Top 8 Biotechnology Industry Trends to Watch in 2024: Current Biotech Market Evaluation and a Comprehensive Guide to Getting Prepared
As we are in the closing phase of 2023, it’s time to reflect on the present condition of the biotechnology industry. This article will serve as a guide to understanding potential market trends and gear up for what lies ahead in the coming year.
Backed by extensive industry research and insights from thought leaders, we have conducted the current biotech market evaluation, the success criteria, metrics to manage the infrastructure of a biotech firm accordingly, and top trends awaiting in the tangible foresight of horizon.
Whether you’re a student, entrepreneur, employee, investor, or industry enthusiast, you’ll find enough insights to assist your strategic planning for the upcoming year and unlock new opportunities for you and your biotechnology company.
Evaluating The Current State of the Biotechnology Market
According to Nasdaq, as of November 2023, the global biotechnology market is valued at $1.22 trillion and is expected to grow to $3.21 trillion by 2030. That indicates a potential yearly compound growth of 12.8%, whereas the S&P 500 exhibits an annual increase of 9.51%.
Challenges in the industry (2023)
- Impending Patent Expirations: Five established biologic products face patent expiration in 2023, amounting to billions in potential revenue loss. By 2030, over 20 products, accounting for nearly $200 billion in annual sales, are expected to lose patent protection.
- Regulatory Pressures: Concerns arise over the potential stifling of innovation due to regulatory restrictions. Regulatory activities by the FTC (Federal Trade Commission) and the US Inflation Reduction Act imply a tougher pricing environment, challenging future reimbursement strategies.
- FDA Approval Fluctuations: FDA approvals faced a decline in 2022, likely due to staffing shortages, though they returned to pre-pandemic levels in Q1 2023.
- Biotech Financing Struggles: Various forms of biotech financing, including venture capital, IPOs, and debt financing, decreased significantly in 2022. The IPO market saw a staggering 93% drop, impacting companies’ financial stability.
Opportunities in the industry (2023)
- Innovation Strength: Despite challenges, the industry’s innovation capacity remains robust, with an ongoing pipeline of promising advancements.
- Streamlined Operations: Streamlining operations and enhancing efficiencies from research and development to commercialization are crucial for continued growth.
- Alliances and Partnerships: Increased alliance deals indicate a shift toward collaboration rather than straight acquisitions, providing opportunities for accessing innovation.
- Focus on Future Growth: Strategies focused on capital allocation, financial resilience, and leveraging technology like AI to streamline operations present avenues for future success.
- Potential for Sustainable Revenue Streams: While challenges persist, sustained innovation coupled with strategic moves could offset threats posed by impending patent expirations, ensuring a steady revenue trajectory.
Regions Leading the Biotech Market in 2023
- North America (United States, Canada)
- Europe (Germany, UK, France, Italy, Russia, Turkey)
- Asia-Pacific (China, Japan, Korea, India, Australia, Indonesia, Thailand, Philippines, Malaysia and Vietnam)
- South America (Brazil, Argentina, Colombia)
- Middle East and Africa (Saudi Arabia, UAE, Egypt, Nigeria and South Africa)
5 Significant Biotechnology M&A Deals of 2023
While leading biotech giants like AbbVie made bold moves to solidify their positions in 2023, the overall M&A picture was not close to being considered one of the peak years for M&A in the last decade, considering the total monetary volume and the number of deals. Investors are still interested in M&A within the biotech industry, being more selective and taking on less risk due to external factors like higher interest rates and stricter regulations. Overall, from the M&A perspective, 2023 can be described as a year of “cautious optimism.”
1) AbbVie acquires Cerevel Therapeutics for $8.7 billion
AbbVie’s $8.7 billion acquisition of Cerevel Therapeutics expands its neuroscience focus. Despite possessing a robust neuroscience portfolio, this move provides AbbVie with access to a phase 2 schizophrenia treatment—a segment previously absent from its offerings.
2) Eli Lilly acquires Point Biopharma Global for $1.4 billion
Eli Lilly’s acquisition of Point Biopharma for $1.4 billion marks its debut in radiopharmaceutical cancer therapy, bolstering its portfolio with Point’s radioligand therapy pipeline.
3) Novartis acquires DTx Pharma for $500 million
Novartis dives deeper into neuroscience by investing $500 million upfront in siRNA-focused DTx Pharma. This deal secures Novartis full rights to DTx Pharma’s FALCON platform and three preclinical programs.
4) AbbVie acquires Mitokinin for $110 million
AbbVie acquired Mitokinin and its preclinical Parkinson’s candidate for $110 million upfront, with potential milestone payments of up to $545 million for Mitokinin’s shareholders.
