Adapting to legislative and policy changes in the life sciences sector

November 2025  |  SPECIAL REPORT: HEALTHCARE & LIFE SCIENCES

Financier Worldwide Magazine

November 2025 Issue

The global healthcare and life sciences sector is facing rapid and profound transformation, fuelled by groundbreaking scientific innovations and substantial policy changes. These developments are reshaping capital allocation, risk management strategies and operational frameworks across the sector.

Key stakeholders, including policymakers, regulators, investors, industry leaders, healthcare professionals and patients, express a wide range of views regarding the pace of innovation, the expansion of access to care and the improvement of operational efficiency. These differing perspectives reflect varying priorities and approaches to addressing the challenges and opportunities within the healthcare and life sciences sector.

In response, the sector is increasingly expected to strategically allocate resources, enhance patient outcomes and exercise rigorous cost management to effectively navigate growing competitive and regulatory pressures within the sector.

Pricing, reimbursement and supply chain challenges are compressing margins, while expedited approvals and targeted incentives help derisk certain areas. In the US, evolving drug pricing regulations, such as the Inflation Reduction Act’s price negotiation provisions, are creating uncertainty around future revenues and prompting reassessment of pricing strategies and asset valuations.

Globally, reforms in market access, clinical trial methodologies and data-sharing are increasingly prioritising robust evidence to guide investment and the research and development (R&D) of new medical interventions. In Europe, coordinated efforts to assess the relative benefits of emerging health technologies are reflected in evolving health technology assessment frameworks, while new regulations aim to streamline market access and raise reimbursement standards.

Regulatory initiatives – including the European Medicines Agency’s adaptive pathways and ‘Clinical Evidence 2030 Vision’, the European Health Data Space and the US Food and Drug Administration’s (FDA’s) support for adaptive trial designs – are fostering a more integrated and efficient environment for cross-border research and accelerated drug approvals. International regulatory agencies are working to harmonise standards and leverage digital health data to support collaborative innovation and expedite access to new therapies. In the UK, accelerated regulatory pathways and pro-innovation policies, such as the Innovative Licensing and Access Pathway and its medical device equivalent, are designed to attract investment in and facilitate the rapid evaluation and adoption of new medicines and technologies.

Geopolitical tensions and deglobalisation are increasing trade barriers and market fragmentation, disrupting supply chains and limiting cross-border collaboration. These factors impede the pace of innovation and constrain patient access to emerging therapies. That said, Asia, especially China, has rapidly emerged as a major hub for medical research and innovation, shaping the future developments of novel interventions.

In response, companies are pursuing M&A and strategic partnerships to consolidate capabilities and diversify risk. Investments in advanced manufacturing and regionalised supply chains are increasing to mitigate regulatory changes, geopolitical pressures and pandemic-related vulnerabilities. Asset performance is diverging, with those supported by robust evidence and clear regulatory pathways outperforming others. Understanding these dynamics is essential for effective capital allocation and portfolio strategy.

Regulatory reforms

Modernising regulatory frameworks to ensure that they remain current and relevant is pivotal to advancing patient interests, particularly in rare diseases and areas of significant unmet need. In the European Union (EU), proposed pharmaceutical legislation aims to harmonise approval procedures, accelerate market access and improve the availability of therapies.

Incentives for orphan and paediatric drugs encourage innovation in conditions affecting the small patient populations, while shorter data exclusivity periods are intended to boost competition and broaden access. However, these changes raise concerns about sustaining investment and maintaining incentives for breakthrough research.

In the US, FDA initiatives such as real-time oncology review and support for decentralised, adaptive trials are expediting the development and assessment of promising therapies, while upholding safety and efficacy standards.

Despite a focus on safety and public trust, critics argue that UK and European regulatory complexity and cost can hinder innovation, particularly for smaller companies and emerging technologies. In response, reform efforts centre on streamlining processes, increasing flexibility and supporting new technologies, while maintaining high safety standards.

Innovation: accelerated product development, health equity and patient access

Legislative and policy changes are seeking to stimulate innovation in the life sciences sector, while intensifying debate over equitable access. Accelerated pathways, such as the FDA’s Accelerated Approval Programme, have enabled rapid introduction of treatments for serious conditions, including gene therapies. While these routes offer earlier access and development efficiencies, they also increase scrutiny of long-term safety and post-market obligations.

Regulators are implementing tools to shorten development and review timelines. The rolling reviews adopted by the UK Medicines and Healthcare products Regulatory Agency and the European Medicines Agency during COVID-19 vaccine approvals enabled swift decision making and timely access. The FDA’s support for adaptive and platform trials, particularly in oncology, allows for simultaneous evaluation of multiple candidates and more efficient data use, reducing timelines and costs while maintaining scientific rigour.

In the EU, conditional marketing authorisations for therapies addressing unmet needs provide earlier patient access, with ongoing evidence generation required; however, recent examples have demonstrated that authorisations may be revoked if comprehensive data cannot be generated in agreed post-approval studies, underscoring the importance of robust follow-up and adherence to regulatory commitments. Joint clinical assessments under the EU Health Technology Assessment Regulation aim to expedite access but raise concerns about national decision making and reimbursement timelines. Stakeholders are monitoring how these changes will affect the availability of breakthrough therapies.

In the UK, the Voluntary Pricing Scheme for Branded Medicines Pricing and Access (successor to the Voluntary Scheme for Branded Medicines Pricing) has sparked debate about balancing affordability with incentives for R&D. Proposals to cap growth in branded medicines sales and increase rebates have drawn industry criticism, with concerns over potential negative impacts on investment. The challenge of rewarding innovation while maintaining affordability for health systems and patients remains significant.

