External environment

Healthcare costs continue to rise

The KOF Swiss Economic Institute at ETH Zurich expects healthcare spending to increase to over CHF 102 billion in 2025 and to over CHF 106 billion in 2026. Health spending per capita is forecast at CHF 11,303 (2025) and CHF 11,594 (2026).

For 2024, the KOF projected an increase in growth in healthcare spending of 4.4%. The growth rate is expected to fall again slightly to 3.7% in 2025 and 3.4% in 2026.

The KOF forecast shows that healthcare spending as a proportion of gross domestic product (GDP) will account for 12.0% in 2024, 12.1% in 2025 and 12.2% in 2026. By way of comparison, this share was only around 9.1% in 2020.

According to the KOF forecast, several key factors are contributing to the increase in healthcare spending in Switzerland:

• The increase in the number of healthcare services used is the main reason for the rising costs, rather than price increases. More and more people are using healthcare services.
• The ageing of the population is a significant factor contributing to costs. As the number of elderly people increases, so does the need for medical services and long-term care.
• Innovative new therapies, medications and treatment methods are another factor contributing to costs.
• Both outpatient and inpatient treatment costs are rising significantly.
• Structural factors such as inflation and the shift from inpatient to outpatient treatment are also increasing the financial burden on premium payers.

(Source: KOF forecast of healthcare expenditure autumn 2024)

The development of premiums remains the main concern of the population and Parliament

The UBS Worry Barometer 2024 shows that health issues are the main concern of the Swiss population. 48% of respondents cite this issue as one of the country’s most important problems. This is a significant increase compared to the two previous years.

Even the younger generation is concerned: 46% of 19- to 29-year-olds consider healthcare matters to be one of their biggest worries. Among women in this age group, the figure is as high as 51%.

(Source: UBS Worry Barometer 2024, GfS)

One of three popular votes was adopted

Three health policy proposals were submitted to the vote of the people in 2024: the Premium Relief Initiatives, the Cost-Brake Initiative and the proposal on the standardised financing of outpatient and inpatient services.

Premium Relief Initiative

On 9 June 2024, the federal popular initiative “Keep health insurance premiums to no more than 10% of income” (“Premium Relief Initiative”) was rejected.

The demand of the Premium Relief Initiative was for policy holders in Switzerland to spend no more than 10% of their disposable income on health insurance premiums.

Parliament adopted an indirect counterproposal. The date on which it will enter into force is still to be decided.

Cost-Brake Initiative

A second health policy bill was rejected on 9 June 2024 with the federal popular initiative “For lower premiums – a cost brake in the healthcare system” (“Cost-Brake Initiative”).

As the initiative was rejected, the indirect counterproposal will enter into force. The date of entry into force is not yet known.

Standardised financing of healthcare services

The reform of standardised financing of services provides for all compulsory health insurance benefits to be financed according to a standardised formula – regardless of whether they are provided as an outpatient, inpatient or in a nursing home. The aim of the bill is to reduce false incentives and promote outpatient treatment. The reform is also intended to ease the burden on premium payers in the long term.

On 24 November 2024, voters approved the amendment to the Federal Act on Health Insurance (uniform financing of services) with 53.3%.

Health Insurance Act

Discussion on the second package of measures to contain healthcare costs will continue

In 2024, Parliament continued its deliberations on the second package of measures to curb healthcare costs. The finalisation of the differences is to be completed in 2025.

The Federal Council and Parliament have provided for the following measures:

Networks for coordinated care: The Federal Council’s draft envisages defining networks for coordinated care as a new service provider.

Differentiated review of efficacy, expediency and economic efficiency (EEE): This measure means it will no longer be necessary to carry out price review rounds every three years for all medications.

Confidential pricing models and reimbursement: Both Councils want to create confidential pricing models to reduce drug costs and promote innovative medicines.

Strengthening pharmacy services: The Federal Council has proposed expanding the competences of pharmacists in the areas of prevention and therapy support. The strengthening of pharmacy services was undisputed in Parliament and has already been approved by both Councils:

• In future, pharmacists will be able to bill for preventive measures such as vaccinations without a doctor’s prescription as part of cantonal or national programmes, which under current law must be paid for by customers themselves.
• Pharmaceutical services to optimise medications prescribed by a doctor and treatment adherence as well as related analyses, remedies and items provided in interprofessional consultation with the attending doctors can now be billed via basic insurance.

The Federal Council takes measures to increase the proportion of generics

The adjustment of the Health Insurance Ordinance as of 1 January 2024 has resulted in an increase in the co-payment for certain medications. For medicines whose ex-factory price exceeds a defined threshold, the co-payment increased from 20% to 40%. However, the co-payment for most generics and biosimilars remained at 10%.

As of the beginning of 2024, not only generics but also biosimilars can be offered as replacements for original drugs.

As of 1 July 2024, the distribution share for medicinal products was adjusted, which has further increased the price differences between original preparations and generics.

The Federal Council is adjusting the distribution share

The Federal Council brought the amendment to the ordinance on the distribution share of prescription drugs into force on 1 July 2024. The distribution share has remained largely unchanged since its introductions over 20 years ago (2001). However, the costs it has to cover have continued to increase.

The revision of the distribution share promotes the spread of cost-effective generics and biosimilars and reduces false incentives. Patients and premium payers benefit directly from this.

