Our industry is undergoing a stress test. There are a multitude of destabilizing factors at play:
- Potential tariffs
- Budget cuts to US R&D funding
- Rapid and sudden loss of key personnel at the FDA, CDC, NIH and other public institutions which support
- Downward price pressure in the US due to potential implementation of reference pricing
- A weaker dollar and interest rate fluctuations
- A weakened stock market
As should be expected, biotech and pharma companies on both sides of the Atlantic are reevaluating their strategies. There has been a wave of announcements of large, long term investments in the US: Roche with $50 billion over ten years; Novartis with $23 billion over the next five years; J&J has announced a $55 billion investment over the next four years; Novo Nordisk will invest over $4 billion in a US fill finish facility; Regeneron will partner with Fujifil Diosynth to double its US manufacturing capacity (deal worth more than $3 billion);Sanofi has made a multi-year capital commitment to Sanofi Ventures, increasing its fund to $750 million. These select examples total way over $100 billion already. More than 30 pharma CEOs have already warned the European Commission that up to 85% of their capital investments may leave the continent.
Despite all of this investment…will the US remain the center of gravity for pharma and biotech? What should the global biotech industry prepare for?
In 2024 global pharma companies continued to depend heavily on the U.S. market, deriving over 70% of global revenues from the United States. Even European-based giants such as Novo Nordisk, Roche , and Sanofi show a clear strategic alignment toward U.S. demand. This implies that the destabilization of the US R&D engine as we have all known will result in the transformation of the biotech industry. Expect more M&A, technology transfers and, in some cases, divestitures in markets that no longer hold the same advantages as they did in the past.
Practical Things We Can Do
Here are a few practical actions that can be taken to identify risks and opportunities:
- Review your supply agreements to understand key clauses: termination, required notice periods, any limitations on your ability to raise pricing, shared costs that may have been overlooked, including litigation.
- Review the IP protection of critical manufacturing processes in new territories.
- Understand what it will take to obtain regulatory approval of a manufacturing process in new territories and also in various states within the US.
- For new agreements, consider your choice of jurisdiction (e.g. US vs EU) carefully.
- For licensed and co-developed or co-commercialized products, review what commercial and manufacturing decisions require consent from the licensor.
- Consider a multi-territory clinical development and commercialization strategy that allows for the shifting of activities from one region to another if necessary.
Don’t Rely on the Contract
Now more than ever, partnerships must be designed and managed with contingencies in mind. Not just around deliverables and governance—but around political and macroeconomic realities. These are times when effective communication and a high level of trust in your partner might be *the* critical factors enabling your company to react nimbly to a sudden change.
Finding Strategic Balance
At LBBAL, we help our clients maximize the value of their licensed and acquired programs. If the M&A route is the appropriate one, we support that process (diligence, deal negotiation, integration, tech transfer) so that the deal is executed smoothly and efficiently.
That means:
- Make sure you do your diligence and that you understand the scientific and clinical drivers for the deal. What is the upside and what is the potential downside of the deal? What are the implications, opportunities and risks.
- Identify the strengths that each party brings to the table and utilize these to make robust clinical development and commercialization plans.
- Pay attention to local legal, regulatory and compliance requirements so you don’t end up limiting your ability to operate in certain territories.
- Ensure mutual benefit in your supply agreements if you depend on the supplier being in business long-term.
Conclusion
2025 is not business as usual. It’s a strategic inflection point. Whether you’re navigating a first-time licensing deal or managing a late-stage co-commercialization alliance, the rules are evolving in real time.
At LBBAL Alianza, we help you stay nimble in the face of change. We, build robust alliances and help you manage dispute. We help you cut to the chase and stay focused on your strategy.
