Trends and challenges in the Pharma and Life Science Industry

This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Deloitte Insights publishes original articles, reports and periodicals that provide insights for businesses, the public sector and NGOs. The authors would like to thank Leah Micalizzi, Namrita Negi, Chase Langhorne, George Forakis, Liv Rogal, Lisa Illif, Christie Murphy, and Roxanne Lucy for their subject matter expertise and review. Special thanks to Terry Koch, Scott Sun, Marc Caeneghem, Michael Dohrmann, Shinji Nishigami, Alex Mirow, Colin Jeffery, Teresa Leste, and Lynn Marks for their support.

• While your main focus may be surviving the coming months, making strategic hires at the Executive level will always be a cornerstone for long-term success.
• High application volumes and the need to assess technical roles can be incredibly overwhelming, leaving less time available for strategic, longer-term initiatives like employer branding and retention planning.
• In 2025, we expect the demand for external recruitment support to increase dramatically, particularly when companies need to fill mission-critical or niche roles.
• Providing flexibility, supporting mental health, and demonstrating commitment to ESG and social impact will not only improve employee satisfaction but also enhance the company's attractiveness as an employer.
• Making strategic hires and proactively planning your recruitment efforts are great, but don’t forget about your existing employees.

To fully realize this potential, life sciences leaders should prioritize strategic issues that can most benefit from gen AI. Artificial intelligence investments by biopharma companies over the next five years could generate up to 11% in value relative to revenue across functional areas, according to Deloitte analysis. Additionally, this report highlights only the trends and actions that survey respondents rated as being “significant” or “very important.” In doing so, we aim to highlight the industry’s top priorities along with relevant and useful insights.

Research and development is the largest area challenges in life sciences industry of investment, reflecting the continued importance of pipeline renewal, product development, and evidence generation. In biopharma, survey responses suggest that the most consequential risks may arise from policy and reimbursement shifts, unpredictable clinical outcomes, and the possibility that scientific or competitive developments could reset expectations quickly. For now, many companies are maintaining their broader strategic direction while making targeted adjustments to priorities and execution (figure 4).

AI and digital enablement is one of the clearest areas of investment momentum in the survey. Launch execution and guidance are largely within management’s control; clinical readouts provide known evidence once reported; and demand, while less controllable, can be measured and influenced. Notably, management teams were generally more direct on issues with greater control, influence, or measurability, including clinical trial readouts, launch execution, guidance, and demand trends. Partnerships can be a practical way for companies to move faster without overextending internal capabilities.

Diversifying Capital Raising Strategies

Going forward, it is unclear whether courts will continue to defer to agencies for statutory, scientific, and technical interpretations of the law, and informal rulemaking.18 Over half (56%) of our survey respondents say their companies are prioritizing real-world evidence and multimodal capabilities, which combine clinical, genomic, and patient-reported data. Factors such as clinical trial uncertainties, integration challenges, and strategic misalignment can limit intended benefits. Our previous report highlighted that the biopharmaceutical industry often uses acquisitions to address portfolio gaps, partly driven by the patent cliff. Over the years, M&A activities have been a reliable source of innovation for some large life sciences companies. In our survey, 32% of biopharma respondents plan to prioritize innovations like cell and gene therapies using CAR-T cells and CRISPR technology over so-called me-too drugs.

However, only about one-third of HCPs say a pharmaceutical company’s customer-facing resources meet their needs, according to a 2024 Deloitte survey. Life sciences companies are also using digital technologies to personalize customer interactions. Additionally, 32% of biopharma respondents considered investments in customer engagement and enabling technologies a priority for 2025, whereas only 24% of medtech respondents shared this view. In our survey, 36% of C-suite executives indicated that improving customer experience, engagement, and trust was very important and 29% said they were prioritizing investments in a customer-engagement strategy. With the Republican control of the White House, the Senate, and the House of Representatives, Congress can use the budget reconciliation process30 to pass new legislation and modify existing laws.

