Life Sciences 2023

Life Sciences: an Introduction

The life sciences industry continues to be active and creative. 2022 was a rough year in general terms and the life sciences industry did not escape its own trials and tribulations, but it continues to forge ahead and adapt to challenges caused by economic, social and political strife across the globe. Investment opportunities are reaching near pre-pandemic levels, and traditional M&A activity is expected to pick up slightly. Some industry players have taken advantage of opportunities to expand, including establishing manufacturing operations across the globe in a special effort to secure their supply chain. However, other companies have disappeared, especially those which depended on a few products, and a number of key players have experienced lay-offs.

The global regulatory landscape is hyperactive. The EU pharmaceutical legislation is under review and the far-reaching changes that are being contemplated could have a profound effect on industry players doing business in that region. Despite efforts, regulatory authorities across the globe continue to lag behind when it comes to developing legal frameworks in synchronisation with advances brought about by digital transformation. On a positive note, some countries – such as Costa Rica, Brazil and Mexico – are taking steps towards regulatory harmonisation. It has yet to be seen, however, when and how the harmonised regulatory frameworks will be implemented.

Digital transformation is a fact of life within the industry, bringing important advances in telemedicine, allowing healthcare professionals to make better, more informed decisions and empowering patients. Reliance on AI is especially important in connection with research and development, clinical trials and healthcare.

The industry's response to the supply chain challenges caused by the pandemic has proven effective for many key players. ESG considerations have been overshadowed by other priorities in some cases, although corporate governance remains in the forefront. 2023 will be especially important for the medical cannabis industry as the regulatory framework across the globe becomes more consistent and more favourable to development. Government intervention in pricing is at a level never seen before, including in jurisdictions where such intervention was taboo not that long ago. The industry faces huge pressure as costs increase, but profits are at risk due to tighter budgets, stricter price controls and stricter reimbursement regulations.

Finally, risks to intellectual property are very real concerns for the industry, with loss of exclusivity being the principal worry, be it caused by patent cliffs or the over-riding of patent protection related to public health emergencies.

M&A and transactional activity

The annual JPMorgan conference in January finally occurred in person after several years as a virtual event, and is an example of renewed enthusiasm for industry growth. The industry seems to prefer smaller transactions, with a focus on smaller bolt-on acquisitions and licensing deals. The sector has also seen many spin-offs and carve-outs, with companies continuing the trend of focusing on their core areas and disposing of non-core assets, freeing up cash to drive more investment in prioritised areas and higher growth spaces. Despite the slowdown, digital transformation, supply chain issues, sustainability and portfolio optimisation continue to be drivers for M&A activity and provide opportunities to add or expand capabilities. Numerous ccompanies that fared well during the pandemic are investing and are expressly open to acquisitions.

EU life sciences regulatory landscape

Since the pandemic, the regulatory landscape in the EU has changed at a rapid pace, and the role of the EU in health policies has been strengthened in an unprecedented way.

The European Commission is due to publish its proposal for a review of the EU pharmaceutical legislation in the first quarter of 2023. The scope of the review is far-reaching and there is concern amongst industry players that the new legislation may veer towards access and affordability rather than the promotion of innovation. The contemplated changes include is a proposed reduction of regulatory data protection periods and orphan market exclusivities.

The review also addresses shortages and security of supply, and making medicines more sustainable. All this will translate into added responsibilities for the industry and stronger EU control.

Digital transformation

Digital transformation is no longer a hot topic; it's a given. With the help of this transformation, companies are innovating at lightning speed and continuing to partner with tech companies through collaboration agreements or outright acquisitions. Corporate cultural shock continues to be a challenge but less so than in the past, since the new generation of life sciences executives is more than prepared to lead the digital transformation of the industry.

We are seeing a flurry of legislation attempting to keep up with these advances and to manage the vast amount of data generated. The alignment of this upcoming legislation with all relevant sectoral and horizontal laws remains a crucial aspect.

Telemedicine

Telemedicine and remote healthcare were forced upon patients because of the pandemic, as governments quickly implemented temporary regulatory frameworks to accommodate the emergency. This rapid transformation has led to new players in telemedicine, online pharmacies and other forms of the digital delivery of healthcare. Many governments have now converted the temporary frameworks into permanent regulations, and other governments have implemented full-blown regulatory frameworks for telemedicine and remote healthcare. The result is that telemedicine and remote healthcare, especially involving medical devices, has been legitimised in patients' eyes. Once hesitant, often resistant to accept telemedicine and remote care when it was forced upon them by the pandemic, patients have now learned to trust and even prefer the options.

Research and development

The active biotech and pharmaceutical pipeline nurtured by the pandemic has calmed down as companies prefer to be more focused and more conservative in their research and development activities. This is due largely to the fact that many players have faced costly failures with what were expected to be promising success stories over the past year. As focus narrows, areas of special interest include treatments for rare diseases, cancer, Alzheimer's, diabetes, obesity and vaccines, including mRNA-based vaccines and therapies. Artificial intelligence has invaded R&D and brings with it promises for speed, efficiency and lower costs; however, this new and somewhat unknown world triggers regulatory demands that will be hard to meet in the short term.

Clinical trials

Clinical trials were a huge challenge during the pandemic but, as with telemedicine, the solutions around clinical trials that evolved during the pandemic have now been adopted to make trials more efficient. Virtual clinical trials, hybrid clinical trials and decentralised trials coexist with in-person trials, where feasible. In addition, the area of clinical trials is heavily influenced by AI, although the regulations have not yet caught up with AI's influence. Diversity and inclusion have fortunately spread to clinical trials as well, with companies heeding consumer demands for diversity in clinical trials as statistics reveal the damage that lack of diversity has caused on health in diverse communities.

AI

Artificial Intelligence is the new industry buzzword, and is especially key to R&D and clinical trials. It has also proven to be both useful and effective in medical imaging. The most recent example reveals that radiologists in Hungary used AI technology on real patients and, after a test on more than 275,000 breast cancer cases, AI software matched the performance of human radiologists when acting as the second reader of mammography scans. This is only one of many trials using AI with medical imaging, with similar success.

Conclusion

The complexities of the life sciences industry continue to grow exponentially, as do the accompanying legal issues. These complex legal issues must be analysed by viewing the whole picture, taking into account the geographic scope and effects as well as the broad legal reach, which often goes well beyond one area of law. Most importantly, however, the analysis must be supported by deep knowledge of the life sciences industry. Counsel must be not only legal experts, but also trusted partners, and industry knowledge is essential in order to be a trusted partner.