How Long Will the Current Slowdown in Biotech Investment Last?

With the increasing focus on supply chains, how do you see the balance between onshoring and outsourcing evolving in the future of the biotech industry?

I guess there's been a tendency, over recent years to do more onshoring, because of COVID, I think, you know, partly because of supply chain challenges. But also, there have been a number of macro challenges sort of politics, security, trade, that kind of thing. But also, the more practical things like regulatory expectations, I think there's some pressure from the US on certain Asian CDMOs. Right now, the cost of doing the work on the project itself, but I think if a biotech is comfortable with all of those areas, in other words, they've assessed risk, I suppose, versus challenge of finding the right expertise, then no doubt, tapping into skills and capability on a global scale is an important element of drug development. Even if the critical R&D functions remain onshore, and they offshore for scalability and operational costs or efficiency, then I think that we're just going to see this balance between the two or almost a hybrid approach, I suspect moving forward.

In your opinion, how long will the current slowdown in biotech investment likely last, and what factors might influence its duration?

It's a challenging time across the sector, some companies are seeming to thrive, and others aren't, it doesn't feel I don't think as dire as it did in the late 2000s, which impacted the industry quite significantly, we are definitely in a period of reset.

So, post COVID, with market volatility and inflation pressure, of course, investors have become more cautious. And we know from experience, this sector is really resilient, and it will rebound, you just have to look at the way the market is responding to the GLP one type drugs. So, it's probably tackling our biggest health challenge after cardiovascular in terms of obesity and diabetes. So, I guess when things get tough, we have to evolve. And this sector is superb at doing that. It of course, it will in influence the investment dynamics, and M&A will no doubt continue as the larger players manage their patent lives and look to improve their pipelines. But if you look at the bigger picture, we've seen increased R&D spend and pipeline growth at 10% per year, despite the challenges. And there's a nice statistic here, the global biotech market is projected to grow to $3.21 trillion by 2030. Whereas it's about 1.2 2 trillion in 2023. So that's quite a significant uptick if you like. But I've heard people say 2024 won't be as bad as 23. But it'll be the end of the year before we really see a bounce back. And others more optimistically, say the spring for the signs of recovery, I think green shoots and all that. So, either way, I think everyone feels cautiously optimistic.