De-Risking Drug Development
The COVID-19 pandemic showed how quickly drug development — especially mRNA technology — can advance when supported by robust resources and investment. Now, according to the 2022 BDO Life Sciences CFO Outlook Survey, life sciences companies are exploring other research areas to try to replicate the results.
Here's What They Had to Say
Investment Trends Have Shifted
Investment plans for 2022 show that drug developers are capitalizing on trends advanced by the COVID-19 pandemic.
Beyond the continuing interest in COVID-19 therapeutics and diagnostics, which we expect to continue as the world strives to bring the pandemic under control, investments are largely focused on treating diseases through personalized medicine. Companion diagnostics, for example, will see increased use in validating an individual’s biomarkers to select the most effective immunotherapy.
As the drug development process becomes faster and less labor-intensive due to advances in technology (more on that later), it makes sense to turn to personalized medicine to better tailor the therapeutic to the individual receiving it. However, the outlook isn’t all optimistic. Drug development continues to require significant cost, on average between $2 and $3 billion from discovery to approval. And a marketable product is by no means guaranteed.
Another challenge drug developers will face is access to resources. At the height of COVID-19, vaccines and therapeutics were prioritized, while other products were deprioritized. As COVID-19 becomes endemic, government funding for COVID-19 therapeutics and vaccines will sunset, and all products will need to compete for the same raw materials and resources. As a result, we can’t continue to expect the same lightning speed in developments like we saw with mRNA technology during the pandemic.
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LANCE MINOR |
Transforming Drug Development
Drug developers are discovering how technology can be used to de-risk the drug development process by making it cheaper, quicker and easier.
The top four technology investment areas — artificial intelligence (AI) and machine learning (ML), cloud computing, robotic process automation (RPA) and data analytics and business intelligence — reflect the growing importance of in silico drug development techniques. This approach not only reduces the possibility of human error in drug development, but also makes the process faster and cheaper. For scientists, duties like target identification and testing tissue samples from clinical trials can take weeks. Computers can shorten that time to mere minutes, while also identifying patterns in massive amounts of data beyond human capabilities to analyze manually. Computer modeling can even reduce the amount of testing needed per drug, further condensing and simplifying the drug development process.
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MICHAEL LEE |
Partnerships Present Opportunities
The drug development process is necessarily long and involved. However, partnering with other companies and working with outside investors can take some strain out of the process by expanding drug developers’ access to the necessary capital, raw materials and expertise. In 2022, 47% of drug developers plan to pursue collaborations or partnerships for greater network value.
Interestingly, SPACs have overtaken IPOs in popularity when it comes to going public. SPACs reduce risks in the process of going public for life sciences companies because they allow these organizations to essentially value themselves as opposed to relying on the analysis of investment banks or the outcome of a road show. This is crucial as many life sciences companies spend a significant amount of time pre-revenue. However, that is not to say SPACs are perfect. The SEC is predicted to pursue greater regulation of SPACs and half of the companies that finished SPAC deals in the last two years are down 40% or more from the price they began trading at.
When it comes to drug development, we’re already seeing life sciences companies partner with tech companies to leverage their capabilities for in silico drug development. With a hot M&A market in the future, especially in the biotech space, we can expect an increase in these types of partnerships to facilitate a faster and smoother drug development process.
SPOTLIGHT: ESG and drug development
Around the world, business stakeholders are turning their attention to environmental, social and governance (ESG) considerations. In Europe, ESG requirements are growing stricter, a trend which is likely to shape U.S. federal regulations.
Drug developers, whose business is necessarily global in nature and who regularly seek investment opportunities, are making moves in ESG. Forty-two percent of drug developers are planning to pursue ESG initiatives in 2022, with biopharmaceutical and pharmaceutical companies leading the charge (50%).
Life sciences companies are clearly seeing the value of ESG initiatives: 68% of drug developers believe that implementing an ESG program that improves resiliency to ESG risks would have a positive impact on their company’s longer-term financial performance. When it comes to ESG programs, drug developers cite two major objectives: the reputation and brand benefits of external reporting (45%) and creating value across the organization (43%). Drug developers should consider designing authentic, impactful ESG programs that create value for all stakeholders.
Looking For Ways to De-risk Your Drug Development Process?
Methodology
The 2022 BDO Life Sciences CFO Outlook Survey polled 100 life sciences industry CFOs with revenues ranging from $100 million to $3 billion in October 2021. The survey was conducted by Rabin Research Company, an independent marketing research firm, using Op4G’s panel of executives.
