Top 10 Health-Tech Market Trends to Watch in 2025

1. TOP 10 Healthcare Market Trends to Watch in 2025 January 2025

2. Our Approach to Identify Top 10 Healthcare Market Trends for 2025 Track emerging trends Set Priorities & Rankings Analyze Emerging Trends Tracked and captured ~150 trends across the entire healthcare ecosystem in 2024 that could be a potential game changer in 2025 Each healthcare market trend was given a weightage (60:40) and a rating on a scale of 1 to 5 based on two criteria: 1) its impact on the future of health and, 2) its adoption by the healthcare stakeholders Top 10 trends were identified based on the scores of their impact on the future of health and its adoption in the healthcare industry Finally, the top 10 trends were analyzed deeply to understand how they serve as a powerful catalyst in the entire healthcare ecosystem and impact millions of patient lives Gathered key information for each trend such as healthcare stakeholder to be affected, focus area, impact on patients’ lives, adoption, etc. to understand the larger potential impact of each trend Trends were prioritized based on possible scores and different pre-assigned weights

3. Top 10 Trends that will be over the Healthcare Market in 2025 Vertical business integration among insurers, PBMs, specialty pharmacies, and providers will continue to strengthen Mega mergers make a comeback in the hospital and health sector in the US with the return of high-value transactions 01 06 The US government released the new negotiated prices for 10 blockbuster drugs which takes effect in 2026 and poises for an estimated savings of $6B Non-traditional players will continue to transform the U.S. primary care market and will capture 1/3rd of the market by 2030 despite headwinds 02 07 Pharmacy deserts are appearing across US and the future of brick and mortar retail pharmacy looks bleak amid multi-fold macroeconomic challenges Biopharma M&A outlook for 2025 is optimistic as companies will seek strategic deals to tackle patent cliffs, pipeline gaps, and evolving market dynamics 08 03 FTC and DOJ have doubled down on aggressive antitrust enforcement putting halt on series of M&A activities to ensure that US market remains competitive 2025 will witness increasing partnerships between payers and providers in a move to transition to value based care with a rising push from CMS 09 04 2025 formulary exclusions and preferences of the Big 3 PBMs – CVS Caremark, Express Scripts and Optum Rx – depicts new focus areas AI will continue to be a transformative force in healthcare 05 10

4. 01 Vertical business integration among insurers, PBMs, specialty pharmacies, and providers will continue to strengthen Key payers & PBMs have expanded their control over patient access, sites of care/dispensing, & pricing through vertical integration Insurer Centene pharmacy service PBM (GPO) Specialty Pharmacy Provider Service Novant Health has entered into a definitive agreement to acquire a 200-provider urgent care group, from Blue Cross and Blue Shield (BCBS) of South Carolina, aiming to expand its healthcare network across the state Centene transitioned its pharmacy benefit management from CVS Health to Express Scripts under a five-year agreement covering approximately 20 million beneficiaries HCSC (an independent licensee of BCBS) announced a definitive agreement to acquire Cigna's Medicare Advantage, Medicare Supplemental Benefits, Medicare Part D, and CareAllies businesses for $3.3 billion Elevance Health has acquired both Kroger Specialty Pharmacy and Paragon Healthcare to enhance its specialty pharmacy services and infusion capabilities, aiming to improve health outcomes and access to therapies for members with chronic and complex conditions Elevance Health has launched CarelonRx Pharmacy, a digital & home delivery pharmacy service that enables members to connect with pharmacists 24/7 via text, chat, or phone, compare medication costs, & track their prescriptions throughout the order process

