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- What are key areas for investment across the healthcare and life sciences ecosystem?
- Why are joint ventures (JVs) and strategic partnerships the way forward?
- How are regulatory bodies responding to knock-on impacts of tariffs on delayed market entry?
- What does the patent cliff mean for investors and healthcare and life sciences companies?
- What are the opportunities for AI innovation amid trade winds and tariffs?
Tariffs and shifting trade dynamics continue to disrupt healthcare and life sciences supply chains. But in addition to affecting operational and commercial outlooks for business, they are also revealing new opportunities for innovators and investors.
What are key areas for investment across the healthcare and life sciences ecosystem?
Biotech companies are seeking financing, and there is growing demand for oncology drugs, biologics, and cancer therapies. There is notable global interest in Anti-Obesity Medications (AoMs) among investors and innovators, due to the potential for consistent market demand. Licensing deals related to research and development in cell and gene therapies, as well as new cancer drugs, are also on the increase.
Safari Watanabe, Partner, Tokyo: “There is a notable increase in backloaded payments tied to performance, reflecting the prevailing uncertainty and anticipation of pricing, as tied to Japan’s National Health Insurance (NHI) drug pricing system.” However, Watanabe also notes that both large pharmaceutical companies and non-traditional investors, including those from the technology and finance sectors, are exploring diverse global opportunities, despite an overall sense of caution when it comes to deal activity.
Watanabe continues: “Clients are aiming to build robust portfolios amidst evolving market dynamics and pricing considerations, keeping a keen eye on targets that include early-stage assets, technology platforms, and strategic global acquisitions.” In addition, Watanabe cites other support initiatives investors may wish to consider such as AMED, the Japan Agency for Medical Research and Development, which offers targeted funding programs aimed at but not limited to oncology, AI-driven drug discovery and medical devices
Mexico is also positioning itself as a leading hub for pharmaceutical and medical device investment under President Claudia Sheinbaum’s “Plan Mexico”, which focuses on boosting domestic production of Active Pharmaceutical Ingredients (APIs) and attracting investment through tax incentives and dedicated industrial zones called “poles of wellness”.
Carla Calderón, Senior Associate, Mexico City, stresses that “Mexico’s proximity to the US, large skilled workforce, and strong trade relationships support its growing role in the Americas’ pharmaceutical and medical devices supply chains.” Recent announcements by established pharmaceutical companies of plans to open facilities to produce APIs, biotechnological, anti-diabetics, renal care and blood derived products, as well as increased investments for clinical studies, affirm the attractiveness of Mexico for life sciences and consumer health.
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Why are joint ventures (JVs) and strategic partnerships the way forward?
Licensing and collaboration agreements remain key for funding and innovation. In Q3 2025, licensing deals saw a shift toward early-stage assets whilst VC investments saw a preference for later-stage biotechs, with an emphasis on decisive human data.1 Licensing deal structures continue to incorporate significant risk sharing through milestone payments.
Oren Livne, Partner, New York, suggests that recent legislation and executive orders are having a significant impact on license arrangements. “Wider geopolitical dynamics, in particular the US-China relationship, create uncertainty prompting companies to seek adaptable agreements”, notes Livne. Parties are increasingly building provisions for manufacturing flexibility, pricing adjustments, and risk sharing in response to tariffs, most favored nation pricing, and proposed legislation such as the Biosecure Act. Ultimately, these new rules give control over key decisions, like manufacturing locations and launch countries of even greater importance.
Livne and Julia Schieber, Partner, Zurich express optimism and confidence in the resilience of the market.
Despite the rapidly shifting legal landscape, licensing activity has remained robust and M&A activity is increasing.
Oren Livne, Partner, New York
Geopolitical uncertainty may complicate dealmaking, but licensing continues to be indispensable — especially as companies face looming patent cliffs. The demand for innovation is constant, and ultimately, good science finds its way to market. Licensing offers the flexibility and speed needed to unlock that potential.
Julia Schieber, Partner, Zurich
Additionally, close attention to IP ownership and protection is crucial for commercialization. "In collaboration agreements, one of the key issues that is typically overlooked is the IP generated pursuant to the collaboration, also termed as "foreground IP". It is important to address issues of who owns the foreground IP and the scope of your IP licence to the counterparty”, says Ren Jun Lim, Principal, Singapore.
