The biopharmaceutical industry in the United States has commenced 2017 amidst uncertainty and speculation about potential changes under the new Administration. After being criticized for high drug pricing during President-elect Donald Trump’s first news conference, several companies experienced a decline in stock prices early in the year. Industry giants like Johnson & Johnson, Novartis, Merck, Eli Lilly, Amgen, and Celgene have also faced increased scrutiny following subsequent press conferences. However, as the global leader in the market with sales of $333 billion in 2015, triple that of its closest competitor, China, the outlook for the US biopharmaceutical industry remains positive. With global healthcare expenditure projected to reach $8.7 trillion by 2020, driven by factors such as increased life expectancy and advancements in therapeutic treatments, the industry dynamics are shifting not only in the US but worldwide. Additionally, the aging population in the US, expected to increase by 8% by 2020, further contributes to the changing landscape.

The US is widely regarded as an attractive hub for innovation, mainly due to its robust intellectual property laws that incentivize research and development (R&D) activities. Although corporate tax rates in the country remain high, there is potential for review under the new administration. To counter recent negative media portrayals, the industry has launched the GoBoldly campaign, aimed at showcasing cutting-edge research and advancements. Universities and research institutions play an increasingly important role as larger companies outsource early-stage development, leading to a rise in projects spun-out into commercial ventures.

The Boston/Cambridge area, ranked first in Genetic Engineering & Biotechnology News’ (GEN) top US biopharma clusters list in 2016, has made significant progress in R&D through the commercialization of academic research projects. The San Francisco Bay area ranked second, while the New Jersey/New York hub, renowned as the “medicine chest of the world,” held the third position. Cross-industry collaboration is on the rise, with associations and research institutions recognizing the benefits of pooling efforts and fostering an innovation ecosystem.

New Jersey serves as an example of successful consolidations and research institutions. The merger of Rutgers University with the former University of Medicine and Dentistry of New Jersey (UMDNJ) has resulted in a strong research institution. Furthermore, Rowan University’s acquisition of the UMDNJ medical school in southern New Jersey has further enhanced the research landscape. Dean Paranicas, President and CEO at the Healthcare Institute of New Jersey (HINJ), highlights New Jersey’s excellent infrastructure, geographic location, skilled workforce, and well-developed network of goods and service providers as key considerations for life sciences companies. The proximity of companies fosters collaboration, advances medical innovation globally, and provides a locally experienced workforce.

While regional hubs offer incentives and companies consolidate their presence through mergers and acquisitions, complex supply chains and the drive to shift manufacturing back to the US pose challenges. In today’s globalized business environment, it remains difficult to manufacture everything domestically due to the intricate nature of supply chains. The potential impact of a Border Adjustment Tax is widely considered negative for the industry. Gil Roth, President of the Pharma & Biopharma Outsourcing Association (PBOA), emphasizes that the industry heavily relies on globalized supply chains and asserts that the necessary infrastructure for complete domestic production does not currently exist.

Outsourcing trends continue to experience positive growth as companies seek to streamline internal expenditure. Contract Manufacturing Organizations (CMOs) and Contract Development and Manufacturing Organizations (CDMOs) expand their services to include development, offering pharmaceutical companies a more accepted and complementary business model. The US biopharmaceutical industry is poised for change under the new Administration, but its strong focus on innovation and R&D positions it to adapt and thrive. The industry’s commitment to innovation will sustain its global market leadership.

The US biopharmaceutical industry faces an evolving landscape as it grapples with potential changes under the new Administration. However, the industry’s position as a global leader, coupled with its commitment to innovation, strengthens its outlook. R&D will continue to be the core focus and investment area, ensuring the US maintains its dominant position in the global market. Collaboration, consolidation, and outsourcing trends are driving advancements, while challenges such as complex supply chains and potential shifts in manufacturing require careful navigation. With adaptability and a focus on innovation, the US biopharmaceutical industry is well-equipped to embrace the changes ahead and continue driving medical advancements for the benefit of patients globally.