5. 02 Non-traditional players will continue to transform the U.S. primary care market & will capture 1/3rd of the market by 2030 despite headwinds The primary care market is expanding despite growing complexities and governance challenges. By 2030, non-traditional providers such as retailers, payers, and advanced primary care providers are expected to capture 30% of the U.S. market UnitedHealth Group & Humana have developed essential capabilities in managing complex primary care through their health services organizations Payers Payer-owned primary care is expected to capture approximately 20% of the U.S. market by 2030 Payers are well positioned to navigate industry challenges and scale operations effectively owing to their historical investments in care delivery Payers like Optum, CenterWell, UnitedHealth Group, and Humana have ventured into the care delivery space since ages, and have built distinctive capabilities to effectively manage complex primary care delivery Payers have also strengthened their capabilities in care management, navigation, and coordination, allowing them to achieve the quality & cost outcomes essential for success in value-based care arrangements Opened 23 new clinics targeting senior care Partnered with Astrana Health Expands primary care access for Aetna DOJ blocks UHG’s $3.3B acquisition of Amedisys Walgreens and Walmart scaled back their health care initiatives, while CVS and Amazon continued to invest and expand in the sector despite facing challenges in 2024 Retailers Retailers struggle to demonstrateprofitability in primary care due to high operational costs & slim margins, with traditional practices often operating at a loss. Integrating acquired primary care entities into existing retail operations is also complex, which can sometimes lead to financial losses & necessitate strategic shifts Retailers entering healthcare must tackle rising labor costs, changing reimbursement models, and the complexities of integrating healthcare with retail, while leveraging technology, partnerships, and flexible care models to succeed and remain profitable Retailers advancing into primary care can achieve success by concentrating on three critical goals - designing an effective care model, strengthening their brand through strategic investments, and cultivating the necessary healthcare expertise within their organizations Closed 51of its health centers & its virtual care service Expanding presence through partnerships like with Cleveland Clinic Closed 160 VillageMD primary care clinics Plans to open 24 Oak Street health clinics

6. 03 Pharmacy deserts are appearing across US & the future of brick & mortar retail pharmacy looks bleak amid multi-fold macroeconomic challenges Pharmacy drugstore closure continues to rise across small stores to big chain stores. Even the big drug store chains like Walgreens, Rite Aid, and CVS have succumbed to macroeconomic pressures and have announced a combined closure of more than 2,000 stores Plans to close approximately 1,200 stores in next 3 years and another 800 stores are under review Closed ~300 stores and eliminated 5,000 jobs to optimize its footprint Announced closure of 800 stores after filing for bankruptcy in Oct’23 Macroeconomic Headwinds Leading to Closure Impact on Patients As per data from Wolters Kluwer Health’s third Pharmacy Next: Health Consumer Medication Trends survey, the American consumers are not ready for the diminishing retail pharmacies: Financial Pressures: Chains like CVS, Walgreens, & Rite Aid are downsizing due to reduced prescription reimbursements, inflation, & changing consumer habits Established PBMs taking most business: CVS Caremark, Express Scripts, and Optum Rx— collectively process about 80% of all prescriptions in the U.S. And PBMs reimburse their own pharmacies (both retail stores and mail order) more than they reimburse pharmacies they don’t own, especially small community or independent pharmacies 84% do not prefer online pharmacies Shift in consumer behavior: The emergence of digital pharmacies, such as Amazon Pharmacy, is reshaping consumer expectations by offering same-day delivery and convenience 61% are not open to medication delivery by drones worry about medication tampering or theft with mail or subscription delivery 59% Increased Competition: Losing customers to competitors like Walmart, Costco, grocery stores, and dollar stores, some of which offer prescription services, intensifying the competitive landscape are likely to visit a pharmacy as a first step for non-emergency medical issues 58% Note - Walgreens is also in advanced talks to go private and sell itself to Sycamore Partners amid ~$8B long-term debt and struggling retail business

