Weathering Headwinds: Bio/Pharma’s Roadmap for Success in 2026
Despite geopolitical uncertainties, regulatory reforms, and fluctuating capital expenditure, the bio/pharma industry is entering 2026 with renewed focus and confidence.
Geopolitical challenges were on the ordre du jour for many industries in 2025, of particular concern were the U.S.-imposed tariffs, which shook global economies. For the bio/pharma industry, along with the tariffs — which resulted in a surge of onshoring activity in the U.S. and adjustments to global supply chain strategies — regulatory reforms, a looming patent cliff, and further advancements of artificial intelligence (AI) have all been impactful.
“Overall, the first half of 2025 continued to be a challenging time for the industry with ongoing FDA regulatory and leadership changes, the turmoil and uncertainty of U.S.-led governmental tariffs, and the continued tectonic shifts around regionalization,” remarks Will Downie, Founding Partner of Downie Pharma Advisory — a boutique consultancy business dedicated to providing Operating Partner and Senior Advisor services to Private Equity firms and CDMO companies — and former CEO of Vectura and Argenta, and Chief Commercial Officer of Catalent. “These geopolitical factors drove trifurcation across major geographies leading to record-level onshoring manufacturing capital expenditure in the U.S., a step-change in China's growth of its advanced therapy market, and favorable conditions that provided a strong tailwind for high quality Indian API and KSM [key starting material] suppliers (China Plus One).”
However, during the course of the year, global interest rates stabilized and general market conditions picked up, leading to “a fresh air of confidence” within the bio/pharma sector, Downie adds. “This [confidence] was coupled with a steady increase in the XBI stock exchange indicating a positive shift in the funding environment for small biotechs and innovators in the early development space. In addition, we also saw several major strategic deals done in the second half of the year, pointing to a more sustained pickup in the M&A environment,” he says.
For John Cogan, Chief Operating Officer at Qinecsa Solutions — a pharmacovigilance services and software company — there were three standout trends from 2025 for the bio/pharma industry. “More broadly speaking, the blockbuster innovation in obesity management and the huge advances in neuroscience and in cancer therapy have been extraordinary in 2025,” he specifies. “I would then also say that pricing and pricing policy globally, things like the Inflation Reduction Act (IRA) in the U.S., are going to have a significant impact on the industry.”
Thirdly, Cogan points to AI and automation as an important trend from 2025. “I think that 2025 was the year where AI kind of finally grew up,” he notes. “We’ve gone from ideas and proof of concept and testing into genuine use cases across the whole of R&D.”
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Positive Progression into 2026
Focusing on the potential progress of obesity management sector first, Cogan points out that the move toward oral dosage forms of these glucagon-like peptide-1s (GLP-1s) will “massively explode” the market. However, with such growth will come challenges, he warns, with a critical challenge being that of safety. “Do we really know if these things are safe in the long run? If all our medications are making us live longer, our signal detection, our signal management is going to have to look at what we’re going to be like in our 80s, rather than maybe what we’re going to be like in our 60s and 70s,” Cogan says.
“From the perspective of the advanced therapies market, there are more than 2,000 clinical studies taking place in the cell and gene therapy space today,” confirms Downie. “With the improved funding environment, let’s hope we see a significant number of these transformational products gaining approval this year, so that they can bring life-changing benefits to patients.”
The potential pricing of these medicines will have a significant impact on the industry moving forward and will shape how R&D spending is allocated, Cogan asserts. “Pricing is going to have a really big impact [in 2026], because prioritization of R&D investment is, and has always been, driven by where the best market is to sell a medicine, and, traditionally, that has been the U.S.,” he says.
Given the way that the U.S. market is funded, should the market shrink then the prioritization of R&D funds will shift, which will have a “profound effect on what therapies come to market and what markets they come to first,” Cogan emphasizes.
Downie also anticipates the strategic importance of CDMOs to be of continued importance for the bio/pharma value chain in 2026. “Whether companies are operating as niche specialists in a specific segment or are providers of broad-ranging services on a global scale, the pivotal importance of CDMOs across the drug development and commercialization continuum has never been so crucial,” he states.
“From a M&A perspective, there is a strong sense that VC [venture capital] and PE [private equity] deals will increase compared to 2025, with a broad range of transaction sizes expected across several sectors,” Downie continues. “There is clearly pent-up demand for transactions in the CDMO space where overall deal-flow has been relatively subdued in the past two years. I would expect the brakes to come off somewhat in 2026 as deals begin to accelerate in the most attractive parts of the market.”