5) Ironwood Pharmaceuticals acquires VectivBio for $1 billion
Ironwood is acquiring VectivBio for $1 billion, expanding its gastrointestinal franchise anchored by Linzess for irritable bowel syndrome.
The Current Market Demand for Biotech Products and Services (2023)
To fully understand the demand landscape in the biotechnology industry, it is crucial to view the biotech market from several perspectives.
- Application-Based Demand:
In 2023, bio-pharmacy continued to be the absolute leader (a $507.7 billion valuation in 2022, around 41.6% share in the market) among other application types, including bio-industries, bio-services, bio-informatics, etc. However, bio-informatics is anticipated to experience a swift 12.6% CAGR in the projected timeframe of 2023-2030. This trend is fueled by increasing demands for nucleic acid and protein sequencing, driving forces behind the advancement of proteomics and genomics, and escalated research in molecular biology and drug discovery.
- Technology-Oriented Demand
Considering the technological aspect of biotech products, the Nano-biotechnology segment dominated the market with the highest market share during 2022, with a CAGR of around 12.4% from the forecasted period of 2023-2030. The increasing adoption of PCR (Polymerase chain reaction) technology, driven by advancements in personalized and precision medicine, along with its expanding role in drug development, is expected to propel this segment’s growth at the fastest rate within the biotechnology market during the forecast period.
What are the Biotech Trends for 2024?
1) Gene Editing and CRISPR Technology
Biotechnology companies in 2024 are poised to utilize the transformative power of gene editing and CRISPR technology to revolutionize drug development. These firms can use these tools for precise genome manipulation, facilitating the correction of genetic anomalies at the root level. For instance, they can focus on specific diseases like cystic fibrosis and sickle cell anemia, where CRISPR offers the potential to correct genetic mutations directly.
Biotech companies can also capitalize on CRISPR’s ability to speed up drug development by creating accurate disease models in cells and animals, expediting the testing phase, and potentially bringing therapies to market at an accelerated pace. Additionally, as CRISPR research expands, firms can explore treatments for complex ailments such as heart disease, Alzheimer’s, and autoimmune disorders, unraveling new avenues for innovative drug development strategies.
Several specific use cases of Gene Editing and CRISPR Technology assisting biotechnology companies in drug development are tumor mutation targeting, CAR-T cell engineering, gene therapy vector development, neurodegenerative diseases, cardiovascular diseases, etc.
2) Stem Cell Technology
In 2024, biotechnology firms will leverage stem cell technology to redefine drug development. Stem cells offer a multitude of advantages for these companies. Firstly, they facilitate drug discovery by enabling the creation of disease models that closely mimic human tissues, streamlining the testing of potential drugs and accelerating the discovery process. Biotech firms can also harness personalized medicine by utilizing patient-derived stem cells, tailoring treatments precisely to individuals’ genetic nuances, optimizing therapeutic outcomes, and reducing adverse effects.
Moreover, the potential for stem cell-based cell therapies is vast; companies are exploring their application in regenerative medicine to heal tissues affected by conditions like heart disease, Parkinson’s, and spinal cord injuries. Additionally, these firms benefit from stem cells in drug safety testing, assessing the impact of potential drugs on human cells and tissues beforehand, thereby identifying patient safety concerns early in the development stage and refining drug optimization.
3) Artificial Intelligence and Machine Learning in Biotechnology
Integrating Machine Learning and Artificial Intelligence in biotechnology will be another significant trend in 2024. AI’s power lies in expediting drug discovery by analyzing expansive datasets from genomics, proteomics, and beyond, identifying promising drug targets and predicting their efficacy. For instance, ML algorithms can facilitate the design of novel drug molecules with precise properties, optimizing potency while minimizing toxicity, thereby ushering in safer and more effective medications with reduced side effects.
Moreover, top biotech companies will benefit from AI-driven drug repurposing strategies, leveraging data from clinical trials and patient records to unearth new applications for existing drugs, accelerating time-to-market for novel treatments in a cost-effective manner. AI’s ability to personalize medicine by analyzing individual genetic and medical profiles enables tailored treatment plans, enhancing effectiveness.
4) Tissue Engineering and Bioprinting:
Tissue engineering and bioprinting offer biotech companies outstanding tools to innovate in drug development, paving the way for more effective and personalized therapies in 2024. These technologies enable the creation of highly accurate 3D tissue models mirroring human organs, revolutionizing drug testing processes. Bioprinting patient-specific cells facilitates customized drug screening, allowing for the assessment of drug efficacy on miniaturized versions of individual organs grown in labs. This personalized approach holds immense promise in predicting individual drug responses and optimizing treatment plans.
