How changing funding models are reshaping pharmaceutical innovation — and communications

How changing funding models are reshaping pharmaceutical innovation — and communications

May 2026

Beatrice Hua, Associate Director, Sandpiper Health

Pharmaceutical innovation is entering a new era where traditional public funding mechanisms are increasingly under strain. Innovation has historically been funded by a combination of public sector institutions, private capital, sovereign wealth funds and philanthropic foundations, yet these funding streams are under pressure as the cost and complexity of R&D grow, geopolitical pressures rise, and budgets tighten.

For decades, the United States has led the world in drug development, with the US Food and Drug Administration (FDA) approving close to 900 novel drugs from 2000 to 2024. But the speed and scale at which cost-containment measures are being implemented in the US have begun to make an impact.

The challenge is no longer only securing capital, but securing alignment among policymakers, investors, health systems, and the public through effective communication and clear positioning.

Policy shifts are accelerating this transition

The US’ Most Favored Nation (MFN) pricing policy, which aligns US medication costs with the lowest prices negotiated by similar developed nations, is expected to lower drug prices in the country, while simultaneously decreasing the capital available for R&D. The 17 largest pharmaceutical companies have signed this agreement.

While affordable access can be prioritised with such pricing policies, patients continue to depend on further innovation to address tomorrow’s unmet needs. The policy challenge is not choosing one over the other, but designing systems that protect both access and innovation.

Impact on R&D

Reduced funding and cost control measures have led to reduced innovation incentives, with a paper finding that theInflation Reduction Act of 2022 affected firm performance and innovation investment, with reduced R&D intensity. In response, biopharmaceutical companies may seek alternative funding models such as engaging in public-private partnerships to drive innovation

They may also seek funding from the private sector such as from insurers, investors and financial institutions, and this will require a different set of approaches as the private sector has a different set of priorities and incentives

Opportunities for biopharmaceutical companies in Asia

Despite these cost-control measures, Asia remains a region of opportunity as it has distinct strengths across a wide range of markets which are hugely diverse and at different stages of maturity.

In 2024, Asia contributed more than 85 percent of the global growth in innovative drug pipelines, with China and South Korea leading growths in new clinical assets. Markets like Singapore have strong government support and coordinated policies that enable funding access and efficient regulatory pathways, alongside deep scientific capabilities and a pipeline of skilled talent.

Biopharmaceutical companies in this region can also leverage globalised models of trial design, licensing, and collaboration, supported by large-scale manufacturing and clinical capacity that help to accelerate development and reduce costs.

What this means for healthcare communications in a changing innovation landscape

As funding sources diversify and financial returns become more contested, the challenge is no longer just how innovation is financed, but how its value is understood. That raises the importance of communications as a strategic enabler across policy, investment, access, and trust.

Supporting advocacy for pharmaceutical innovation in a constrained funding environment means that there is a need to explain trade-offs between drug affordability and long-term innovation to mitigate cost-containment efforts, especially with spiralling healthcare costs.

Beyond this, translating scientific outcomes to value for society and patients continues to be crucial. Pharmaceutical innovation plays a key role in transforming how diseases are treated, in being more precise, effective, safe and accessible, which makes the balancing act with communicating patient outcomes even more important.

The Sandpiper Health team helps our clients articulate their position in line with business priorities, engage with audiences relevant to policy, access and trust, provide strategic insights on priority issues and opportunities and manage and protect reputation across markets.

Find out more here: Sandpiper Health