are subsidiaries of health insurance companies. 

Meanwhile, the public backlash erupting after the slaying of UnitedHealthcare’s CEO has raised questions about whether health insurers will be forced to illuminate or change their business practices.   

“I can tell you that the C-suite at a lot of health plans are really reevaluating how they operate based off of what happened because the [UnitedHealthcare] action itself is horrible. [What] makes it significantly worse is how the public reacted.” 

— Director with a large managed care organization  

Biotech and Pharma

The Trump administration is expected to bring a relaxation of antitrust enforcement. This would likely be positive for biopharma M&A activity, particularly as large biopharma companies remain under pressure to replace an estimated $300B in sales during 2025-2030 due to loss of exclusivity in high-revenue drugs.  

On the other hand, experts predict the Trump administration will not repeal prescription drug pricing provisions contained in Biden’s Inflation Reduction Act (IRA) that are opposed by the biopharma industry. Experts say the provisions are too appealing as cost-saving measures and too popular with voters to be undone.

“With Trump being reelected, it’s a little less clear how the IRA is going to proceed, [but] I don’t think it’s going to be repealed. Remember, Trump has said that he thinks drug prices are too high too.”

— Former biopharma exec responsible for health policy

Experts also see Trump’s healthcare agency nominees as negative influences for the biopharma industry, as their anti-establishment views could sow further public mistrust in vaccines, health screenings, and Western medicine. In addition, the slate of nominees has sent contradictory signals about drug regulation. 

Specifically, experts note the co-leaders of Trump’s Department of Government Efficiency, Elon Musk and Vivek Ramaswamy, are pushing for greater speed and efficiency in pharmaceutical regulation, while RFK Jr., the Health and Human Services nominee, is seeking greater stringency and accountability at the FDA with plans to overhaul the agency.  

“[RFK has] remarked on firing a lot of staff. …I think it’s going to be challenging because the FDA is already very overworked. The number of applications coming in — they’re not able to meet the demand just from their [current] personnel. Cutting more staff just might mean longer wait times for approval and regulatory decisions.” 

— VP of an operating company that partners with biopharma companies on drug development 

Further complicating matters, Trump’s proposed tariff policies could create a sustained inflationary environment that keeps interest rates high and constrains capital. This would be especially challenging for small, cash-strapped biotechs pursuing higher-risk therapies, although these factors may not come into play until post 2025. 

Therapeutic Innovation

Ultimately, therapeutic innovation is the engine that propels the healthcare industry. Policy uncertainty aside, experts expect the rapid pace of scientific breakthroughs made during the past five or more years to set up 2025 to be another strong year for therapeutic innovation.

Here are some of the most anticipated 2025 therapeutic innovations:

Oral GLP-1 Obesity Drugs

Experts believe 2025 will be pivotal for oral GLP-1 obesity drugs, with Eli Lilly‘s orforglipron set to deliver the first phase 3 data for the oral class. Although oral agents are expected to be less efficacious than the current injectable versions, they would likely be cheaper and faster to manufacture, potentially easing the GLP-1 supply-demand imbalance. 

Consequently, orals may capture as much as 30% of the global obesity market by 2030, according to some Wall Street estimates. Lilly’s data will establish the benchmark for other oral GLP-1 players with planned 2025 readouts including Pfizer, AstraZeneca, Roche, Vertex, GSK, and Structure Therapeutics.

“I am very enthusiastic about [Lilly’s oral] orforglipron. In terms of efficacy, it’s a little weaker [than injectables], but that’s to be expected. As long as it’s within shouting distance and as long as the pricing is aligned with its efficacy expectation, this is something I’m very enthusiastic [about].” 

— Endocrinologist at Columbia University Medical Center

Bispecifics for Solid Cancer Tumors

Bispecific antibodies are generating significant buzz as a promising immunotherapy for solid cancer tumors. Unlike monoclonal antibodies, which bind to one antigen on the surface of a cancer cell, bispecific antibodies bind to two different antigens to bridge together a cancer cell and an immune cell to attack it. With this direct approach, bispecifics promise enhanced efficacy with a better safety profile. 

This year, all eyes are on Summit Therapeutics’ ivonescimab bispecific, which targets the PD-1 and VEGF proteins. In September, ivonescimab showed superiority to Merck’s blockbuster Keytruda monoclonal antibody as a first-line treatment for non-small cell lung cancer (NSCLC). However, the trial was limited to measuring progression-free survival in Chinese patients, raising questions about whether ivonescimab’s efficacy will translate to overall survival in a broader patient population. 

