Full Economic Impact of COVID-19 on Life Sciences Industry Still Uncertain

By Maria Fontanazza

While companies developing solutions that address the current pandemic may be receiving an influx of financial support, recovery for companies in other segments of the industry is slow.

It will be some time before the full impact of the coronavirus pandemic is realized. As the life sciences industry responds and adapts to the evolving needs, the ups and downs will continue. “If COVID-19 continues to boil throughout 2020 it will impact the life science industry as it will impact everything; however, we are likely to come to an uneasy adjustment to the new normal,” says Jordan Herman, partner at Baker Botts, a global law firm. “This will likely mean company valuations will become more predictable, and M&A activity and investment in emerging companies is likely to increase modestly.”

In a brief chat with MedTech Intelligence, Herman shares what changes he has seen in the life sciences industry as a result of COVID-19.

MedTech Intelligence: How is the COVID-19 pandemic changing the economic strength of the life sciences industry?

Jordan Herman, Baker Botts
Jordan Herman, partner at Baker Botts, is Chair of the Austin Corporate Department. His practice focuses on M&A, joint ventures, licensing, venture capital and complex technology/outsourcing transactions, in the software, medical device, and digital media industries.

Jordan Herman: While more attention has never been paid to the life science industry, the economic impact of COVID -19 on the industry is uneven. There is huge growth for companies with COVID-19-specific products, but there has also been an interruption to research and development and clinical studies. This in turn has dampened demand for products other than COVID -19 specific products. Further, although the stock market has recovered since its initial COVID -19-related fall, the COVID-19 triggered recession has lowered valuations and made financing scarce for emerging companies of all types, including life science companies. Further, the intense scrutiny and public need for COVID -19 treatments and vaccines are anticipated to challenge historical pharma pricing models, which could have long-term adverse impacts on the industry.

MTI: Has government investment in medtech and the broader healthcare industry changed during this time?

Herman: We are seeing governments (particularly outside the United States) increase funding for medtech and healthcare, with a focus on ensuring a local supply of core supplies. The interruption in research and clinical trials due to COVID-19 may jeopardize non-COVID-19 grant-funded research. New non-COVID-19 grants may be harder to find as money is focused on COVID-19, and government and non-profit budgets are stressed due to the recession.

MTI: What role do you see artificial intelligence and machine learning playing in medtech and healthcare moving forward?

Herman: Artificial intelligence—or more accurately—machine learning is becoming as ubiquitous as the Internet. Machine learning will almost certainly speed the development of new drugs, improve evidence-based medicine, and make healthcare spending more efficient. Prior to COVID-19, concerns about privacy may have slowed the growth of machine learning in the healthcare industry, but it looks like those concerns are outweighed by getting a handle on the virus.

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About The Author

Maria Fontanazza, MedTech Intelligence