5 Healthcare Trends from the Industry’s Top Companies

The healthcare industry is navigating a series of inflection points that could shape near-term performance and long-term growth. Investors and companies are assessing scientific progress in an environment shaped by U.S. reforms and global geopolitical uncertainties, from drug pricing debates to tariff tensions and the evolving role of China in biotech.

Conversations at Morgan Stanley’s 23^rd Annual Global Healthcare Conference underscored that innovation remains a focus for companies in areas such as neurology, oncology and immunology, as well as the integration of AI and partnerships or strategic M&A between companies.

Based on panel discussions with the biggest companies’ executives at the conference, top healthcare themes for investors and corporates to watch are:

1.      Breakthrough innovations shaping diagnostics, treatments and care delivery

2.      AI use cases for efficiency and transformation across the value chain

3.      China’s role in innovation and geopolitical complexity

4.      Drug pricing and policy pressures that are reshaping markets

5.      M&A and partnerships as companies position for the next decade

"Healthcare companies and investors are weighing medical innovations alongside policy uncertainty and shifting global dynamics,” said Siddhart Nahata, Global Head of Healthcare Investment Banking at Morgan Stanley. “How companies navigate this mix will shape where capital flows."

1. Innovations and New Technologies Transforming Healthcare

Recent advancements in areas such as oncology, immunology and neuroscience are redefining the landscape for companies, patients and investors. Some of the innovations shared by executives at the conference include:

• Patient testing developments. Integrated diagnostics are unlocking new ways to analyze patient data. Specialist doctors can now order all of the assays a patient might need and generate a unified report. Sequencing technology, in addition, is shifting from targeted panels to whole genome sequencing (WGS), enabling a single chassis of data that can support multiple analyses over time. Instead of fragmented results, clinicians and patients may benefit from comprehensive views that could be more actionable and cost effective. WGS may help detect rare or novel variants. Data centralization also enables data licensing because it creates standardized, comprehensive and reuseable datasets.

• Biomarker breakthroughs. New biomarkers are transforming how diseases are detected and monitored, with major implications in Alzheimer’s and oncology. In Alzheimer’s, blood-based tests are offering a faster and less-invasive alternative to spinal taps and PET scans, enabling earlier identification of patients for treatment and trials. In cancer, tumor DNA is powering liquid biopsies that detect mutations or recurrence from a simple blood draw, while minimal residual disease assays can reveal traces of cancer left after therapy.

• Subcutaneous delivery advancements. Executives highlighted innovations making the subcutaneous delivery of medications a more viable alternative to intravenous infusion. Enzyme-enabled dispersion and improvements in biologic formulations allow much larger fluid volumes to be administered under the skin, enabling patients to administer at home in much less time, safely and comfortably. Injectable medications are also freeing up clinic resources; one executive underscored how they are helping ease burden on neurology nurses, especially in the treatment of diseases such as Alzheimer’s.

• mRNA cancer vaccines. These represent a new modality beyond traditional cancer treatments such as surgeries, radiation, chemotherapy, targeted therapy and immunotherapy. mRNA cancer vaccines are designed to train the body’s own immune system to recognize and attack tumor-specific mutations. The same mRNA platforms that enabled rapid COVID-19 vaccines are now being repurposed in oncology to stimulate targeted immune responses. The vaccines sequence a patient’s tumor, identifying unique mutations, which also makes them customized to each patient’s cancer.

2. AI Use Cases in Healthcare

For most healthcare companies, artificial intelligence’s current value lies in cost savings and efficiency. Providers are deploying AI to streamline workflows, while drugmakers see its potential in areas like pricing and risk models. Patient-facing contact centers are another early application, as AI tools can improve service while lowering overhead.

Emerging use cases are taking shape in clinical research. By analyzing large datasets, AI can accelerate trial recruitment, identify the most promising geographies for enrollment and optimize trial design to better match real-world patient populations.

