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The Life Sciences Trends to Look Out for in Q4 2022

The life sciences industry continues to experience considerable attention, investment, and acceleration in Europe as we move into Q4.

Over the last ten years, VC financing in European life sciences has grown by 65% year-on-year, totalling more than $13.6bn.

Cutting-edge developments are rapidly transforming the industry, from technological advancements to new diagnostic tools, and the landscape of the industry is markedly different from what it was a few years ago.

With such an unprecedented pace of change and transformation, what life sciences trends can you expect this quarter, and what does the future hold?

Drug pricing developments
Significantly impacted by the pandemic, drug pricing has been an area of focus globally, with different approaches to tackling pricing issues.
In the EU, the focus has been on driving down drug prices since 2016, and this has only increased since the pandemic has added a renewed focus on the necessity to take action.
General budget pressures and a number of examples of excessive pricing have brought greater attention to better, alternative pricing models.
Potential pricing model alternatives include the prospect of drug prices being based less on the value of the drug, and more on the direct cost of R&D instead.
Additionally, in Q4 it is expected that The European Commission will propose new EU legislation that could link the grant or maintenance of intellectual property and regulatory rights to launching a product in most (or all) Member States, potentially providing cost transparency.
In Germany in particular, there are efforts to make procedural changes to the market that could reduce the period in which pharmaceutical companies set their commercial prices, whilst also looking to increase mandatory discounts.
For life sciences businesses, this may mean that a greater focus on following regulatory discussions is needed to be best able to ensure products qualify for rewards and incentives.

Transformative technology
From mobile health technology and wearables to enhanced use of AI and new digital health regulatory frameworks, the life sciences industry is experiencing an age of transformative technology in Q4 and beyond.
These factors are very much linked and overlap.
For example, data mining by wearables can benefit from the application of AI systems to process large, complex sets of data.
Data protection considerations have arisen as a result of the need for blockchain-based solutions, due to the availability of large amounts of private data.
Data generated by patients and doctors outside of clinical trials, such as those generated by wearables, could even be used in regulatory decision-making and the drug approval process.
Put simply, the industry isn’t looking at the uptake of one type of transformative technology, but instead, an interwoven variety of technology working in tandem to meet business and industry goals from a cost and efficiency perspective.
There is also the proposed EU AI regulation, which would provide the legal basis for adaptive AI systems to be considered as more businesses utilise AI.

Data protection and regulation
As mentioned above, with new technology comes the minefield of risks that arise with privacy issues.
Evolving privacy laws present a considerable barrier to life sciences businesses that operate globally, given the cross-border regulation that is the focus of these laws when it comes to the transferring of data.
Additionally, the protection of data could be costly for life sciences businesses, as instances of data breaches increase and evolve in their complexity.
For European life sciences businesses, international data transfers are the primary area of note because of the changes likely to occur as a result, such as:
The need for data transfer agreements
Further guidance across areas of digital health (e.g. AI)
A consideration of data ethics that go beyond existing privacy laws
In the future, it is likely that additional resources will be necessary to assist these changes in the long term.

Changing investor interests and approaches
Whilst investor interest in life sciences peaked in 2020 to 2021, attitudes are shifting towards greater caution.
Large amounts of capital flowed into the industry through VC funding previously, particularly through IPOs and mergers, but there is now a slower pace in investment activity.
Many investors are choosing to wait for stability in the IPO market into late 2022, with investor interest resting heavily on sector and asset reallocations, and any highly anticipated clinical data and approvals.
Whilst this is unlikely to be a significant trend in the industry (in the sense that it’s not a case of high volatility but one of caution) it is noteworthy.
Funding for startups in life sciences in Europe is still low compared to the US, though growth capital is maturing.
This is noteworthy as it shows the slow and steady progression in investment trends – unlike the highs of the pandemic, attitudes are levelling out generally and primarily peaking in areas such as technology.

Where is the industry going?
Much of the change in the life sciences industry is a direct result of the aftereffects of the pandemic.
Trends such as lower drug pricing have been, in part, catalysed by efforts to evolve the clinical trials process during the pandemic.
New legislation relating to drug pricing is likely to impact the industry on a wider scale in the coming years, making it essential for life sciences businesses to stay up to date with developments to avoid being blindsided when it comes to cost transparency.
Transformative technology isn’t a new trend, but recent developments mean that the industry is having to take steps to ensure data privacy, so that technology can continue to be used to make the drug approval process more efficient and cost-effective.
The ripple effects of the pandemic have also impacted investment trends, as investment generally slows down to a steadier pace than the impressive pandemic levels, though areas such as technology continue to garner heavy investor interest.
In short, the life sciences industry is adapting to the ‘post-pandemic’ period by focusing on areas that will address the less cost-effective aspects of their processes, whilst making strides to match legislation with new technology.

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