Moreover, these innovations in tissue engineering empower firms to delve deeper into disease mechanisms by creating sophisticated models of diseases like tumors or inflamed blood vessels, potentially unveiling previously unseen drug targets. Rapidly generating multiple tissue models via bioprinting expedites preclinical testing, accelerating drug development timelines. Additionally, bioprinting facilitates the design of customized drug delivery systems, such as implantable scaffolds or targeted nanoparticles, enhancing drug efficacy while minimizing side effects.
5) Real World Evidence Trials
In 2024, Real World Evidence (RWE) emerges as a cornerstone for biotechnology firms, redefining drug development strategies. Leveraging existing data from electronic health records (EHR) and real-world practices, RWE expedites drug validation, revolutionizing the pace of life-saving therapy delivery while significantly reducing developmental costs.
The diverse, real-world dataset enables personalized medicine, tailoring treatments to individual patient needs and optimizing clinical outcomes. Moreover, RWE’s comprehensive insights transcend controlled trial settings, uncovering rare side effects and enhancing understanding across varied patient groups. Biotech companies utilizing RWE gain a competitive edge, swiftly refining therapies, prioritizing safety, and elevating efficacy, ultimately reshaping the industry by delivering more effective, personalized, and patient-centric treatments.
6) Biotechnology Companies Collaboration with Full-Service and Specialty Contract Research Organizations (CROs)
In 2024, biotechnology sponsors are poised to embrace a significant trend: increased collaboration with both biometrics and full-service Contract Research Organizations (CROs). This strategic alliance allows access to specialized expertise, cutting-edge resources, and streamlined processes crucial for efficient drug development. By leveraging the strengths of CROs, biotech firms optimize costs, accelerate research timelines, and enhance innovation. This collaborative synergy between biotechnology firms and CROs not only expedites market entry but also ensures adherence to regulatory standards while focusing on core competencies.
7) Outsourcing Between Biotechnology Firms (Bio-to-Bio)
As the drug development landscape evolves, 2024 will mark the rise of a strategic paradigm shift: biotechnology companies will increasingly collaborate, forming synergistic partnerships. Driven by expertise in areas like gene editing, AI-powered discovery, and nanomedicine, these collaborations unlock significant advantages.
Efficiency grows as companies focus on their core strengths, accelerating development timelines and delivering life-saving therapies to patients faster. Resource optimization takes center stage, with shared expertise reducing overhead costs and fueling further advancements. Moreover, knowledge exchange thrives within these partnerships, fostering collaborative innovation and paving the way for groundbreaking solutions to intricate medical challenges.
While challenges remain, such as intellectual property concerns and the crucial element of finding the right partners, the potential of this collaborative approach is undeniable.
8) Investment Patterns and M&A Deals
In 2024, the “cautious optimism” of 2023 might turn into a strategic focus on mergers and acquisitions (M&A) within the biotech industry. Investors, staying cautious due to external challenges, will likely be picky, seeking deals that offer clear value and specific growth opportunities. There could be more consolidation, especially in areas like gene editing and AI-driven discovery, where specialized skills are highly valued. However, the potential for increased deals exists due to the interest in new technologies like mRNA vaccines.
Some biotech companies aiming for a global presence might pursue M&A for market access, while others might surprise by acquiring promising research pipelines. Navigating these uncertainties presents investment opportunities by identifying undervalued tech, anticipating regulatory changes, and predicting future successful treatments.
Conclusion
The biotechnology industry is currently navigating a complex landscape. While revenues have normalized after the pandemic’s surge, the looming patent cliff and increased regulatory pressures pose significant challenges. Despite these obstacles, the industry’s long-term potential remains strong, fueled by a robust innovation pipeline and opportunities for operational efficiency. Biotech companies can secure future growth and address market challenges by focusing on capital allocation, establishing beneficial partnerships, and leveraging technology. In conclusion, though the path forward is complex, the future of the biotechnology industry remains bright in 2024 due to its inherent strengths and dedication to innovation.
Resources
Nasdaq – “3 Biotech Stocks You’ll Regret Not Buying Soon: November 2023”
Tobias Wingbermühle – “10 success criteria that characterize a successful biotech ecosystem”
Innovaco Solutions – “Biotechnology Market Size In 2024 : Growth Opportunities and Future Outlook 2031”
Labiotech – “The biggest biotech trends that will shape 2023”
Precedence Research – “Biotechnology Market Size, Share, Growth, Forecast 2023-2030”