He has promoted programs that aimed at lowering drug costs for seniors, but has not explicitly endorsed the drug-pricing provisions of the Inflation Reduction Act. Regulatory changes such as the European Union medical device regulation and in-vitro diagnostic regulation, combined with inflation and shared demand for materials, add further layers of complexity. These requirements include plain language summaries of scientific publications and data anonymization and redaction.20 Although the implementation timeline for new and ongoing clinical trials concludes in January 2025, the law contains several requirements that the industry has yet to master. In Europe, several regulatory changes are underway.19 Of immediate concern to both sectors at the time of survey fielding was clinical trial regulation.

Seeking faster, better, and more cost-effective alternatives

The authors wish to thank Vicky Levy, Rob Jacoby, Karen Taylor, and Jay Bhatt, who contributed significantly to the interpretation of the findings, and Terry Koch, Sheryl Jacobson, Mathias Cousin, Gregory Reh, Shoichi Negishi, Teresa Leste, Kathy Haines, Alina Klinova, Cameron McClearn, Kenji Tomino, and Glenn Snyder for their additional support. The industry’s focus on advancing therapeutic solutions and improving patient outcomes highlights a promising future. As companies adapt to this evolving landscape, their ability to implement new initiatives will be crucial for differentiation and market expansion. “With advances in genomics and biomarkers, we can provide patients with more precise treatment options. “We are full of expectations for personalized medicine,” explained a senior vice president of a small German pharma company. Additionally, 50% of biopharma and 44% of medtech respondents reported that they plan to offer consumers more personalized health insights.

The incoming administration may seek changes to the distribution of funds under the CHIPS Act.29 It may initiate policy changes around drug pricing to establish its own approach to drug price negotiation. Instead, he has indicated a preference for revising a proposal from his first term, which involved creating a “most favored nation” model to cap Medicare drug prices at the levels paid by other countries.

The authors wish to thank Rob Jacoby, Andrew Davis, Frank Bressau, and Tobias Langenberg for reviewing the survey and the report. Apoorva Singh led the earnings call research, designed a generative AI-driven analytical framework, generated key insights, interpreted key findings, and helped write key sections of the report. The companies that perform best may not be the ones that wait for conditions to improve before acting. But they can control how decisively they allocate resources, how quickly they improve productivity, how effectively they execute commercially, how selectively they partner, and how rigorously they measure AI value.

Our top five tips for success…

Insights from interviews with three company executives further contextualize the cautious optimism that was revealed in the survey results. While several potentially disruptive forces could reshape the life sciences industry in 2025, the vast majority (75%) of global life sciences executives are optimistic about the year ahead, according to a recent survey from the Deloitte US Center for Health Solutions. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.

Our survey data indicates R&D is likely to be a major focus in 2025, although there is no universal approach. This looming patent expiration is likely to drive interest in mergers and acquisitions, with 77% of surveyed executives expecting M&A to increase in 2025. Additionally, 37% of respondents view competition from generic drugs and biosimilars as a top trend, while 30% cite the patent cliff as a significant concern.

The strategic question is how to keep moving with discipline while the external environment remains difficult for the industry to predict. Surveyed leaders express greater confidence in their ability to execute on existing strategy despite the uncertainty. While the external environment may remain uncertain, leaders appear increasingly confident in their ability to perform within it.

More than half (52%) of biopharma and 44% of medtech respondents said they plan to customize patient-support programs or care journeys based on consumer needs. While HCPs can be important influencers, health care consumers are increasingly acting as the “CEOs” of their health.32 Some consumers are turning to gen AI when making decisions about their care. By contrast, over 80% of pharma executives said they are satisfied with their current customer engagement strategy.31

About 20% of survey respondents are evaluating their portfolio strategies to balance innovation capabilities with market needs. Digital twins, which serve as virtual replicas of patients, allow for early testing of new drug candidates. The traditional R&D process is often slow and stage-gated, typically requiring large trials to establish meaningful impact. A recent Deloitte Center for Health Solutions report on measuring the return from innovation illustrates how some pharmaceutical organizations are integrating gen AI and other advanced technologies into their R&D strategies.