In 2024, economic uncertainties will continue to place strain on the pharmaceutical industry, limiting scientific research and development.
However, there are factors that could help to lower the risks to the life sciences sector. These have been identified by Carl Foster, who is the Chief Business Officer at Standigm (an AI drug discovery company).
Focusing on biotechnology, Foster predicts that “2024 will be challenging for the biotech industry, especially when it comes to early research and development (R&D), a key indicator for the sector.”
As to what has caused this, Foster identifies: “A rocky economy and turbulent stock market has caused IPOs to dwindle and VC firms to hoard cash instead of investing in new companies.”
In terms of the consequences, Foster says: “As a result, many pharma companies are looking for down and dirty merger and acquisition deals. There is likely to be an increase in deals and acquisitions in the late-stage technology arena as these are more appealing to companies that are worried about revenue, compared to new early-stage projects.”
The impact of these changes will affect funding and realisation of research. Foster sees: “It will become more challenging to explore early R&D in this rapidly changing environment for many enterprises, regardless of their sizes.”
As to what is likely to happen, Foster thinks: “As global uncertainty continues, big pharma will continue to feel the pressures of the Inflation Reduction Act, and this can cause companies to defer drug releases in order to avoid grappling with government price negotiations.”
The Inflation Reduction Act aims to spur investment in green technology in the U.S. by devoting $369 billion in subsidies through grants, loans and tax credits to public and private entities.
According to some commentators, the Acts drug price setting provisions are likely to fundamentally change the economics of the pharmaceutical industry and disincentivize the industry from placing ‘big bets on diseases with large unmet burdens. Many firms expect to develop fewer new uses for medicines because of the limited time available before being subject to government price setting.
There is, nevertheless, hope on the horizon, observes Foster. He says: “There are many technological silver linings. CRISPR, gene editing and cutting-edge therapies like CAR-T are likely to play an important role in healthcare, and we can continue to anticipate breakthrough drugs that promise to reshape the landscape and potentially provide important, effective and safe treatment and healthcare options.”
The biotechnology industry is expected to continue to provide a pipeline of innovative products at a time when the pharmaceutical industry is experiencing a productivity crisis.