7. 04 2025 will witness increasing partnerships between payers and providers in a move to transition to value based care with a rising push from CMS CMS’ goal to transition 50% of its commercial and Medicaid contracts to value based models by 2025 is fueling the partnerships between payers and providers in a move to transition towards value based care and arrangements Increasing Partnerships between payers and providers Partnerships to improve access to value-based care in primary care Partnerships to create a primary care platform, Mosaic Health Acquisition to create a based new value-care platform Partnerships to help primary care reach >350K patients across Georgia Adoption of value-based payment models is still less and growing slowly, as there are certain challenges Operational Adjustments: Modify operational strategies and payment systems while ensuring quality patient care Transitioning to VBC: Balancing Fee-for-Service (FFS) and Value-Based Care (VBC) models Quality Metrics Tracking: Monitor key quality metrics, such as 30-day readmission rates, for reimbursement under value-based care models Financial Pressures: Address financial challenges from declining commercial payer rates, as Medicare and Medicaid typically offer lower profit margins Future outlook In 2025, medical practices are expected to increasingly adopt VBC models to improve payment structures and financial security Medicare Advantage enrollment is projected to reach 35.7 million in 2025 By 2027, 90 million lives are expected to be in VBC models, a 109% increase from 2022 VBC will require enhanced interoperability between EMRs and HIT systems

8. 05 2025 formulary exclusions and preferences of the Big 3 PBMs – CVS Caremark, Express Scripts and Optum Rx – depicts new focus areas CVS Caremark’s Standard Control formulary has excluded an additional 33 drugs in 2025, while ESI’s National Preferred formulary excluded an additional 19 drugs and OptumRx’s Premium formulary has announced 12 new exclusions Excludes Humira & Hyrimoz, retaining biosimilars such as Cyltezo, adalimumab-adbm Excludes Humira along with several other biosimilars, leaving only Amjevita as a formulary alternative Anti- Excludes Humira and Amjevita, adding Hyrimoz and adalimumab-adaz Inflammatory Excludes biguanide antidiabetic drugs Fortamet, Glumetza, & metformin 625mg, likely due to the availability of lower-cost options Diabetes and Obesity Excludes Saxenda in favor of preferred alternatives Wegovy and Zepbound Excludes Victoza for alternatives like Mounjaro and Ozempic Excludes tiotropium bromide inhalation powder while preferring the brand Spiriva HandiHaler, due to limited generic competition and modest pricing. It prefer lower-cost generics over the brand Dulera Excludes Aralast NP, Glassia, and Zemaira, with Prolastin C as the only preferred alternative; additionally excludes, Karbinal ER Suspension, with several generics will be preferred alternatives Respiratory - Excludes branded NSAID-combination products and high-cost generic strengths while promoting the use of lower-cost generic alternatives to manage medication costs effectively Excludes high-cost strengths of certain generics while prioritizing lower-cost alternatives, thereby managing drug costs Excludes Cardizem, Emflaza, and Syprine, citing that each brand has available generic equivalents covered on Tier 1 Generic strategy All Big 3 PBMs: Have excluded Humira and will prioritize their respective private-label alternatives Plan to leverage the interchangeability of biosimilars to help drive utilization to the lower-cost biosimilars Are focusing on obesity and diabetes products and are favoring generic NSAIDs and other high-quality generic alternatives Have also added new high costs therapies serving as alternate to drug exclusions