The change will make around two-thirds of medications cheaper, around a third will become more expensive.

The DigiSanté programme

In 2024, Parliament approved the programme to promote digital transformation in healthcare (DigiSanté). The programme will run for 10 years and has a commitment credit of CHF 392 million.

Other key drivers – megatrends

Global megatrends are constantly changing the global economy and society. These long-term trends present both opportunities and challenges that shape our business environment. By analysing these trends, we can make strategic decisions that ensure our company is fit for the future.

Digitalisation

Digitalisation helps to improve the quality and accessibility of healthcare and stabilise costs. New technologies are revolutionising healthcare – for example, in the field of telemedicine, with the introduction of electronic health records and AI-supported diagnostics. In addition, digitalisation makes it easier to manage and analyse large amounts of data, which can lead to new research approaches and innovative therapies. With its IT expertise and e-health initiatives, Galenica is committed to an efficient, secure and increasingly digital healthcare system for the benefit of all stakeholders and the well-being of patients.

Interconnectedness

Patients want a connected healthcare system. Collaboration between different service providers, consolidation and cooperation between the private sector, the public sector and academia are crucial. This is because interdisciplinary teams are working more closely together to ensure holistic, patient-centred care. Galenica is supporting this by bringing the various service providers together and engaging in industry associations.

Changing consumer needs

Personalised healthcare is gaining in importance due to changing customer needs. Patients prefer tailored treatment plans and demand special confidentiality and data protection in the context of digital healthcare. They expect a presence in both the digital and the analogue world and want trustworthy and efficient communication with healthcare providers. With its Omni-Channel strategy, home care offerings and reputation as a leading healthcare network, Galenica has succeeded in positioning itself as a reliable partner for healthcare services.

Ageing society

The population in Switzerland is getting older and older. This is impacting the healthcare sectors in many ways as a megatrend in healthcare: demand for health services is increasing as older people need medical care more often. Chronic illnesses are on the rise, which requires specialised treatments over a longer period of time. In addition, elderly people want to stay at home for as long as possible. Galenica’s home care offerings are of great importance against the backdrop of demographic change.

Climate change

Climate change with regular heat waves is affecting the health of the population. For companies, it entails rising energy costs, additional regulations and disclosure requirements. Galenica is convinced that acting responsibly makes a significant contribution to the company’s long-term success and has a positive impact both within and outside the company. Sustainability is therefore an integral part of Galenica’s corporate management.

Diversity and equal opportunities

Mixed teams are more successful – and so are companies that recognise this. Diversity and inclusion are therefore key corporate principles. The Galenica network makes a conscious effort to promote diversity. The company brings together people from all language regions of Switzerland and from more than 85 different countries. We firmly believe that the varied professional backgrounds, age groups and cultural heritages of our employees make the development and success of Galenica possible in the first place. In addition, we actively promote gender equality and the inclusion of people with specific needs to create a working environment where everyone feels valued and supported. This diversity enables us to anticipate the varied needs of our customers.

Shortage of skilled workers

Many healthcare providers struggle to recruit and retain qualified people, especially when competing with other healthcare professions. This often leads to an increased workload for existing employees. The shortage of qualified specialists affects the entire sector and remains a major challenge for the healthcare system in Switzerland. Galenica gives top priority to its commitment to young professionals and its attractiveness as an employer – through modern working conditions, career opportunities and investments in education and training.

Outlook for 2025

Parliament is expected to complete its reading of the cost containment 2 package of measures in the first half of the year 2025.

In the second half of 2025, the Federal Council will adopt the dispatch on the partial revision of the Therapeutic Products Act (stage 3a), which is intended to clarify access to innovative drug therapies and promote the use of digital instruments in the medication process. A core focus of the digital instruments is an obligation on the part of service providers to use electronic prescriptions and e-medication plans.

In the second half of 2025, the Federal Council will open the consultation process on the amendment of the Ordinance on Integrity and Transparency in the Context of Therapeutic Products (OITTP), with the aim of implementing Parliament’s resolution to extend the principle of integrity to medical devices. Article 55 of the Therapeutic Products Act, which covers integrity, states that the choice of treatment may not be influenced by benefits of any kind. As it stands, this principle of integrity applies to the prescription, dispensing and use of prescription-only medicinal products.

The dispatch on the comprehensive revision of the EPRA electronic patient record is also expected in 2025. However, the dispatch is not included in the annual objectives of the Federal Council.

Parliamentary motions to relax the territoriality principle and the contractual obligation in the Health Insurance Act (HIA) are also being discussed. A consultation process on the procurement of funds and items in the EEA will run until the end of March 2025. Galenica is committed to high-quality healthcare services and fair compensation that guarantee an efficient benefit–cost ratio and opposes all proposals that worsen the healthcare situation, create unfair regulatory and economic conditions in Switzerland and abroad and weaken the principles of the HIA.

Health policy continues to focus on the shortage of skilled workers, bottlenecks in the supply of medicinal products and the hospital crisis. Many hospitals are running high deficits and are no longer able to make investments themselves. It is undisputed that there are too many hospitals in Switzerland. The unclear point is what role hospitals should take on in future and how financing that covers the costs can be ensured. Many stakeholders place great hope in expanding the role of outpatient treatment in healthcare. This is still underdeveloped in Switzerland compared to other countries.