Life sciences are experiencing a shifting landscape of rapid technological innovation, coupled with volatile market conditions that companies in the sector must be ready to adapt to, according to a new analysis by Savills. It’s a landscape being transformed by AI, regulatory uncertainty, rising costs and changing forms of healthcare delivery.
“With 2025 in full swing, life sciences companies face a rapidly evolving landscape filled with both opportunities and significant challenges. Success will depend on strategic adaptation, investment in emerging technologies and a proactive approach to supply chain resilience and healthcare system changes,” commented Austin Barrett, Savills vice chairman and head of life sciences.
Patents on a number of high-revenue drugs will expire this year. This will intensify competition from generics and biosimilars in terms of pricing, market share and patient access. To retain their leadership positions, companies will need to diversify their portfolios through rapid innovation in developing vaccines and specialty medicines, the report said.
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At the same time, they will have to deal with the rising cost of R&D caused by increasingly complex research methods and technologies, higher skilled labor costs, stricter regulation, and capital-intensive research equipment and facilities.
AI is an especially important new technology that can be used to speed up R&D efficiency and predict therapeutic outcomes. “The rapid advancements of artificial intelligence (AI), machine learning, biotech and personalized medicine are helping accelerate drug development," the report said.
"Ongoing investment in new technologies and methodologies—and the skilled workers needed to leverage them—will be critical to stay relevant and efficient in research and operations,” the report said.
Then, there is the issue of supply chain vulnerabilities that could affect the production and distribution of medications. “New tariffs will impact how drugs are manufactured and come to market in North America, as they influence the import of raw goods and export of products," Savills warned
"This factor prompts a growing need for sustainable practices across manufacturing and distribution processes, but it will require significant adaptation and investment."
Another risk is the possibility of an economic slowdown that could reduce spending on both supply and demand sides and affect companies’ growth.
U.S. firms will need to prepare for whatever regulatory and legal challenges the Trump administration introduces. However, the report noted that regulators globally are increasingly focused on drug pricing, transparency and patient safety. Patent infringements, product liability and non-compliance cases could put financial stability and reputations at risk.
In addition, margins and profitability may be affected by public scrutiny of corporate drug pricing and transparency, along with changes in health insurance and reimbursement rates.
The life sciences space will also have to adapt to a healthcare system moving to a more patient-focused proactive model of care and treatment that emphasizes prevention, access, and coordination instead of traditional treatment-focused interventions.
“By anticipating and addressing these factors, companies can position themselves for long-term sustainability in an increasingly complex environment,” the report advised.
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