Policy reform is increasingly focused on reducing disparities in access and improving outcomes. The EU’s pharmaceutical legislative proposals include incentives for launching medicines across all member states. In the US, the FDA encourages more diverse trial populations to enhance generalisability and address disparities. Global initiatives, such as the World Health Organization’s Access to COVID-19 Tools Accelerator, highlight the importance of international collaboration in promoting universal healthcare access.

Digitalisation infrastructure and greater data integration

Digital transformation is fundamental to regulatory and clinical innovation, with governments and industry investing heavily in digital infrastructure to drive progress and strengthen healthcare resilience. In the US, pandemic-era initiatives such as the Coronavirus Aid, Relief and Economic Security Act expanded telemedicine and remote care, improving access for underserved communities. In Europe, the Digital Europe Programme supports digital health technologies, including artificial intelligence (AI)-enabled diagnostics and interoperable electronic health records, enabling more personalised and efficient healthcare delivery.

Pharmaceutical companies are utilising cloud platforms, advanced analytics and AI to enhance R&D, pharmacovigilance and regulatory compliance. These technologies facilitate seamless data integration, foster collaboration and enable faster, more informed decision making.

The General Data Protection Regulation in Europe sets a global benchmark for data privacy, shaping how organisations manage patient data for research, but also adding complexity to data governance and cross-border collaboration. The European Health Data Space initiative aims to facilitate cross-border data sharing that could support generation of real-world data to support regulatory submissions, safety monitoring and research. European regulators are developing frameworks to integrate real-world evidence (RWE) throughout the lifecycle of medicines and medical devices, with access to diverse datasets expected to accelerate therapy development and improve patient outcomes, provided robust governance ensures privacy, security and data quality.

In the US, the FDA’s Digital Health Center of Excellence promotes digital therapeutics and software as medical devices, while the agency’s acceptance of RWE in regulatory submissions highlights the increasing value of data generated outside traditional clinical trials. The FDA’s Sentinel Initiative also leverages electronic health data at scale to monitor product safety and support ongoing innovation.

Strategic partnerships

Collaboration is increasingly essential for navigating complex regulations and dynamic markets. Public-private partnerships, such as those led by the Coalition for Epidemic Preparedness Innovations and Gavi, were pivotal during the COVID-19 response, accelerating vaccine development and distribution.

Similarly, industry-academia alliances like the Innovative Health Initiative in the EU unite companies and research institutions to address unmet medical needs. These partnerships foster knowledge sharing, risk pooling and resource optimisation, supporting more efficient therapy development.

International trade and tariff policies continue to shape the sector, but ongoing uncertainty – driven by recent trade disputes – has disrupted supply chains and increased costs. These developments highlight the importance of proactive risk mitigation through diversified sourcing, regional manufacturing and strong compliance strategies.

For example, the threat of US tariffs on pharmaceuticals and medical devices imported from Ireland and other countries could significantly increase costs, directly impacting pricing strategies and profit margins. Beyond these financial pressures, such tariffs introduce complexities in intellectual property management and tax planning.

Businesses must navigate changes in customs valuations and adjust transfer pricing arrangements to ensure continued compliance with evolving regulations. Furthermore, ongoing regulatory changes and geopolitical tensions further complicate cross-border collaboration, presenting new challenges for businesses operating in the global life sciences sector.

Supply chain resilience

Recent disruptions have revealed significant vulnerabilities in global supply chains, leading to shortages of personal protective equipment and essential medicines. These events have highlighted the risks associated with overreliance on limited suppliers and geographic regions.

In response, governments have implemented measures to strengthen supply chain resilience, including expanding domestic manufacturing capacity, diversifying sourcing strategies and increasing transparency throughout the supply network.

The EU’s pharmaceutical strategy specifically targets these weaknesses by promoting reduced dependence on single suppliers and regions, enhancing real-time supply chain monitoring and improving crisis preparedness. These initiatives are designed to safeguard continuity of care and ensure that health systems remain robust during future disruptions.

In the US, executive actions have prioritised the reinforcement of domestic production for pharmaceuticals and medical devices. Incentives for local manufacturing and reshoring reflect a strategic shift toward securing supply chains and mitigating the impact of global shocks on healthcare delivery.

Broader health and sustainability goals

The healthcare and life sciences sector is increasingly aligning with broader environmental and social objectives. For example, the European Green Deal encourages companies to minimise their environmental impact by reducing pharmaceutical residues in water and adopting cleaner manufacturing processes. These efforts contribute to a more sustainable health ecosystem.

In addition, many companies are shaping their strategies around the United Nation’s Sustainable Development Goals, with a focus on health, equity and environmental responsibility. Corporate initiatives such as implementing green chemistry, decarbonising operations and supporting global health programmes are becoming central to business models and investment strategies.

Conclusion

Legislative and policy changes are rapidly transforming the healthcare and life sciences sectors, presenting both challenges and opportunities. Organisations that maintain a strong awareness of the evolving external policy environment and respond proactively will be best positioned to foster innovation, achieve better outcomes and manage costs effectively.

Continued engagement with key external stakeholders, coupled with a disciplined approach to capital allocation, and a strong alignment with overarching health and sustainability objectives, are essential for long-term success. By adopting these strategies and remaining attentive to evolving policy developments, the approach not only mitigates risk but also enhances resilience and fosters sustainable growth in an increasingly complex globally competitive environment.

 

Lincoln Tsang is a partner and head of European life sciences at Ropes & Gray LLP. Dr Tsang can be contacted on +44 (0)20 3201 1565 or by email: lincoln.tsang@ropesgray.com.

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Lincoln Tsang

Ropes & Gray LLP

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