Though nascent now, looking further ahead AI may have application in drug discovery and development. The rise of foundation models and synthetic data—one corporate executive mentioned using cryopreserved tumor tissue for the latter—may be forming some of the backdrop of these applications by expanding useable datasets and enabling analytic power at scale. Still, biopharma companies are treading carefully in pursuing AI for drug development to prioritize patient safety.

3. China’s Biotech Evolution: Innovation and Constraints

Large patient pools, faster recruitment and cost advantages have influenced global drugmakers to turn to China in their pursuit of innovation, and now especially in complex modalities, such as oncology biologics, cell therapies and autoimmune treatments, company executives at the conference shared. Supported by advances in AI, biomarker development and delivery technologies capable of crossing the blood-brain barrier, companies are focused on disease modification, compared to the last 20 years, when drugmakers pursued products that provided symptom relief.

Chinese government incentives and returnee scientists have driven an investment boom in Chinese biotech in the last several years, which has created an attractive ecosystem for drug developers that need resources and facilities to advance their proofs of concept. Global pharma companies see China as a way to fast-track innovation, setting up future pipelines in areas such as oncology, diabetes and immunology and hedging against patent expirations. Annual revenue from drugs originating in China could soar to $34 billion by 2030 and $220 billion by 2040, according to Morgan Stanley Research.

"There are a number of structural advantages the Chinese biotechs have in terms of cost, speed of innovation and the ability to get drugs through early clinical development," said Cailin McGurk, Co-Head of Global Biopharma Investment Banking at Morgan Stanley. 

Even so, drugmakers targeting global markets said they cannot rely on Chinese patient recruitment alone. Even if enrollment is faster in the region, regulators may still expect Phase 3 trials to include the U.S. and Europe, which means companies must balance speed with regionally-representative data. In addition, companies must also be ready to navigate any future U.S. restrictions on drugs licensed from Chinese biotech companies or that include Chinese clinical trial data.

4. Drug Pricing Pressures and Alternative Models

The debate over drug pricing is increasingly shaped by policy proposals like Most Favored Nation (MFN), which would peg U.S. reimbursement to the lowest prices paid globally. Companies argue that Europe, where prices are lowest, is not a favorable benchmark because reimbursement there often takes years, while high clawback rates and mandatory rebates act as taxes on revenue.

If drugmakers stop offering lower prices in Europe to avoid pulling down the U.S. benchmark, it may not mean that Europe pays more for drugs. Instead, it could mean that the overall pot of funding in Europe remains fixed and that fewer patients get reimbursed at higher prices, one executive said. Company leaders also shared that it may be premature to raise prices on existing European products, though they are considering higher prices for new launches. Another possible byproduct of MFN would be more splits-rights deals, in which a company licenses EU or emerging-market rights to a partner, which could insulate U.S. pricing from downward pressure.

Drugmakers said they are exploring direct-to-consumer (DTC) models as a lever to lower costs while broadening access. This approach may be most viable for drugs including those for HIV and diabetes, oral GLP-1s and respiratory or inhaled medicines, compared to high-cost branded therapies that require complex financing. DTC models also align with cash-pay channels, and options for patients to secure lower prices by committing to longer treatment durations. Employer coverage adds another layer of support by capping patients’ out-of-pocket costs.

5. M&A and Partnerships in Healthcare

Mergers, acquisitions and partnerships remain critical strategies for healthcare companies facing the loss of exclusivity cliff as drugs lose patent protection. To sustain growth, companies are actively looking to acquire assets that can be advanced from early stages into commercialization and, in some cases, build licensing businesses.

While oncology and immunology remain hot areas, executives highlighted neuroscience as the second-largest therapeutic area, spanning psychiatry, Parkinson’s disease, neurodegeneration and Alzheimer’s—where demand and innovation are accelerating.

Beyond drug pipelines, hospital and health system M&A is also reshaping access and diagnostics. Hospitals are consolidating to gain access to patients and considering acquiring labs to run diagnostic testing for physician offices.

Executives at the conference also spoke about interest in specialty test providers, as their proprietary diagnostic tests can be licensed to labs and health systems. Still, some executives cautioned that some private company valuations remain high, which can still ultimately deter deal making.