Pharmaceutical Technology Is Now PharmTech: A Sharper Name for a Smarter Industry

Navigating FDA Shakeups and Obesity Drug Wars

Behind the Headlines Episode 28

Ask the Expert

Outsourcing Partnerships Fuel Global Biopharma Discovery and Scale-Up

Drug Digest February 2026 

How It Helps Avoid Facility and Equipment Problems

A “Plan, Prevent, Prove” Approach

Supreme Court Blocks Trump Tariffs | Created with Canva

The Supreme Court's 6-3 decision to strike down duties imposed under the International Emergency Economic Powers Act (IEEPA)

 represents a pivotal moment for professionals in pharmaceutical development and manufacturing who manage international supply chains.¹ Chief Justice John Roberts observed that,¹ "The president asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration and scope," yet the administration points to no statute in which Congress authorized such expansive power under the 1977 law. While this ruling invalidates broad reciprocal tariffs, such as the 34% levy on goods from China, its direct impact on the pharmaceutical sector requires a nuanced understanding of the different legal authorities that govern trade.²

Why Does the Distinction Between Legal Authorities Matter for Drug Manufacturing?

It is critical for industry leaders to recognize that most high-profile pharmaceutical tariffs discussed in 2025 were intended to be imposed under Section 232 of the Trade Expansion Act, rather than the International Emergency Economic Powers Act, often referred to as IEEPA.² In spring 2025, the Department of Commerce launched a Section 232 investigation into pharmaceutical imports and ingredients to assess potential national-security risks. President Trump subsequently announced plans for a 100% tariff on branded or patented pharmaceutical products specifically linked to that investigation.

Consequently, the Supreme Court's ruling against IEEPA primarily affects mega-tariffs and global reciprocal actions, while pharmaceutical-specific measures grounded in national-security authority remain potentially in force.² For example, Section 232 tariffs on steel and aluminum are separate and remain in place even after this decision. Furthermore, negotiated exceptions and trade agreements with the UK and EU were designed to shape how Section 232 duties on drugs would be applied, distinct from the broader emergency powers recently curtailed. This means that while some broad import taxes are gone, the targeted investigations into the pharmaceutical supply chain have not been directly invalidated.

How Have the Tariffs Been Affecting the Pharma Industry?

On the tariff developments, Kristin Ciriello Pothier, Americas Life Sciences Leader, KPMG, comments, "Today's ruling and subsequent developments are only part of the story for the life sciences industry, leaving key questions around tariff exposure and trade uncertainties. Now is the time to pressure-test sourcing models and accelerate AI-driven forecasting. Resilience and disciplined scenario planning will be essential as trade dynamics continue to shift."

The tariffs have caused the industry pivot toward domestic manufacturing, which has accelerated global trade tensions.³ Major developers have already committed billions to reshoring to mitigate potential duties and ensure supply chain resilience. For example, 

Eli Lilly and Company initiated plans for four new manufacturing sites

, bringing its total US capital commitments to over $50 billion.⁴ More recently, 

Johnson & Johnson announced a $1 billion investment in a Pennsylvania manufacturing site

What Are the Long-Term Operational Implications of Shifting Trade Policies?

This massive reallocation of capital responds to an invest-or-tariff ultimatum, where high taxes could be avoided by beginning US facility construction.³ This is a vital shift, as 90% of biotech firms rely on imported components for at least half of their approved products. High costs have already squeezed profit margins, forcing some companies to delay R&D. While the court decision limits broad emergency taxes, onshoring continues to provide benefits like improved quality control and reduced miscommunication. Manufacturers are now prioritizing trade compliance and supplier diversification to balance domestic capacity with flexibility. The industry continues to advocate for stable policies to protect critical inputs like APIs and excipients. By investing in domestic R&D and localized APIs, firms aim to strengthen medicine supply security for the future.

​Supreme Court strikes down most of Trump’s tariffs in a major blow to the president. NBC News. Published February 20, 2026. Accessed February 20, 2026. 

https://www.nbcnews.com/politics/supreme-court/supreme-court-strikes-trumps-tariffs-major-blow-president-rcna244827

Sagonowsky E. Supreme Court steps in as Trump’s tariffs are thrown out. FiercePharma. Published February 20, 2026. Accessed February 20, 2026. 

https://www.fiercepharma.com/pharma/supreme-court-steps-trumps-tariffs-thrown-out

Cole C. The year of the tariff: pharmaceutical supply chain reimagined in 2025. Pharmaceutical Technology. Published Year. Accessed February 20, 2026. 

https://www.pharmtech.com/view/the-year-of-the-tariff-pharmaceutical-supply-chain-reimagined-in-2025

Cole C. Lilly invests $3.5B in Pennsylvania injectable medicine facility. Pharmaceutical Technology. Published February 13, 2025. Accessed February 20, 2026. 

https://www.pharmtech.com/view/lilly-invests-35b-in-pennsylvania-injectable-medicine-facility

Zubulake Z. Johnson & Johnson Announces $1B Investment in Pennsylvania Manufacturing Site. Pharmaceutical Technology. Published February 19, 2026. Accessed February 20, 2026. 

https://www.pharmtech.com/view/johnson-johnson-announces-1b-investment-in-pennsylvania-manufacturing-site

Articles

The Supreme Court’s 6–3 ruling curtails use of IEEPA to impose sweeping, open-ended tariffs, eliminating broad reciprocal levies such as the 34% duty on China. However, pharma exposure depends on the governing authority: proposed drug and ingredient tariffs were largely tied to Section 232 national-security powers, including a Commerce investigation into pharmaceutical imports and a floated 100% tariff on branded products. Meanwhile, tariff uncertainty has accelerated onshoring, reshaping capital allocation, compliance priorities, and supply-chain risk management amid heavy reliance on imported inputs.

