After a pandemic-fueled period of historic growth, the life science industry has found itself in a slump; but, that has not dissuaded future plans, according to the 4th annual Horizons: Life Sciences 2023 report.
The report is produced by CRB, a provider of sustainable engineering, architecture, construction and consulting solutions to the food and beverage and life sciences industries. The 2023 version surveyed just over 500 leaders from companies from small, medium, and large companies across North America and Europe.
According to the results, life science companies are focused on de-risking their pipeline amid this industry turbulence and implementing a more calculated business approach; but at the same time,
they see huge potential in the industry’s future. Specifically, 86% of respondents said they see a positive business growth outlook over the next three years. Only 1% said the marketplace business will decline, while 13% predicted it will not substantially change.
On the up and up
One of the keys to success in the next few years is long-term contractor relationships. Survey respondents overwhelming (81%) indicated that they use clinical trial management (CRO services) to supplement company operations. Supply chain management services is next with 56% of responses.
A closer look reveals insights about the unique challenges facing individual submarkets. When CRB asked gene therapy developers about their contracting strategy, for example, the green company noted a much higher demand for CGMP manufacturing services (54%) than the average life science company (34%). Given this submarket’s relative infancy, it’s no surprise that these companies would choose not to invest in their own capital-intensive manufacturing facilities.
Contracting strategies appear to differ across regions, too, as manufacturers in Europe appear more likely to seek regulatory support from third parties than those in North America. This is likely due to the fact that bringing new modalities top marker is more challenging in Europe than North America, thanks to the differing regulatory bodies. If companies seeking approval in North America can prove that their approach adheres to the principles of CGMP manufacturing, they may succeed; meanwhile, companies in Europe must prove their adherence to a strict rulebook with much less leeway for interpretation. In addition, these challenges could explain why the European survey respondents are much less likely than those from North America to expand into new countries over the next five years (9% versus 26%).
Contracting doesn’t stop at clinical trial management, though. According to CRB’s report, nearly 70% of respondents plan to supplement their in-house capabilities with contracted manufacturing. For startups and small companies in particular, that number jumps to 83%. Even large companies—presumably with more robust in-house capabilities—are more likely than not to engage a CMO. For example, only 20% of North American respondents (37% of European) said they plan to handle all manufacturing in-house. For both geographics, a combination of in-house and contracted manufacturing was the most popular choice (73% North America, 60% Europe).
That's because these intelligent tools make success far more likely...giving companies more certainty that their R&D investment will pay off—and soon.
Horizons: Life Sciences 2023
The deeper into the manufacturing lifecycle these life sciences companies are, the more likely they are to outsource to a CMO. Seventy-nine percent do so at the commercial phase as opposed to 10% at the pre-clinical. In Phase I, it is 20%, Phase II is 28% and Phase III is 52%.
“This overall trend likely plays out differently across submarkets,” explain study authors Noel Maestre, CRB’s VP of Life Sciences, and Peter Walters, Fellow of Advanced Therapies. “In our experience,
for example, startups with emerging therapies in their pipeline and without manufacturing capabilities are likely to partner with a CMO for clinical-scale production, with the goal of bringing manufacturing in-house through a late-phase tech transfer process. In more established submarkets, on the other hand, companies often strive for an ongoing hybrid of in-house capacity and contracted support to manage market fluctuations.”
Maestre and Walters also note that shifts in the life science industry can be attributed to the emergence of AI-driven tools capable of machine learning and predictive analysis. Put simply, “R&D isn’t what it used to be,” they write.
In fact, when it comes to spending money on artificial intelligence, survey respondents indicated they prioritize their R&D programs above any other.
“That’s because these intelligent tools make success in the research lab far more likely; discoveries that would have once taken months to manually identify and document could be possible in just weeks or days, giving companies more certainty that their R&D investment will pay off—and soon,” according to the survey writers.
The emergence and adoption of AI
These days, it’s hard to get away from the ChatGPT conversation, and it seems the life science industry is no exception. While traditionally laboratories have been slow to embrace digitization, the Horizons: Life Sciences 2023 reports suggests companies are now developing robust plans to leverage the benefits of advanced analytics, AI and machine learning at scale.
Three-quarters of respondents indicated their companies will implement a plan to use AI tools within 2 years, reflecting the rapid uptake of these technologies in the industry. Meanwhile, 21% said their AI strategy will be implemented in 3 to 5 years. Startups and smaller companies were more likely to have a strategy that could take as long as 5 years (40%). This could reflect a greater focus on the science of developing products than on what it means to operate in a CGMP environment.
Investments in AI is dominated by drug discovery and R&D (48%), followed by quality/regulatory (40%) and clinical manufacturing (34%).
Interestingly, CRB found that digital transformations are led by the C-suite, with 38% of CEOs responsible for heralding AI initiatives. In fact, only 7% of respondents indicated someone outside the C-suite level—specifically at the VP level—was leading the digitization charge at their company.
“[This ensures] this is a strategic goal involving processes and people, not just a technology project,” said Niranjan Kulkarni, Senior Director, Consulting and Ryan Thompson, Senior Specialist, Industry 4.0 at CRB.
Perhaps not surprisingly, there remains cynicism that investments in digitalization will yield dividends. When respondents were asked about the challenges preventing their companies from adopting data and AI projects, the top issues were either technological, a lack of market clarity or regulatory concerns. In fact, 43% cited lack of evidence of ROI as the top barrier preventing their company from implementing AI projects. The next-highest concern was security/cybersecurity risks (41%), followed by regulatory concerns (33%), lack of data connectivity and infrastructure (29%), and market confusion (28%).
While most respondents (89%) said their companies used the same amount of data and technology as—or more than—their peers, the respondents were split on whether this provides a competitive advantage. That lines up with the data showing uncertain ROI as the biggest barrier to AI adoption.
Even so, the CRB authors think that will change: “companies know there’s no turning back.”
“They intend to push forward with digital technologies,” Kulkarni and Thompson conclude. “While manufacturers may have lagged behind retail, banking and transportation in harnessing the power of data and AI, this survey of industry experts suggests we’re witnessing the maturation of Pharma 4.0™.”