Trends in Life Sciences
Revenue at Risk from Loss of Exclusivity
Source: EY analysis, Evaluate Pharma (September 2023)
Nearly 200 drugs are facing patent expirations through 2030, with major blockbuster drugs at risk, including Merck & Co’s Keytruda, which will expire in 2026.
The loss of revenue is estimated at nearly $300 billion for drugs expiring between 2025 through 2028. The large number of patent expirations will make it difficult for pharmaceutical (pharma) companies to find replacements immediately. Therefore, strategies to replace this revenue loss include:
Implementation of AI to speed up drug discovery, clinical trials and production.
The acquisition of drug and therapies through mergers and acquisitions (M&A). Based on a recent EY report, the biopharma industry had approximately $1.5 trillion available at the end of the first quarter of 2024, giving the sector significant capital for M&A deals.
Key Takeaway: The pharma industry will continue to make strategic investments in AI and M&A to shore up the drug discovery pipeline and make up for the significant loss of exclusivity in the next five years.
AI-Powered Drug Discovery Venture Capital Funding
Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts; YTD as of June 2024; RHS=Right Hand Side
The potential implications of AI on drug discovery is making waves in the life sciences sector. Venture capital (VC) funding for AI companies focused on drug discovery has accelerated, and as of midyear 2024, totaled more than any individual year.
VC is not the only funding source driving AI advancements; the pharma industry is also making substantial investments into AI applications. Many companies have already integrated AI in their current research and development (R&D) plans. According to a recent Evaluate survey, about 270 companies are implementing AI solutions in their drug discovery efforts.
AI has the potential to enhance the lifecycle of drug discovery from ideation to production. Some benefits to the industry include:
Faster drug development
Cost savings that free up funds for further R&D
Growth in both the number and quality of drugs
Key Takeaway: The fusion of drug discovery and AI has already begun and is in its early stages. AI has the potential to revolutionize the next generation of drugs and serve as a bridge to the upcoming patent cliff.
Strategic Adjustments Made in Response to the U.S. Biosecure Act
Source: L.E.K. 2024 Global Survey on Impact of U.S. BIOSECURE Act; Based on 73 responses from Biopharma, CRO/CDMO and Investors
The proposed Biosecure Act plans to restrict which foreign companies can do business with pharma companies that receive U.S. funding. Since most global pharma companies have contracts from the U.S. government, this legislation will have far-reaching impacts on the pharma industry and its supply chains.
Global consulting firm L.E.K.’s survey of life sciences companies found that 68% of respondents have begun making strategic adjustments in response to the Biosecure Act. The survey also found that 26% of respondents have begun to evaluate options outside of China.
The immediate impact of the Biosecure Act is the diminished confidence in Chinese companies, although only a few have been named in the proposed legislation. Longer-term impacts of moving operations away from current partners will require significant time and money from pharma companies, but it may also present opportunities for other countries.
Key Takeaway: The Biosecure Act was recently passed by the U.S. House of Representatives and is now headed to the Senate. The life sciences sector must begin preparing for its eventual passage and the potential impact on the pharma supply chain.
