Introduction to USA Life Sciences 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.”

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.”