Moving onto AI, Cogan stresses that 2026 is the year when a return on investment needs to be seen. Drawing on a recently published paper from the Massachusetts Institute of Technology, he highlights the fact that 95% of AI proofs of concept fail, which demonstrates that, while much has been learned, a lot of investment has still been spent investigating the technology. “Now we know what the use cases for AI are, we really have to get away from the smoke and mirrors of what might actually happen and get into the true return on investment for the industry,” Cogan says.
Advantages of Automation and AI
“It is impossible to go a day without reading something related to generative AI or machine learning. Despite just 9% of all organizations using AI routinely, we can see the significance of early adoption of AI in the biopharma space,” exclaims Downie. “Most notably, AI is being used very successfully in drug discovery and early R&D to improve hit-to-lead optimization, as well as in commercialization with smart factories and continuous manufacturing. In the CRO space, the use of massive datasets is playing a significant role in trial design, patient recruitment and real-time monitoring.”
For advanced therapies, such as cell and gene therapies, given the costs associated with potential batch failures there has been an increase in the use of AI to optimize processes and detect any deviations, Downie confirms. “Also, with the explosive growth of the antibody drug conjugate (ADC) and oligonucleotide markets, we are seeing several CDMOs invest in fully automated systems to solve the complexity of bioprocessing and faster scale up. Again, this will help bring more novel products to market in a more efficient manner,” he explains.
Tools such as AI and automation will enable a dramatic reduction in the cost of case processing for pharmacovigilance and epidemiology (PVE), Cogan adds. “The biggest operational cost for many PVE, or most PVE organizations, is the actual cost of case processing,” he says. “Right now, we have a disjointed multi-vendor environment in most of the mid-size and large pharma companies that actually makes realizing the return on investment quite difficult because when an investment is made into a technology in one place, the ROI needs to come from a supplier of, let’s say, case processing in another place.”
Further to this, automation can also offer advantages to PVE companies around aggregate reporting, such as periodic safety update reports (PSURs), Cogan remarks. “These reports are actually really labor-intensive tasks that AI and automation will be good at. So, while that sounds a little bit boring, the use cases there are going to bring really big efficiencies,” he says.
“However, I think the role I’m most excited about for AI/automation is actually in signal detection,” Cogan exclaims. Looking at the new medicines in development, the continuous rise of new data sources from wearables and devices, the continuing growth in real-world evidence, and the technology as well, there is a deluge of data now to be analyzed and considered in signal detection, which is where AI/automation can be advantageous, he specifies.
A Regulatory Evolution
As data volumes and complexity of analysis increases, frameworks and guidance around how to handle such data also needs to evolve. “In February within the EU and in April for the UK, some PV guidance around documentation, auditing, and reporting is coming into effect,” Cogan confirms.
EU Regulation 2025/1466 sets out administrative processes and contractual requirements and seeks to align EU practices with international standards in drug safety monitoring (1). The regulation is moving to full enforcement from Feb. 12, 2026 (save for a few provisions that have already been applied in 2025).
In the UK, amendments to the clinical trials regulations will come into force on April 28, 2026, and represents the most significant update to clinical trials regulations in the country for two decades (2). The updated regulations have been designed to protect trial participants, strengthen patient safety, and speed up approvals (2).
Across the Atlantic, the U.S. regulatory body, the FDA, is implementing a novel regulatory approach to help accelerate approvals of certain medicines. “In November 2025, the FDA announced the ‘Plausible Mechanism Pathway’, a new regulatory approach to help authorize bespoke, individualized therapies without the need for traditional randomized trials. The paper published in the New England Journal of Medicine will now need to be converted into legislative policy, but one could imagine a framework that could significantly speed up the approval of personalized therapeutics,” adds Downie.
Additionally, “on January 11, the FDA announced more flexibility around CMC [chemistry, manufacturing, and controls] in the manufacturing process for cell and gene therapies. This should enable less friction for manufacturers of advanced therapies as they scale their processes between phases of clinical development,” explains Downie. “This enhanced flexibility should lead to an increase in the speed of product development and a subsequent step up in the number of approvals in the short to medium term.”
However, there is some discrepancy with acceptance of E2B(R3) gateway submissions — electronic transmission of individual case safety reports — around the world, points out Cogan. “So, I think there is going to be an advance there as well,” he states.
Another area that should prove interesting, will be in how regulators deal with the use of AI in PV and R&D, Cogan reveals. “The sharpening up of guidelines on what is acceptable because a lot of AI right now is a black box, and auditors don’t like a black box, they like you to be able to show this input equals that output, and so on,” he says.
“Our good friend, IDMP — and SPOR and all of that good stuff — is going to continue to harden,” Cogan notes. “It’s taken a really long time, but the foundation of that is still extremely valid, and I think that’s going to continue to get implemented.”