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How are regulatory bodies responding to knock-on impacts of tariffs on delayed market entry?
As shifting tariffs disrupt end-to-end supply chains, regulators are looking at innovative pathways to abridge a complex regulatory system in a bid to speed up market entry. This is particularly pertinent for drug products, which address unmet needs and patient demand. The UK's Innovative Licensing and Access Pathway (ILAP) and International Recognition Procedure (IRP) for medicines and its new framework for medical devices are examples of regulatory moves to speed up the development and market access for transformative therapies in biotech and pharmaceuticals.
Regulators are being more innovative around not having a defined set or laundry-list of specific requirements and are looking to fast-track approvals with more flexible approaches, particularly for products that will have post-market entry data and have been proven safe. This has been designed as a response to complicated data requirements and the urgent need to bring innovative drugs to market.
Indradep Bhattacharya, Partner, London
This notion of greater regulatory flexibility is a global theme. Mexico’s Comisión Federal para la Protección contra Riesgos Sanitarios’s (COFEPRIS) introduced a digital platform with the aim of simplifying processes. “The pharmaceutical and life sciences sector benefits from streamlined regulations, driving cost efficiency and competitiveness”, notes Calderon. Mexico is aligning regulations with other Latin American countries and international regulatory bodies by recognizing health approvals, including GMP and market authorizations, from 43 international agencies. However, ongoing delays in regulatory processes, especially for import permits, particularly in connection for public procurement delivery deadlines, highlight the importance of companies collaborating with legal advisors.
What does the patent cliff mean for investors and healthcare and life sciences companies?
The patent cliff presents pharmaceutical companies with opportunities to safeguard their market position and revenue streams by developing next-generation medicines and securing supplementary patents. Increasing complexity in drug composition offers more options for exclusivity, though sourcing, manufacturing, and cross-border market access rights remain challenging.
Regulators are cracking down on patent prosecution tactics that transparently have their primary objective of stalling generic entry and create undue commercial uncertainty. This is increasingly causing patent holders to revisit their prosecution strategies, particularly in relation to divisional applications. In the UK, courts are also using discretionary remedies such as Arrow Declarations to provide declaratory relief in respect of pending patent applications and requiring more stringent data requirements in patents which establish the claimed invention is indeed plausible. This has relevance for drugs in emerging fields, such as biologics.
What are the opportunities for AI innovation amid trade winds and tariffs?
Investment in digital healthcare, and specifically AI, for medical devices or software is also greatest in evidence-based assets. Galen Growth’s report on H1 2025 Digital Health funding saw USD 12.2 billion worth of deals, with the strongest growth concentration in Europe, led by the UK. The report cites mega deals focused on AI-enabled health management and research solutions ventures (biotech), emphasizing the importance of digital health in both customer-centric and clinical areas.
The growing interest in AI for diagnostics raises questions about regulating such software as medical devices, which complicates market access. This also creates opportunities for medical device and tech companies to form strategic partnerships on cybersecurity, data privacy, and cross-border regulation.
Debates continue over proper safeguards for data model training, feedback loop effectiveness, and human involvement in AI-based diagnostics and treatments. As consumer-facing devices proliferate, regulators in the UK, Europe, and Singapore are increasing oversight of AI in medical devices, checking for feedback mechanisms and opportunities for human input. Singapore’s Ministry of Health aims for care to be “AI-enhanced or AI-enabled, but not AI-decided,” according to Lim.
Conclusion
Uncertainty around tariffs affects the efficiency with which new biologics are developed, though exactly how this will play out in the longer term is unknown. From a supply chains perspective, robust international systems are necessary for life sciences companies to be able to respond to the wave of innovation that is happening globally.
Sourcing, testing and manufacturing occur across multiple locations, and tariffs are adding further complexity to an environment already characterized by fluctuating demand. Ultimately, the attractiveness of assets – and the confidence of investors and strategic partners – is being shaped by where, how and when products and devices are manufactured.
Footnote:
1 Is the worst over? Biopharma dealmaking shows an uptick in the third quarter”, Endpoints News