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CPHI North America: what are the trends driving growth in the USA in 2023

Ahead of North America’s largest pharma supply event, CPHI North America later this month, Chemicals Knowledge Hub previews the event by getting the views of five top experts on the year ahead for pharma. These insights are [pre-publish] extracts from the CPHI GBR North America Report to be released at the event.

The 2023 edition of CPHI North America will bring thousands of pharma professionals from 80+ countries to the Pennsylvania Convention Centre (April 25-27th) to meet, connect and attend high-level conference sessions, where leading CDMOs will seek to address capacity challenges and supply chain contingencies.

At the heart of pharma in North America, 65% of attendees having purchasing power and 48% from the C-Suite.

  1. Q) How do you see 2023 unfolding for biotechs?

“I believe 2023 will look similar to 2022 with more realistic valuations, fewer early-stage IPOs, and fewer total deals. It is healthy for the industry as we had a period of exuberance. In 2023, we will see more companies reducing the workforce and extending their cash runway to survive to more meaningful data inflections. The market likely has hit its bottom, so I don’t see a negative scenario, but I don’t think we are ready to rebound to the levels of 2019 and 2020. I don’t expect a strong growth period for the sector to begin until 2024, at the earliest.”  

Chris Garabedian, Portfolio Manager, Perceptive Xontogeny Venture (PXV) fund

  1. Q) What is your financial outlook for the industry in 2023?

“In 2022, the number of deals – from a volume and value perspective – was low, if not at an all-time low for the last 10 years in the US. The volatility in the market prohibited dealmakers to deploy large capital, although we are expecting more deal activity starting in Q3 2023. More stable macro conditions and inflation under control will give better sight to dealmakers and the pipeline is promising. Because of the high valuations post-Covid, unconventional investors flooded into biopharma companies, and that capital infusion created unusual valuations that were not sustained.

In recent years, some biotechs IPO’d too soon. Generally, companies go public when ready for Phase 3 trial and launch to raise capital of +US$100 million. In contrast to this traditional approach, some companies in Phase 1 or even in pre-clinical stages went public. In 2023, biotechs with the right de-risked asset can do an alliance, be acquired, or will have an IPO window open. I expect the market to remain quiet for the first half of the year, but we need to keep in mind that pharma needs those products with the topline eroding. For the first time, we are estimating US$1.4 trillion of cumulative firepower to deploy toward inorganic growth and CAPEX. Pharma now has a balance sheet to afford those acquisitions, but low valuations do not mean pharma will go on a buying spree, it has to make sense portfolio-wise.”

Arda Ural, Americas Industry Market leader, Health & Sciences EY USA

  1. Q) What trends do you see shaping the life sciences industry in the US looking into 2023?

“Our target market, small and mid-sized companies, are capital market dependent and have been challenged in attaining funding for their R&D. The confluence of events such as COVID-19, the Russian-Ukraine war, and massive inflation has created uncertainty in the markets which makes raising capital difficult. Fortunately, I believe we have seen the bottom of this situation in 2022, and we are starting to see improvement. Even with this environment being what it is, there is still a huge opportunity for drug development, and I believe when looking back at this time a few years from now, fundraising challenges will be a footnote and the real storyline will be the exciting science of the time.”

Mark A. Goldberg, CEO, Allucent

  1. Q) What does demand from the life science industry in the US currently look like?

“We see the trend for many US pharma and biotech companies reallocating investments from China to India. They are not exiting China, but reallocating part of their investments to India, especially on the discovery side – chemistry, biology, and to an extent biologics. On the manufacturing side, we are seeing companies reallocating their investments from China and taking it back to the US. This had a big ripple effect as manufacturing companies in the US and Europe reached capacity, these CDMOs started collaborating with companies in India.”

Manni Kantipudi, CEO at Aragen Life Sciences

  1. Q) To what extent do you expect a reshoring of the supply chain, and how does one close the manufacturing loop in the US?

“It would take decades and add a huge cost to drugs to fully “reshore” the supply chain. In 2020, the previous administration put out an Essential Medicines List, the idea being to make sure these medicines have a secure supply chain. The new administration looks more towards “friend-shoring”, while still pushing for more domestic manufacturing. But friends are not immune to natural disasters. Italy is not an enemy of the US, but early in the pandemic, several API suppliers were not able to ship. As far as onshoring goes, we have explained that within the dosage form space, there is plenty of manufacturing capacity and room for expansion in the US.”

Gil Roth, President PBOA

  1. Q) What will be the key trends driving tech in the life sciences space in 2023 and beyond?

“I believe augmentation in human decision-making is inevitable – using data and analytics to assist humans in making the right decisions. Furthermore, daily complete de-identified datasets can have a profound impact in helping the life science industry find cures faster and can enable every clinician anywhere to be an expert so they can diagnose patients more quickly and recommend the best treatment. I think that at some point someday we will see families having access to this data so they can make the most informed decisions about their care. This solution will be empowering for the innovators in the life sciences space trying to best take care of their patients.”

Terry Myerson, CEO, Truveta

Want to learner more about the opportunities and trends in USA pharma market then register to attend CPHI North America – which is running for three-days and spans 50 sessions with 5 dedicated tracks. Exhibitors cover the entire end-to-end pharmaceutical supply chain from clinical trial supply to ingredients manufacturing, packaging, biologics and finished products.

Sign up today to attend CPHI North America and meet other leaders from the world’s largest and most innovative pharma market:

The Online Learning and Networking will bring together interactive features of both an online and onsite experience and runs from March 16th through May 12th.