As we step into 2024, the global life science industry finds itself at a crossroads, facing plenty of challenges and exciting opportunities, says Emma Banks, CEO, ramarketing.
The pharmaceutical and contract outsourcing space has shifted, with new trends emerging that will shape the future of this rapidly changing industry.
The global stage witnessed significant upheavals throughout 2023, with wars impacting everything from oil prices to work locations.
Inflation and rising material costs cutting into the
profits of many life science companies and a continuation of the COVID comedown has left vaccine producers
facing challenges, and emphasises the need for diversification of capabilities.
Here are our predictions for 2024:
1. Biotech investment slowdown: A cautionary post-COVID tale
The roaring success of biotech investments during the pandemic has hit a speed bump. As other sectors gain traction, biotechs face a slowdown due to rapidly increasing interest rates and the diversification of investments. This shift poses risks and a reduction in the flow of money with less capital available for biotech companies.
Faced with this challenge, biotech firms are now reevaluating and being more cautious with their investment strategies, focusing on specific assets within their pipelines.
“… the biggest trend we’ve seen is the number of customers that are not necessarily well-funded. So many of them have far less cash than they’ve had in the past. As a result of that, they’re much more cautious as to how they’re spending their capital. They’re very selective on their number of assets. We’ve seen a lot of deprioritisation of assets. They’re looking for more creative funding, where they give us stock. We can only take so many bets, and I think that’s the challenge.” Outsourced vendor.
2. Increasing focus on supply chains
The vulnerabilities exposed by COVID have led to a renewed emphasis on securing and optimising supply chains.
Onshoring is gaining prominence due to geopolitical tensions, with more business flowing from East to West. That said, there are a growing number of Asian CDMOs coming to the fore of the industry, particularly in markets such as Japan and South Korea.
The concept of “domesticating” gains momentum, as countries like Canada invest heavily to be better prepared for future pandemics.
“Canada has a nice R&D rebate program, which factored into our decision to go with our vendor. If it’s qualified as research you can get a good percentage of that back from the Canadian government.” Biotech
3. Continued explosion of advanced novel modalities
Cell and gene therapies, CAR-Ts, and oligonucleotides continue to grow within the clinical pipelines, promising groundbreaking treatments. Despite regulatory challenges and complexities in commercialization, the focus on these novel modalities remains strong. Companies specializing in platforms supporting these new products play a critical role in the success of these therapies.
4. Real focus on partnerships
The life science outsourcing market remains highly fragmented; with over 400 players in the biopharma CDMO space alone, businesses and investors face almost limitless options.
This trend is coupled with a shift towards innovative partnerships; biotechs are now seeking risk-sharing models and flexible collaborations with CROs and CDMOs. It’s time for companies to explore models beyond traditional fee-for-service arrangements, ensuring maximum value and conservation of cash.
5. New breed of biotechs
Despite challenges, long-term funding trends for biotechs look positive. A leaner and more capital-efficient approach is emerging, with biotechs relying more on outsourcing. Mastering the vendor ecosystem and investing in innovative partnership models are becoming key strategies for success.
“So, when I got to BMS, our process for developing a protocol took 12 months from the idea of a clinical trial to implementation. When I was at Rockefeller, the timeline from an idea to implementation was less than a month. Because we were an academic, we didn’t have the process that a Big Pharma has and in the environment we’re in, we can’t afford to delay 12 months to develop and launch a new clinical trial.” Ian Walters, Portage Bio
Hear more about this trend from Molecule to Market’s interview with Ian Walters: Meet the lean, keen biotech.
6. AI – A disruptive force
AI and digitisation are transforming the industry and we expect to see this evolve further in 2024. From drug discovery to clinical trials, AI is already beginning to save time, reduce manual efforts, and improve overall efficiency. Companies with AI-enabled platforms are set to become sought-after partners.
Marketing practices and processes are also being heavily influenced by AI. Both agencies and in-house teams are utilising tools to make efficiencies. There is still more to consider and refine as AI continues to evolve and the jury is still out on some of the ethical considerations regarding this technology.
“How does AI seep into this world? And does that put pressure on everybody to just get things done more quickly? Can I do some of that myself or hire those people to do that?” Biotech VC
“Something may not be a big deal now but in five years, it may be a very big deal as you think about AI. If you can electronically collect, organize, and analyze your datasets faster, you will be well ahead with speed and quality compliance will be much easier.” Outsourced vendor
7. Outsourcing is King
R&D spending and clinical pipelines continue to grow, driving the need for outsourcing to access specialist capabilities, expertise, and capacity. The total addressable market for outsourcing in the life science sector is vast and continues to expand. Despite challenges, outsourcing remains a key driver of success for companies ranging from big pharma to virtual start-ups and biotechs.