• What are some of the biggest threats and opportunities facing the pharmaceutical industry?

Chris Hall, Aptar Pharma: “Healthcare cost pressures have been around for a while, but over the last few years the regulators have been adapting their guidance to industry to accelerate the ease of developing generic products. How you view this is a matter of perspective. If you are a brand holder in big pharma this is probably a significant threat; if you are a generic company it is an opportunity.

“For pharmaceutical device companies and services companies, the increase in generic products and fall in drug prices to payers is likely to drive volumes with a net positive impact. Linking payment to treatment outcomes has become common in the US for hospital treatment. This is arriving for new classes of drug product. This trend is creating a need for pharma companies to be able to ensure patients use their products properly. It is now nearly 40 years since the US surgeon general said: “Drugs don’t work in patients that don’t take them.” This linking of outcomes to payments is creating the opportunity for digital health solutions to track and measure adherence, side effects and outcomes of pharmaceutical products. This has been held back by tightening in the financial markets, but for those solid technology companies that survive the next 6-12 months, the commercial opportunity is expected to be significant.”

Ross Burn, CatSci: “At the moment, the biggest threat is the lack of capital investment available for emerging biopharma (ie companies conducting early-stage research that do not have a commercial product). They require capital markets to fund their innovation and way to market. There has been a real softening in the market and, although funds are starting to flow a little, for over 12 months, there has been a lack of venture capital deals and a significant fall in the number of IPOs. The NASDAQ Biotech Index is still where it was in 2022, which reflects a lack of funds flowing. Therefore, whilst balance sheets remain strong, there is less money available to progress assets as companies have less certainty about when they will be able to next raise funds, resulting in fewer projects for innovation partners and contract manufacturers to deliver.

“Of course, a key reason for this has been inflation. Covid saw a lot of companies receiving funding that potentially shouldn’t have; plenty of money was spent with few products making it to market. We have seen a huge reset after Covid. A lot of the large pharma companies are going through pipeline reviews, while recent legislation by the US government (such as the Inflation Reduction Act) is definitely affecting potential returns with many major programmes being adjusted accordingly. As for the UK, there are definitely problems with the supply chain due to inflation on top of Brexit, especially regarding regulation.”

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• How has the pharmaceutical industry changed for you in the last 12 months? How do you see it changing over the next few years?

Chris Hall, Aptar Pharma: “There has been a normalisation of supply chain stresses in the pharma industry caused by Covid. It remains to be seen how many of the projects to address a global pandemic will be continued in the long term now that the urgency has gone, but the NGOs and some governmental funding bodies are continuing to invest in technologies to rapidly develop and distribute vaccines.

“The expansion of the indications of GLP-1 agonists into weight loss has driven a scramble for sterile fill and finish capacity. This has culminated in the acquisition of Catalent by Novo Nordisk’s major shareholder to secure capacity to fill their GLP-1 products. This need is also driving huge capacity expansion in auto-injector device capacity and elastomer components  manufacturing to support the expected growth. This will only continue as the expansion of indications for GLP-1 continues expand to areas such as addiction treatment.”

Ross Burn, CatSci: “There are lots of companies underperforming. The whole CSO market has really had trouble. There have been many big deals done by large pharma companies involving ‘new modalities’, reflecting how the market is diversifying into new areas, such as ADCs, oligonucleotides, protein degraders, and molecular glues.

“Beyond 2024, these  emerging complex medicines will push forward, but small molecules will continue to be critical tools for the treatment of challenging diseases. Whether it is in oncology or cardiovascular, for example, there will be needs for small molecules across ultra-rare, rare, and large clinical populations as there are many unmet patient needs. For example, psychoactive compounds being used to treat depression.”

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• Which sectors are you seeing the most activity in? Are any particularly fast-growing?

Chris Hall, Aptar Pharma: “Services sectors are strong to serve the smaller biopharma development companies. These companies do not have the large internal resources to bring products to the market and as such are dependent on pharmaceutical services companies (CDO, CDMO, CMO, analytical services, regulatory consultancies etc).”

Ross Burn, CatSci: “In small molecules, the compound annual growth rate has reduced from around 10% to 6% - but that’s still growth. The high growth is around oncology, which makes up around 40% of programmes, so a lot of the more potent or targeted small molecules programmes will be seeing double digital growth going forward. Of course, the rate of growth for biologics will continue to be larger, whilst many of the new modalities will see growth because of new opportunities presented by breakthrough science.”

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