Finally, Cogan points to the IRA, which is in its next phases of implementation and will impact how companies prioritize R&D spending. “So, there’s going to be a continual feed of new regulations in 2026 and beyond,” he says.
Resilience and Potential for Success
From a personal perspective, Downie is excited about trends taking place across the inhalation space and the cell and gene therapy CDMO market in particular. “As a former CEO of a respiratory CDMO, I am delighted to see low global warming potential products finally come to market for patients using pressurized meter dose inhalers,” he remarks. “These environmentally friendly products, now with lower levels of fluorinated gas, will have a positive impact on the environment, providing long-term sustainability for patients suffering from asthma and COPD. The advent of these products has come as a result of many years of regulatory fine-tuning, finally culminating in the new EU Directive for fluorine gas usage that will drive significant ‘green’ benefits.”
Moving over to the advanced therapies space, Downie highlights his excitement for CDMOs, such as Touchlight Genetics — a company that is revolutionizing the cell and gene therapy market. “The company’s innovative enzymatic approach to synthetic DNA production will help their customers bring a broader range of advanced therapies to market in a faster, cheaper and safer fashion,” he specifies. “This is a great example of ground-breaking science that will help to industrialize much needed cell and gene therapies for patients.”
While Cogan believes that 2026 will be more of a year where industry realizes what was discovered in 2025, he also points to the uptick in M&A activity, both at the sponsor level and on the provider side, that is being seen at the moment. “There’s a lot of money out there looking to be invested and so, I think we’re going to see a lot of acquisitions, including pharma companies buying software, as well as, PEs buying software, and PEs buying pharma companies,” he adds.
“I also think there’s going to be more players come into the AI and automation space,” Cogan continues. “We’re still dominated by the traditional companies that have always been in pharma, but I think if some of the behemoths of technology really decided to do pharma, they could completely blow up how we research drugs, how we find them, how we register them.”
There is a need, however, for industry to figure out how humans can augment AI, Cogan asserts. “There’s an interesting use case in testing, in signal detection, you could write a detailed PSUR and then you could feed all your assumptions into an AI engine and say, with those assumptions, would you have reached the same conclusion? So, using AI as a validation tool rather than a creation tool,” he explains. “I think the agencies are thinking like that, they’re thinking of using AI from a validation perspective, rather than from a creation one. So, there’s so much going on, but there’s also lots of smoke and mirrors, which is actually quite frustrating.”
“Echoing the overall sentiment coming out of the J.P. Morgan Conference that took place in San Francisco between Jan. 12–15, there seems to be a more prevalent positivity coming into 2026,” summarizes Downie. “In particular, I would add that 2026 could potentially be a very successful year for the CDMO space. Following a few years of prevailing headwinds, I expect to see very strong growth across many parts of the pharma services space. Although geopolitical uncertainty will inevitably continue, it seems biopharma is proving to be as resilient as ever in the face of these uncertain times. It is a testament to the ingenuity, innovation, and industrial fortitude of an industry focused on advancing medical care and solving complex health problems for society.”
References
European Commission. Commission Implementing Regulation (EU) 2025/1466 of 22 July 2025 Amending Implementing Regulation (EU) No 520/2012 on the Performance of Pharmacovigilance Activities Provided for in Regulation (EC) No 726/2004 of the European Parliament and of the Council and Directive 2001/83/EC of the European Parliament and of the Council. EudraLex, Volume 1, July 22, 2025.
Pound, J.; Messer, J. Clinical Trials Regulations: Six-Month Countdown Begins. MHRA Inspectorate, Gov.UK, Blog, Oct. 28, 2025.
About the Contributors
John Cogan, COO of Qinecsa, is a life sciences industry veteran with over 30 years’ experience in transforming strategy, organisations, processes, and systems across R&D. Qinecsa is a global provider of innovative, digital pharmacovigilance solutions, including cloud-based analytics solutions and services for medical research and healthcare delivery.
Will Downie is an experienced Chief Executive who has worked for publicly traded and private equity owed companies. In his last role, he was the CEO of Argenta, a combined CRO/CDMO in the animal health market. Prior to this position, Will was the Chief Executive of Vectura Limited, a FTSE-250 inhalation drug development and device company, which was successfully sold to a strategic buyer for more than £1.1bn.
From 2009 to 2019, Will was the Chief Commercial Officer with Catalent Inc., one of the largest CDMOs in the pharma services space. Prior to this, he worked in various leadership capacities with GE Healthcare, Sanofi and Merck.
Currently, he owns his own business called Downie Pharma Advisory, where he works with Private Equity companies and Boards as an adviser in the pharmaceutical outsourcing space.
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