Editor’s (re)View: Is the biopharma industry’s glass half empty or half full?

We’re at about the halfway point of 2025, which is a good time to take stock of the biopharmaceutical industry. There’s no sugarcoating it: the threat of U.S. tariffs on pharmaceuticals and President Trump’s “most favored nation” drug pricing executive order are weighing heavily on the sector, as biotechnology funding continues to dry up.

“From U.S. drug pricing reforms to global tariff tensions, sentiment has taken a hit — reflected in a 16% drop in industry optimism” compared to the start of the year, according to data and analytics firm GlobalData.

In its State of the Biopharmaceutical Industry 2025 (Mid-Year Edition), GlobalData paints a sobering picture of the macroeconomic and geopolitical factors shaping the current business environment. Among them trade policy: the potential for reduction in profits due to U.S. tariffs, other countries’ retaliatory tariffs, and the risk of pharma-specific tariffs.

“The biopharmaceutical industry will need to continue rethinking models from manufacturing to market access, especially under the expanding shadow of the Inflation Reduction Act (IRA) and FDA shifts,” Hannah Hans, GlobalData’s head of pharma strategic intelligence, said in a statement.

However, when it comes to pharmaceutical outsourcing and services, William Blair analysts found that while macroeconomic uncertainty continues to weigh on the sector, they see glimmers of hope in some areas — based on their meetings with roughly three dozen companies attending last week’s BIO International Convention in Boston. 

“Despite some pockets of weakness, our conversations pointed to a relatively stable large pharma demand environment, with companies generally still in ‘wait-and-see mode’ and consolidating efforts on their most promising assets, likely until the exact nature and timing of potential pharmaceutical tariffs are revealed,” analysts Max Smock and Christine Rains wrote in a June 24 report to investors.

Potential pharma-specific tariffs are driving increased demand for U.S. capacity and more focus on regionalizing supply chains, according to the analysts, who view both dynamics as a “strong tailwind” for contract development and manufacturing organization (CDMO) Lonza “given its global footprint and available U.S. capacity in high-growth areas, such as mammalian drug substance.”

At the same time, they said small biotech demand was “less encouraging” and their conversations with companies at the BIO 2025 conference “hinted at the potential for modest incremental weakness relative to earlier this year, with companies noting that smaller innovators are increasingly delaying decisions on the back of the challenging funding environment and concerns over recent disruption at the FDA.”

Still, the William Blair analysts reported that the overall commentary on the CDMO front was generally positive, especially with respect to commercial demand.

“In the biologics drug substance space, companies pointed to healthy demand for mammalian and microbial capacity, as well as capacity for advanced modalities, such as bispecifics and antibody-drug conjugates (ADCs),” the analysts said. “On the fill/finish side, commentary suggests that overall supply remains tight and demand is healthy, particularly for prefilled syringes and autoinjectors, but also, to a lesser extent, for vials.”

On the other hand, the discussions at BIO 2025 on the outsourced cell and gene therapy manufacturing market were “overwhelmingly” negative, according to the analysts, who wrote that several CDMOs “pointed to recent decisions to scale back facilities or completely exit the market due to overcapacity and weak demand, which have resulted in pricing ‘falling through the floor.’”

In the cell and gene therapy manufacturing space, the analysts noted that they do not expect an improvement in the situation any time soon. Making matters worse, last week Office of Therapeutic Products (OTP) Director Nicole Verdun and Deputy Director Rachael Anatol were placed on administrative leave. The OTP is the office at the FDA’s Center for Biologics Evaluation and Research (CBER) responsible for reviewing cell and gene therapy products.

One could argue that cell and gene therapies are a niche segment in the global biopharma market, with only a couple of therapies reaching blockbuster status so far. However, there are five regulatory decisions pending on cell and gene therapy products in 2025 and “patients with severe diseases waiting for durable, potentially curative treatments do not have the luxury of time,” according to the Alliance for Regenerative Medicine.

Ultimately, it depends on your perspective as to whether the industry’s glass at mid-year is half empty or half full.