Week of Jan. 29, 2024

This week we highlight the beginning of the first round of Inflation Reduction Act drug negotiations, the increasing popularity of co-working spaces in the biotech industry, and the mergers and acquisitions outlook in the area of central nervous system disorders. We also examine a U.S. Food and Drug Administration program that focuses on artificial intelligence in drug development. Additionally, we look at the prevalence of psychometric testing of potential employees in life sciences.

Each week we highlight five things affecting the life sciences industry. Here’s the latest.

This week the Biden administration announced the first round of price negotiations with the manufacturers of the initial 10 prescription drugs selected under a provision of the IRA, aimed at reducing spending for Medicare, according to the New York Times. The selected medications target a variety of indications in including diabetes, oncology and heart disease. The negotiation process begins with drugmakers receiving initial offers to which they must respond by March, with final prices going into effect in 2026. Several large pharmaceutical companies have filed lawsuits against the federal government contesting this program.

Co-working labs are gaining popularity among biotech start-ups, Nature reports. These spaces provide cost-effective solutions, supportive community, mentorship, and foster collaboration and innovation in the industry. Start-up companies have access to state-of-the-art spaces with shared equipment and consumables. Such spaces have been a part of the biotech landscape for quite some time but have recently become more prevalent. Several co-working collaboratives that started as small, one location spaces, have grown to become international networks, supporting small life sciences companies worldwide.

Two recent multibillion-dollar acquisitions in the psychiatric drug development space may indicate a resurgence of interest in central nervous system disorders, according to BioPharma Dive. While many large pharmaceutical companies had previously deprioritized this area, breakthroughs in treatments for conditions such as schizophrenia are drawing investor interest. The significant market opportunity for drugs targeting muscarinic receptors in indication such as schizophrenia further underscores the potential for additional M&A activity in the space.

In 2020, the FDA launched a program called Innovative Science and Technology Approaches for New Drugs (ISTAND), reports Fierce Pharma. This week they announced that the program accepted its first AI-powered tool. The tool, called AI-COA, uses multimodal behavioral signal processing and machine learning to assess mental health symptoms. This marks a significant step for ISTAND, aligning with the FDA’s goal of optimizing drug development and evaluation by incorporating innovative technologies like AI into the process.

Psychometric tests are commonly used by employers to assess cognitive abilities, problem-solving skills and personality traits of prospective employees. Such testing ranging from personality assessments to critical thinking evaluations is employed at various stages of the recruitment process to determine a candidate’s fit within the organizational culture, reduce bias and enhance the hiring process. Currently, 15% to 20% of biotech and pharma companies routinely use these tests and that number appears to be increasing, according to BioSpace.

For more insights in life sciences, check out RSM’s industry outlook.


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