As our teams discuss in our 2024 Life Sciences & Health Care Horizons guide, the global transition from soft law to hard law will keep Environmental, Social, and Governance (ESG) initiatives front and center in 2024 and beyond. The potential environmental impacts of supply chain planning now place companies at risk for regulatory and civil law penalties. While many of these regulations are industry agnostic, their impact will nevertheless be significant for clients across our sector. Life Sciences and Health Care (LS&HC) companies must also stay up to date on sector-specific developments. A new environmental risk assessment as part of a larger proposed European pharmaceutical law package, actions aimed at strengthening the pharmaceutical supply chain in the U.S. and elsewhere and global initiatives aimed to improve diversity in clinical trials are but a few examples. Manufacturing reliability – for pharmaceuticals, (traditional) medical devices, and now, increasingly, for radiopharmaceuticals, precision medicines, custom/customizable medical devices, and for AI-enabled products – are key areas requiring attention to agreements, export controls, appropriate corporate and tax structures, and an awareness of the risks from missteps that can result in an increasingly global economy.
Digitalization also continues to generate both opportunity and risk, driving innovations in AI, virtual health solutions, telehealth products, and related cybersecurity measures, while raising vexing questions on how to safely and appropriately access patient health data, protect patient privacy, and manage social media. The November 2023 signing of the Bletchley Declaration on AI signifies that jurisdictions globally are committed to safe and responsible AI. However, local approaches vary, with some jurisdictions placing higher scrutiny on “high-risk” uses, including many health and medical applications. Again, LS&HC companies are uniquely positioned and must grapple with both sector-specific and industry agnostic guidelines. Understanding the interplay between multiple regulatory and legislative efforts will be crucial to success for developers and end users alike.
In the transactional space, we also see increasing complexity, as partners consider alternative funding options to account for long development timelines and allocation of manufacturing risk for bespoke therapies. While investors continue to take a cautious approach towards all types of deal making, an uptick in activity as we enter 2024 hints at the possibility of a more robust life sciences capital markets, M&A and partnering market in the coming months. However, innovators with early stage pipelines (especially pre-clinical assets), may need to advance further into the development process with their own de-risking strategy before traditional players will partner or invest. Regional opportunities for government-backed research and other sources of non-dilutive funding may prove to be of strategic interest for companies with particularly innovative technologies.
LS&HC companies are also disproportionately affected by specific issues in each geographic area, where new legislation and regulation setting precedent locally, with regulators in other markets likely to follow. In the United States, impacts of the initial drug price “negotiations” under the Inflation Reduction Act of 2022 (IRA) will have broader implications for product lifecycle management and pipeline valuation. FDA also appears to be gearing up for changes across technologies as varied as psychedelic therapies, over-the-counter drugs, and skin substitutes, while drug patents and pricing are attracting scrutiny across agencies. The UK continues to promote a progressive regulatory environment supporting innovation and accelerated access to drugs and medical devices post-Brexit. In the EU, our LS&HC clients are also navigating changing legislation with proposals for new pharmaceutical regulations as well as local implementation of, among others, the AI Act and European Health Data Space.
Companies are also tracking the early cases before the European Unitary Patent Court, which has already proven an attractive pathway for some life sciences litigants. These themes also carry over to Asia-Pacific markets, where we see fast-track routes for drug marketing authorization and incentives for research and development of cell and gene products, coupled with continued scrutiny on health care corruption. Companies with current – and future – interests in these regions would be well advised to factor these into their plans ahead. We are proud that our truly cross-border and cross-functional teams are here to help.
These are just some of the current and evolving trends that are shaping the future of the industry, which we discuss in the article linked below. The Hogan Lovells global Life Sciences and Health Care team – comprised of more than 500 lawyers around the world who support more than 1,000 clients in the industry – stands at the ready to provide you with creative strategies for your most promising opportunities and integrated solutions that protect and support your business when issues arise. We hope that you find our view of the horizon thought-provoking. We look forward to working together, and hopefully seeing each other, again soon.
