Read our Pharma Services Market Update for our sector insights.

We continue to be optimistic about the fundamentals of the pharma services space over the next five to ten years. Over the past several years, we have seen an accelerating focus by the life sciences industry on complex precision and biologic medicines as a result of advances in molecular biology and the development of new modalities of treatment — as well as an increasingly favorable regulatory and legislative environment. We anticipate that this trend will continue for the foreseeable future, leading to a greater need for pharma and biotech firms to pursue outsourcing solutions with third-party specialists.

Key Takeaways

• We saw a positive “reset” to the valuations of publicly traded contract research organizations (CROs) in recent weeks following stronger than expected 2Q25 results. In our view, a common theme across the publicly traded CRO space was a sharp sequential uptick in gross bookings, particularly among small/mid-sized biopharma sponsors. Investors seemed to interpret this as a possible “bottoming-out” of the challenging and volatile clinical trial environment over the past 18 to 24 months.

• The passage of the One Big Beautiful Bill (OBBB) Act in July 2025 materially improved the favorable regulatory treatment of “orphan” drugs. Under the Inflation Reduction Act (IRA) of 2022, orphan drugs with a single indication are exempt from Medicare price negotiations. The OBBB Act expanded this exemption to all orphan drugs, regardless of the number of indications. Orphan drugs are now fully protected from the negative provisions of the IRA. In our view, this is relevant to therapeutic areas like oncology where drugs commonly have multiple indications.

• With the rising focus on rare diseases and orphan drugs, we see “medical affairs” as an increasingly strategic function for pharma companies. In fact, we are hearing more and more examples of pharma and biotech companies needing to partner with third-party outsourcing providers to get access to the specialized medical affairs staff and resources they need.

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 Q1 2025 Pharma Services Sector Snapshot here.