9. 06 Mega mergers make a comeback in the hospital and health sector in the US with the return of high-value transactions In Q3’24 the hospital M&A activity surged by 79% as compared to Q3’23 and an overall YoY increase of 25%. The number of M&A deals might be lower but the value of M&A for hospitals are at historic high with mega mergers returning back # M&A of Hospitals and transacted revenue 83* 65 Revenue ($B) 53 Prime Healthcare acquire nine Illinois hospitals from Ascension for $375 million, with plans to invest $250 million in upgrades 49 $12 B # Tractions announced $48.1** *Q1-Q3 revenue: $36.3B; Expected Q4 2024 revenue: $12B **Q1-Q3 2024 # traction: 58; Expected Q4 2024 # traction: 25 $30.0 $45.0 $38.4 $36.1 2021 2022 2023 2024 Sanford Health and Marshfield Clinic Health System signed a merger agreement to form a $10 billion health system with 56 hospitals Key Factors for increased M&A Financial Distress: Hospitals are facing significant financial difficulties, worsened by inflation and operational challenges, prompting them to seek partnerships for sustainability Steward Health Bankruptcy: The bankruptcy of Steward Health Care has significantly impacted the M&A landscape, with 11 out of 27 transactions in Q3 2024 directly linked to Steward's divestitures Focus on Regional Market Development: Hospitals are consolidating their care networks within core regional markets, as demonstrated by mergers such as Froedtert Health with ThedaCare and BJC Healthcare with St. Luke’s Health System New Partnership Models: Strategic partnerships are increasingly being pursued by hospitals to enhance value-based care & digital services, exemplified by Kaiser Permanente's acquisition of Geisinger and General Catalyst's establishment of HATCo Regulatory Considerations: To navigate antitrust regulations, many health systems are pursuing mergers outside their immediate markets to achieve growth while minimizing scrutiny Aster DM Healthcare and Quality Care merge to form one of India's top three hospital chains, boasting over 10,150 beds across 38 hospitals Risant Health completed the acquisition of Cone Health for ~$1.4 billion (over 5 years), expanding its health system portfolio

10. 07 The US government released the new negotiated prices for 10 blockbuster drugs which takes effect in 2026 and poises for an estimated savings of $6B The Medicare has negotiated discounts ranging from 38% to 79% for the 10 blockbuster drugs, with the new prices projected to save beneficiaries $1.5 billion in out-of-pocket costs and approximately $6 billion for the Medicare program Medicare Price Cut (%) Impact of IRA on healthcare stakeholder 79% 76% 68% 67% 66% 66% 62% 56% 53% 38% Effect of new maximum fair price (MFP) on competitor drugs: It is expected that negotiated drug’s competitors could also lower their prices Change in Part B Reimbursement for providers: Reimbursement for provider-administered drugs will shift from the average selling price (ASP) plus a 6% add-on to being calculated on the Maximum Fair Price (MFP), which is expected to be lower than the ASP Reduced OOP for patients and shifting burden to Payers in catastrophic coverage: IRA restructures Medicare by capping annual OOP costs at $2,000 from 2025 (down from $3,300 in 2024), and shifting financial responsibilities among patients, Medicare (Payer), and drug manufacturers in the catastrophic coverage phase phase 5% 20% The above drugs were selected on the basis of their high Medicare expenditure Under the Inflation Reduction Act (IRA) by 2027, 20 additional drugs per year will be negotiated, including complex and expensive physician-administered Medicare Part B drugs, such as infusible biologics It will be interesting to witness how the subsequent series of Medicare negotiations will fair under the new government Beneficiary Drug Manufacturer 20% 80% 80% Taxpayer Payer 20% 60% 15% 2023 2024 2025

11. 08 Biopharma M&A outlook for 2025 is optimistic as companies will seek strategic deals to tackle patent cliffs, pipeline gaps, and evolving market dynamics Key trends from 2024, such as focus on rare diseases, oncology, & weight-loss drugs, are expected to intensify in 2025. Additionally, the increasing role of AI in drug discovery & the growing emphasis on sustainability will shape dealmaking strategies in 2025 Sectors on the rise Drivers for M&A in 2025 Weight-Loss & Metabolic Therapies Patent Expirations & Pipeline Challenges Long-Term Value Creation Oncology Rare Diseases Neurology Digital Health Oncology will lead M&A activity due to high demand for innovative cancer treatments, with a focus on precision medicine, immunothera pies, and antibody-drug conjugates (ADCs) Rare disease sector will become more lucrative due to regulatory incentives, high profit margins, broader therapeutic areas, & the creation of comprehensiv e treatment franchises using advanced gene & cell therapies Weight-loss and metabolic health market is projected to exceed $100 billion, fueled by the global obesity epidemic & advancement s in GLP-1 receptor agonists & comprehensiv e health solutions Neurological disorders will continue to gain attention due to breakthroughs in treatments for Alzheimer's & Parkinson's, as well as increasing investment in rare neurological conditions & mental health therapies Digital health will continue to transform the pharmaceutic al landscape through AI- driven drug discovery, digital therapeutics, & patient-centric solutions, making it a critical area for future growth Innovation in Therapeutic Areas Expansion into Emerging Markets AI Integration in Drug Discovery Trends Shaping 2025 Mid-cap biotech companies will become prime M&A targets due to their strong pipelines, specialization in niche areas, & lower risks compared to startups Programmatic M&A will continue to gain popularity as companies opt for multiple smaller acquisitions to manage risk and adapt to market changes Convergence of biotech and big tech is set to revolutionize healthcare, merging advanced technologies with traditional therapies to foster transformative M&A and create integrated digital health ecosystems Page 11

