Read our Pharma Services Market Update for our sector insights. We continue to be optimistic on the fundamentals of pharma services companies over the next decade. However, over the past six months, we have seen an elevated volume of study delays and cancellations by small/mid-sized biopharma sponsors, and this is having various negative downstream financial effects on companies in the space. We are also hearing more anecdotes of larger pharma sponsors re-prioritizing their product development strategies in response to the prescription drug price cuts associated with the ongoing rollout of the Inflation Reduction Act (IRA) of 2022.

Key Takeaways

1. President-elect Donald Trump announced the nomination of Robert F. Kennedy Jr. (RFK) as his Secretary of the Department of Health and Human Services. RFK is perhaps best known for his criticism of what he considers to be lax regulatory oversight of vaccines. RFK has also supported measures to cap drug prices. To us, RFK’s past commentary on drug pricing seems consistent with Trump’s attempt to implement a “Most Favored Nation” policy late in his first administration.
2. RFK has also spoken out against direct-to-consumer pharma advertising (via television), which he has recommended be banned. However, we have come across a number of surveys/studies suggesting that both doctors and patients find direct-to-consumer advertising more helpful than harmful. So, we expect further debate here.
3. The U.S. House of Representatives passed the BIOSECURE Act by a wide bipartisan margin. This bill now awaits a vote in the Senate and signature by the President (Biden or Trump). In our view, passage of the BIOSECURE Act coupled with potential tariffs on imports could be very disruptive to the global pharma supply chain and it could require pharma companies to revamp their sourcing strategies and CDMO relationships.
4. We are seeing improving labor market conditions for pharma services (and tech) companies. Over the past several years, pharma services companies have struggled with high employee turnover and difficulties recruiting new staff. In our view, much of this was due to well-capitalized biopharma firms being able to pay-up and poach away talented staff. This competition for labor seems to be dissipating, which should benefit sector margins in 2025 and 2026.

In the dynamic healthcare industry, staying ahead of trends is essential for informed decision-making and seizing opportunities. Please reach out to our research team for more information: research@bourne-partners.com

Compare to our Q3 2024 Pharma Services Sector Snapshot here.