Experimental landscape of weathering transformation

The clinical trial industry is browsing periods of regulatory uncertainty, geopolitical tensions and potential target tariffs. This climate of economic uncertainty forces sponsors to reassess their pipelines and review the efficiency of their R&D investments, while emerging biotechs face a tougher funding environment.

While tariffs and macroeconomic pressures have taken the headlines, they are only part of the story. The broader reality is that the trial began to drop for several quarters and then stabilized again. This change feels as much as it is periodic and its ripple effect is felt at sponsors, CROs and research sites.

The experiment is beginning to stabilize – continue to develop

Although new trials eventually increased again in 2024, the focus of these trials has shifted to high-impact areas such as oncology, rare diseases and central nervous system diseases. This reflects the priorities of unmet medical needs and innovation potential. Meanwhile, interest is shifting from small molecules (especially late-stage trials) to biologics and late-stage therapies. Now emerging biopharmaceutical companies lead much of this innovation, especially in rare disease research, and their share of trials has nearly doubled over the past decade.

Interestingly, biopharmaceutical funding in China's rapidly growing trials has dropped dramatically in recent years. In 2023, China's healthcare investment fell to US$12 billion, down from US$31 billion in 2021. Much of this is driven by global capital flight and regulatory issues.

In a world where R&D priorities change rapidly, the accuracy and timeliness of clinical trials must be carried out. Sponsors of varying sizes prioritize the best candidates in their pipeline to advance during the trial process and stay at least for the less desirable candidates at present. For any reason, there is no room for delay or overspending at all.

As a risk of differentiation

This new environment provides everyone with the necessity of refocusing on efficient and agile execution. Faced with cutting funding from government agencies, regulators (such as the FDA’s move to eliminate mandatory animal testing), a shift in global trial geographic location and a shift in investment priorities, sponsors no longer seek capacity or scale, but reduce risks.

how? The answer lies in three pillars.

Operational stability: Employee shortages and burnouts are common at various sites and CROs, and sponsors increasingly view stability as reliability and quality

From a CRO perspective, low project team turnover is becoming more and more valuable in a world of talent constraints. Each handover introduces risks: delay, protocol bias, retraining and communication failures. Changes to a single project manager can be set to return to the trial week. By contrast, consistent teams provide closer timelines, better site relationships and higher data quality.

Sponsors often notice it. Employee continuity is always one of the top priorities. Familiarity is important when clinical programs span years and continents. Teams that stay together move faster, advance the flag, and require less supervision. These are the characteristics required in a risk aversion environment.

Global Flexibility: Multi-regional execution functions are provided for sponsors’ contingency plans. If a region is politically or economically unstable, then there is no need to suffer if geographical diversity has been created.

In addition to mitigating risks, global diversity also brings specific competitive advantages. For example, early trials in Australia provided low-cost, low-risk entry points, and tax authorities provided a huge tax advantage for companies investing in first-time human insights. Incorporating a favorable regulatory environment, this has led to accelerated timelines and reduced investor exposure.

Treatment focus: Working with partners with expertise in high priority areas creates confidence in execution. For example, working with a therapy professional business partner and CRO ensures that your most important partners understand not only science, but also the nuances of reducing regulatory, recruitment and operational milestones.

Define the certainty of the next 3-5 years

There will always be volatility in the market, and given the current regulatory and economic uncertainty, no one can afford to wait passively. Sponsors who use this period to reevaluate their trial portfolio, rebalancing their geographical location and aligning with the CRO will be better positioned when they meet more certainty in tariffs and regulations.

It is necessary to understand which therapeutic areas still attract capital and deprive the therapeutic areas that are stagnant due to market or funding uncertainty. Consistency and continuity of audit partnerships are also essential, as frequent team turnover or vague accountability structures are red flags. Stable and experienced teams not only reduce trial risks, but also improve field relationships and data quality.

Finally, it’s the time to make a flexible plan. Developing an organization with an operational model with built-in scenario planning will scale up as the capital environment changes and will be positioned to take advantage of larger investments.

In short, the current next cycle positioning time. Wait too long and you may react to change rather than through it.

Images: Gremlin, Getty Images

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