Life Sciences 2024

Adapting and Innovating: The Dynamic Landscape of the Life Sciences Industry in 2024

The life sciences industry continues to evolve at record speed. This evolution brings with it more government attention and more challenges. Regulations with respect to AI, for example, continue to lag behind innovation so industry players are faced with guessing when regulations will appear and how they will affect research and development as well as commercialisation. Medtech suffers the same regulatory trap in many instances. Government regulations with respect to compliance issues continue to be of increasing concern as well, while competition authorities are heavily involved in monitoring and controlling M&A within and outside their jurisdictions. 

Once again intellectual property is a major concern in the industry. The risk of shrinking patent rights is stretching across the globe where the EU Pharma Package is taking a lead. This risk arises out of the growing importance of access to medicines and the focus on reducing healthcare costs, especially those related to medicines. Protection of the many facets of AI has also raised uncertainties around intellectual property rights.

Pharmaceutical pricing continues to dominate conversations, particularly in the United States, where the impact of the Inflation Reduction Act is continuing to be felt.

International trade is an integral part of the life sciences industry. One of the biggest challenges the industry faces is to operate efficiently and legally while its supply chain, research and development and commercial activities literally span the globe.

AI continues to contribute to the healthcare and life sciences industry

AI has tremendous potential to facilitate R&D and improve medical outcomes, but the promising progress implies risks to industry players. Regulations around the use of AI in the industry are inconsistent and, in many cases, non-existent. They sometimes overlap with other regulatory frameworks, which offers unique challenges. The potential of AI to transform drug discovery is unquestionable but it will not necessarily make the process less expensive, primarily because of the substantial expense associated with software development and computational power. AI in the industry also introduces significant risks around confidentiality and cybersecurity, as well as onerous data-handling obligations, especially in view of the highly sensitive nature of healthcare data.

AI has the potential to help in virtually every step of the drug development process, from early-stage computer simulations to late-stage trial design, patient recruitment and data analysis. AI can also reduce the operating costs of clinical trials in a number of ways including by improving trial design, enhancing recruitment effectiveness, and facilitating increased data monitoring. Finally, AI can provide widespread benefits in easing healthcare providers’ day-to-day tasks by allowing them to spend more time treating patients.

Research and development is becoming more focused

Oncology remains the largest therapeutic area under study. Cell and gene therapy continue to be major focuses for the industry. CAR-T therapies have revolutionised treatment of blood cancer over the last decade, but early academic data suggest they could now transform the lives of people living with severe autoimmune diseases.

In 2023 we saw the approval of the world’s first CRISPR gene editing therapy aimed at treating sickle cell disease. These treatments require complex supply chain arrangements and complex commercial models, and face pricing and reimbursement challenges due to their high specialisation and cost.

Obesity drugs have skyrocketed in popularity since debuting a few years ago. The popularity of obesity drugs has led to shortage challenges and an increase in counterfeit medicines.

Digital transformation at its best

Digital transformation has continued to raise opportunities for pharma, medtech and healthcare providers. AI has been a key trend in this area as mentioned above; however, aside from AI, other trends and developments are worth flagging. The convergence of science and technology is increasing the speed of innovation. Computing power is booming, experiments are moving from labs to computers, and this allows for much faster experimentation and innovation. Regulators have a key role to play in the field of digital health, and we are seeing signs of them trying to catch up. Remote audits, decentralised clinical trials and “collaboration from a distance” have become a common feature since the pandemic, with numerous related legal developments cropping up across jurisdictions. The US FDA recently created a “Digital Health Advisory Committee” to better inform the agency of “the complex, scientific and technical issues” related to digital health technologies. At EU level, the EU Pharmaceutical Package contains measures aimed to adapt the EU’s pharmaceutical legislation to current technologies.

Compliance continues to hover over the industry as new types of compliance risks emerge

Increased government control across the globe continues to plague the healthcare and life sciences industry. Due to the inherent importance of the sector, enforcement is aggressive. Key compliance areas for the industry include clinical trial issues; adverse event reporting; GCP, GMP and GDP requirements (which are also binding on third-party intermediaries); interaction with healthcare providers; advertising and promotion; and hospitality and funding of events. Globally speaking, there is a broader trend in the passage of new transparency laws. In the US, there is increased control at both the federal and state levels. In Latin America, post-marketing surveillance has increased. In Brazil and Colombia in particular, there are increased and more stringent inspections regarding GMP compliance, sometimes resulting in the closure of manufacturing plants. In the broad sense of compliance, there is a more aggressive enforcement environment, which is particularly evident in the fields of transactions, trade (sanctions) and data privacy.

Proposed EU Pharma Package creates concern across the industry

In April of 2023, the European Commission published a proposal to amend the EU’s general pharmaceutical legislation and the legislation on orphan and paediatric medicines. The proposal contains far-reaching measures that will have a significant and negative impact on innovation in the industry. At the heart of the reform is the aim to provide affordable, timely and equitable access to medicines. Of key concern to the pharmaceutical industry is the proposal to cut down on regulatory incentives to protect innovation. Other measures are aimed at addressing unmet medical needs. In addition, there is a drive to fight shortages and a new set of measures to protect the environment. Although the approval of the legislation is not imminent, pharma companies are already preparing – and bracing – for the change given the extent and impact of the amendments that are being proposed.

Targeted M&A and transactional activity is expected to rebound

M&A levels are expected to rebound in 2024, led by big pharma; however, restructuring is expected to continue in 2024. M&A, carve outs and spin offs remain popular with industry players and generate cross-jurisdiction demands. This is especially seen in the increased separation of consumer businesses from pharma companies. Transactions reveal a focus on expanding capabilities in specific areas such as immunology, oncology, and gene therapy. Pharmaceutical companies are focusing on smaller and more specialist deals.

Licensing and collaboration deals are increasingly important

Licensing and collaboration deals continue to remain critical for pharma in maintaining their drug pipelines. Coupled with biotech’s need for financing, this has driven deal flow, although levels remain below their 2021 peak. Oncology and biologics continued to maintain their importance, especially with big pharma, and cell and gene therapies continue to attract large R&D licensing deals. Regulatory clearance is becoming more complex, both from a competition law and foreign direct investment perspective, and generates greater deal uncertainty. Digital transformation influences many of these agreements as life sciences companies are partnering to use AI as well as develop products with a digital component.

Conclusion

The complexities of the life sciences industries continue to grow as do the accompanying legal issues. These complex legal issues must be analysed viewing the whole picture, taking into account the geographic scope and effects as well as the broad legal reach that 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 not only be legal experts, but trusted partners with industry knowledge and business understanding.