12. 09 FTC and DOJ have doubled down on aggressive antitrust enforcement putting halt on series of M&A activities to ensure that US market remains competitive The FTC and DOJ after releasing new merger guidelines have become stricter and are aggressively scrutinizing all M&A activities and putting halt on anti-competitive ones, however, it would be interesting to note how they will function under the new govt. Mergers and acquisitions under FTC and DOJ scrutiny $16.5B $8.7B Evolving regulatory landscape demands that dealmakers adopt more cautious and strategic approaches. They must prepare for longer timelines, potential litigation, and increased scrutiny while ensuring robust planning and communication throughout the process Concern of reduced competition in the GLP-1 drug market, where Novo holds a 55% share Concern of potential impact on market competition, in the field of neuroscience $3.3B $0.32B Concern of reduced competition in the home healthcare market Concern of reduced competition and Novant gaining control over nearly 65% of the market Future outlook under new Trump Government The second Trump administration is expected to adopt a more "merger-friendly" stance compared to Biden's, favoring consent agreements & merger settlements with divestiture packages, while rejecting the 2023 Merger Guidelines' deemphasis on the distinction between horizontal & vertical mergers This shift may acknowledge the procompetitive benefits of vertical transactions, although populist influences from Vice President-elect JD Vance will limit any drastic rollback of merger enforcement, ensuring that scrutiny of such deals continues Page 12

13. 10 AI will continue to be a transformative force in healthcare In 2025, we can expect greater and more widespread adoption of AI, ML, and predictive analytics technologies in the healthcare market, bringing even more impactful changes across the industry Approval of AI-based devices by the US FDA has grown exponentially over the years AI in Healthcare: Key Use Cases for 2025 Supporting Earlier Disease Diagnosis by Mining Unstructured Data: Streamline unstructured data analysis to detect disease, saving time and enabling timely diagnoses Enhancing Remote Patient Monitoring Capabilities: Monitor patient health in real- time, predicting health events and facilitating prompt interventions EH2 2024 Optimizing Medical Supply Chain with Predictive Analytics: Forecast medical supply demand to optimize inventory, reduce waste, and ensure resource availability Identifying Patients for Clinical Trials with NLP and OCR: Use NLP and OCR to analyze records and identify eligible patients for clinical trials, accelerating recruitment Accelerating Drug Discovery with AI-Powered Simulations: Utilize AI simulations to predict drug interactions, reducing discovery time and cost Improving Marketing and Sales Activities: Analyze patient data to refine marketing strategies, segment audiences, and boost pharmaceutical sales H1 2024 26 64 80 113 130 158 221 107 Seamless Integration of AI in Health Systems: By 2025, AI will enhance diagnostics, personalize treatment, and automate tasks to improve healthcare efficiency 2017 2018 2019 2020 2021 2022 2023 2024 Page 13

14. Authors DR. PURAV GANDHI FOUNDER & CEO RITU BALIYA ENGAGEMENT MANAGER CONTACT US 821, Sun Avenue One Manekbag, Ambawadi, Amdedabad, India contact@healtharkinsights.com www.healtharkinsights.com SHRIYA SHAH CONSULTANT Copyright © 2025 HEALTHARK. All rights reserved.