Introduction to USA Life Sciences Industry
Weathering the storm
The ability of the US life sciences industry to attract innovation, talent, and investment remains unparalleled worldwide. From the R&D labs of the East Coast to the biotech leaders of the West, and passing by growing manufacturing hubs countrywide, biopharmaceutical leaders continue striving to keep the US in pole position for life sciences globally. Yet, following a “sugar high” for the industry in 2020-2021 at the height of the Covid-19 pandemic, 2022 felt like a hangover for several players across the value chain, bringing more uncertainty than guarantees for many, and raising concerns about the future of the industry.
Deemed, perhaps too harshly, as an “annus horribilis”, 2022 was certainly a rocky year for the life sciences industry in the US. With capital markets having peaked in Q1 2021, the past 18 months were marked by macroeconomic shockwaves, repercussions of the Ukraine war, talks of a global recession, and a biotech space that arguably hit rock bottom. There is a silver lining, however. 2023 is deemed by many industry leaders to be the much-awaited M&A year. With big pharma holding over US$1 trillion in capital to deploy to deal-making, it will likely soon be shopping season for the 20 biggest firms in the industry, further reinforcing their pipeline and boosting R&D investments that will benefit biotech through a trickle-down effect. Looking ahead, the growth of the global pharmaceutical market (from US$1.42 trillion in 2021 to US$1.48 trillion in 2022 and a forecasted US$1.50 trillion finish in 2023) should accelerate significantly, as recent studies estimate the pharmaceutical industry to grow to over US$2.4 trillion by the end of 2029.
Beyond external geopolitical factors and recent turmoil in the banking system in March 2023 (rocked by the collapse of the Silicon Valley Bank, Signature Bank, and the last-minute rescue of Credit Suisse by UBS), perhaps the most substantial event for the life sciences industry in recent months came with the passing of the Inflation Reduction Act (IRA). Since August 2022, top-selling prescription drugs are subject to Medicare price negotiation, which has already impacted margins, revenue forecasting, and asset valuation for biotechs and biopharma. Among the giants, AstraZeneca and Pfizer have been vocal about the IRA’s potential negative impact on their cancer drugs pipelines, worrying that close to 60 therapies will likely be affected by 2030. President and CEO of Biocom, Joe Panetta shares concerns about the regulation’s impact on innovation: “Our elected representatives in Congress were short-sighted in passing the IRA. It will have a detrimental effect on investment in innovation. Beyond large pharma, the bottleneck will slow the pace at which smaller companies can raise the capital they need to sustain their discovery and development efforts.”

“Precision medicine will be important for advancing diagnoses and treatment. In this new world, you will see more partnerships with patients throughout their care.”
Tyrone Brewer, President, US Oncology, Janssen Pharmaceutical Companies of Johnson & Johnson
There are nevertheless reasons to be excited for the upcoming decade of life sciences progress. From new drugs to advanced manufacturing techniques for cell and gene therapies, mRNA, orphan, and rare diseases discovery, the pharmaceuticals field is back to its pre-pandemic focuses, boosted by huge capital allocated by big pharma to R&D. With the pandemic redesigning the public’s relationship with the industry, ESG, health equity, and precision medicine are now actual trends rather than buzzwords. With Covid-19 re-engineering home health, consumers become more comfortable with the self-administration of drugs. As put by John Pennett, partner-in-charge of the national technology and life sciences group at EisnerAmper: “It is a convergence of health care, payers, providers, AI, and connected patients that is under development. Individuals are making their own decisions, self-regulating and self-medicating.”
Home health brings about risks for the consumer, however. The pharmaceutical counterfeiting market is currently valued at US$200 billion, with no signs of a decrease in sight. “Individuals’ acceptance of online pharmacies will be the next main driver in the boom in counterfeiting,” explained Steve Tallant, senior director, solution marketing group at Systech, a solutions division of Markem-Imaje.
Unsung heroes: the pharma distribution chain
With the height of the pandemic in the rear mirror, the life sciences industry is now reviving disrupted clinical trials for key drugs and vaccines and battling backlogs. Managing supply, cold, and refrigerated chain logistics is more important in an industry where time is of the essence (for both patients and shareholders).
Aerial logistics are therefore likely to increase in the coming years. Building on the success of air corridors established to deliver vaccines during the pandemic, several firms continue to answer seemingly impossible challenges. Etihad Cargo was a founding member of the HOPE Consortium, a vaccine distribution initiative that proved its value during the pandemic. “With the HOPE Consortium, we created a unique ecosystem from a logistics point of view, which was possible through collaboration with the government and businesses. Overall, 260 million Covid-19 vaccine doses were distributed to more than 60 different countries”, detailed Fabrice Panza, manager of global cool chain solutions at Etihad Cargo.
The hyper-focus put on developing cell and gene therapies – widely accepted as the most revolutionary field in life sciences – will bring about further logistic challenges and more opportunities for air carriers. These technologies are highly sensitive to temperature deviations and must be handled according to tight frozen and cryogenic standards. As put by Trevor Caswell, chairman of Pharma.Aero, a collaboration platform bringing together manufacturers, certified cargo firms, airport operators, and logistics specialists: “The future of pharma is moving towards individualized treatment processes and protocols, which means we need to start looking more into how biopharma and cell and gene products are moved by air.”
From air to land, earlier investments into the cold chain infrastructure will undoubtedly be leveraged as a pipeline for upcoming novel therapies and technologies in 2023 and beyond. Logistics firms must be innovative to best deliver vaccines and drugs to patients: UPS Healthcare delivered over 3 million doses of Covid-19 vaccines in Africa by drone. Dan Gagnon, vice president, global strategy & acquisition integration at UPS Healthcare, emphasized: “There is a strong pipeline of biologics and pharmaceuticals that will benefit from that readily available cold chain infrastructure.”
Science does not stop. The formidable challenges of 2022 did not deter an industry known for its ability to adapt and resilience. Rapid innovation, strategic repositioning, and deal-making continued, albeit at a slower pace and with lower valuations than in the past two years. With the return of international travel and trade events, it is anticipated that over the next 12-18 months, the industry will see a ‘supercharged’ period for partnering, strategic alignment, and contract agreements. For life sciences firms – focused on cell and gene technology, providing lab equipment, or pioneering CNS breakthroughs – the focus will be on embracing digitalization, navigating a changing regulatory and financial landscape, and tackling health inequalities. As diseases know no boundaries, 2023 will also likely bring about broader global cooperation, as US stakeholders continue to strengthen their global reach through academic, public, and private deals globally.

“Moving forward in 2023, we want to take what we learned from the pandemic and take this forward into a proactive end-to-end supply chain state.”
Trevor Caswell, Chairman, Pharma.Aero
Article header image courtesy of Etihad Cargo