Read our Pharma Services Market Update for our sector insights.

We continue to be optimistic about the fundamentals of pharma services companies over the next decade. However, over the past year, we have seen an elevated volume of study delays and cancellations by small/mid-sized biopharma sponsors, and this is having various negative downstream financial effects on companies in the space. We are also hearing more anecdotes of larger pharma sponsors re-prioritizing their product development strategies in response to the prescription drug price cuts associated with the ongoing rollout of the Inflation Reduction Act (IRA) of 2022

Key Takeaways

• The Trump administration seems to be doing everything in its power to rebuild the pharma manufacturing infrastructure in the United States, in our view. The Department of Health and Human Services is currently going through a Section 232 investigation on how the United States’s dependence on pharma imports could be a “national security issue.” Nobody knows how this is going to play out, but it is feared that this could lead to tariffs and/or trade restrictions on pharma products.

• Book-to-bill ratios in 1Q25 were broadly weak (sub-1.2x) across the publicly traded contract research organizations (CROs) (and site networks) with elevated project cancellations, delayed decision making, and budget cautiousness. Demand was particularly pressured for CROs focused on small/mid-sized sponsors. In our view, there is an increasing disparity between “winners” and “losers” with respect to access to funding for more speculative clinical development projects.

• We are closely watching for any potential negative regulatory actions by the Trump administration to limit the use of pharma direct-to-consumer (DTC) advertising. The newly appointed Secretary of Health and Human Services, Robert Kennedy, is a long-time critic of DTC pharma advertising, and the just released “MAHA report” highlighted how DTC advertising can inappropriately influence drug prescriptions.

In the dynamic healthcare industry, staying ahead of trends is essential for informed decision-making and seizing opportunities. Please reach out to our research team for more information: research@bourne-partners.com

Compare to our Q3 2024 Pharma Services Sector Snapshot here.