Experts will be looking for answers in mid-2025 from Summit’s phase-3 HARMONi trial, which evaluates ivonescimab in combination with two chemotherapy drugs for the treatment of NSCLC. In addition, BioNTech is expected to report data from phase-2 global trials of its PD-L1/VEGF bispecific (BNT327) for treating small cell lung cancer and triple-negative breast cancer.

“At least in a Chinese population [Summit’s ivonescimab bispecific] does appear to be superior [to Keytruda]. It does look like a better drug. The big question though is overall survival data; that is the number one thing that we need to know at the end of the day.” 

— Oncologist at Arizona Center for Cancer Care 

Long-Lasting HIV Prevention

Although the development of an HIV vaccine has been unsuccessful thus far, a different strategy — pre-exposure prophylaxis (PrEP) — has proven highly effective in preventing HIV.  PrEP drugs have been on the market for more than 10 years and are mostly oral drugs taken daily. However, Gilead has developed a new PrEP drug called lenacapavir, which is administered via subcutaneous injection every six months and is expected to receive FDA approval in 2025. 

Experts are impressed by Gilead’s Purpose 1 and Purpose 2 clinical trials, both of which published data in 2024 showing lenacapavir to be significantly more effective than oral PrEP drugs, explained, in part, by lenacapavir’s long-lasting nature. 

Experts say lenacapavir offers particular promise for marginalized populations that struggle with daily dosing and for lower-income countries where PrEP access has historically been limited. In addition, experts believe their patients would prefer lenacapavir to the injectable PrEP drug Apretude from Viiv Healthcare (majority-owned by GSK). Apretude was approved in 2021, requires administration every two months, and represents just a small portion of the market. Still, experts say insurance coverage of lenacapavir in the United States is a wildcard. 

“[Lenacapavir] is a very safe, ridiculously effective drug. …I think it would be hard to find any physician that does PrEP that has issues with these results. These [results] are astonishingly good. Doctors are going to like this, but it comes down to paying for it.” – Infectious disease physician at Icahn School of Medicine at Mount Sinai  

Cardiometabiolic Disease: ATTR-CM Treatments

Alnylam’s vutrisiran is expected to receive FDA approval in 2025 for ATTR-CM (transthyretin amyloid cardiomyopathy), which is a progressive and potentially fatal condition that occurs when the liver produces faulty proteins that build up in the heart. These faulty proteins make it difficult for the heart to pump blood effectively. 

If approved, vutrisiran will join ATTR-CM treatments from Pfizer (Vyndamax) and BridgeBio (Attruby), although vutrisiran has a different mechanism of action. Vutrisiran targets the production of the abnormal protein (i.e. the root cause) and is administered every three months by subcutaneous injection, while the others stabilize the faulty protein (rather than reducing its production) and are oral drugs taken daily. 

Experts are enthusiastic about vutrisiran as another ATTR-CM treatment option, although they have raised concerns about insurance coverage and questioned whether it makes sense to switch patients to vutrisiran from existing treatments. Experts said vutrisiran may be best used in combination with existing treatments, if insurance coverage allows, or as monotherapy in new patients. 

Reactions from regulators, payers and clinicians to vutrisiran will likely offer signals about the acceptance of Intellia Therapeutics and Regeneron’s NTLA-2001 ATTR-CM treatment. NTLA-2001 uses a CRISPR-based gene editing approach that could be curative and eliminate the need for ongoing medication. Although it’s early, experts are excited about NTLA-2001’s potential and are eager to see additional data coming this year from Intellia and Regeneron’s ongoing phase 1 study of NTLA-2001.  

“[Without] knowing the long-term side effects, [NTLA-2001 is] a promising agent. It’s a different mechanism of action. Hopefully, this will be available widespread, and [patients] will not have many barriers to afford this medication. I think overall, it looks promising.” 

— Cardiologist in private practice

Stay on Top of the Evolving Healthcare Landscape with AlphaSense

The healthcare sector is evolving at an accelerated pace, and it’s critical to stay on top of every new development, trend, and key player that could affect the market. But in today’s age of information overload, finding the right insights and cutting through the noise is a nearly impossible task. 

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