SCOTUS struck down IEEPA tariffs. Pharma duties under Section 232 persist as they fall outside the ruling's scope.

Supreme Court Rejection of Trump Tariffs Has Nuanced Implications for Pharma Importers

FDA Commissioner Says US is Falling Behind China | Created with Canva

The United States risks ceding leadership in early-stage drug development to China because of avoidable regulatory and operational delays in initiating clinical trials, according to recent comments by FDA Commissioner Marty Makary.¹ In a televised interview, Makary identified hospital contracting, institutional review board (IRB) processes, and Investigational New Drug (IND) application review timelines as key bottlenecks that may be slowing first-in-human and early-phase studies in the US.

How Do US and China Early Development Pipelines Compare?

Currently, China is ahead of the US in clinical trials,

 accounting for around one-third of emerging, global drug approvals.¹ Makary is citing structural constraints that could influence sponsors to conduct phase I and early phase II trials in China over the US. Early development geography can shape subsequent regulatory strategy, patient access, and the global evidence base.

In the interview, Makary called for reforms to streamline trial initiation.¹ He cited three specific areas of concern: protracted hospital contracting negotiations, duplicative or slow-moving ethical review processes, and the time required for IND submission and clearance.

Under current US law, sponsors must submit an IND application to the FDA before initiating clinical trials in humans.² The agency has 30 days to review the application and may impose a clinical hold if safety or protocol concerns arise. While the statutory timeline is fixed, pre-IND preparation, sponsor–FDA interactions, and post-submission queries can extend development timelines. Additionally, multicenter trials often require negotiation of site-specific clinical trial agreements and budget terms, as well as IRB approval, processes that may vary widely across institutions.

China, by contrast, has implemented regulatory reforms in recent years aimed at accelerating drug development.³ In 2017, China’s National Medical Products Administration joined the International Council for Harmonization, committing to align technical requirements with global standards. Subsequent reforms have included implied approval mechanisms for INDs if no objection is raised within a specified period and prioritization pathways for innovative therapies.

Although direct, head-to-head comparisons of median IND review times between the US and China are limited in the peer-reviewed literature, several analyses have documented a substantial increase in China-originated first-in-human trials and oncology innovation programs over the past decade.⁴

These comparisons along with Makary’s comments suggest that future reforms for US drug development will induce additional pressure on producers to shorten tech‑transfer timelines as well as implement more modular or single-use capacity.⁵ US partners will be expected to match the increased speed of China developers while still maintaining the high standards of compliance and quality, as standards are unlikely to be adjusted.

What Do Makary’s Comments Imply About the Future of Clinical Development?

FDA has previously emphasized its commitment to expediting innovative therapies through mechanisms such as Fast Track, Breakthrough Therapy, Accelerated Approval, and 

.² However, these programs primarily affect later-stage development and review. Makary’s comments focus on the pre–proof-of-concept period, where operational inefficiencies rather than formal regulatory timelines may predominate.¹

Adjustments will need to be made to portfolio and trial-location strategy in order for assets to reach first‑in‑human and proof‑of‑concept in competition with China.¹ US and EU developers are under pressure to innovate news ways to streamline early‑phase IND processes and adopt more adaptive or decentralized trial designs to match China’s speed of output.

The US continues to lead globally in total biopharmaceutical R&D spending and in the number of new molecular entities approved annually.⁶ Additionally, the FDA’s 30-day IND review window is relatively short compared with some international counterparts.²

The more salient issue may be system-level fragmentation rather than statutory review times.⁴ A 2020 analysis of global clinical trial trends demonstrated significant expansion of early-phase oncology trials in China, accompanied by regulatory reforms and domestic investment. Still, the quality, reproducibility, and global generalizability of early-phase data require careful evaluation regardless of geography.

What Are the Next Steps for US and EU Manufacturers?

Makary’s statements should be interpreted as policy signaling rather than evidence of imminent regulatory change, as they were presented with no new trial data or FDA guidance.¹ Comparative metrics on median trial startup times, IND clearance intervals, and contract negotiation durations would be necessary to quantify the scope of the issue.

Future reforms could include expanded use of centralized IRBs, harmonized contract templates across federally funded institutions, and enhanced pre-IND consultation programs.³ Policymakers may also look to international models for implied approval or parallel review mechanisms. Any regulatory adjustments that reduce early-phase startup timelines could influence site selection strategies, patient recruitment, and competitive positioning in global drug development.

Along with likely future reforms to accelerate early‑stage approvals, US authorities be more vigilant with the sharing of data and re-investment in regional development.⁵ The sharing of sensitive biological and clinical data with Chinese developers and other countries of concern are likely to be more restrictive. Development teams will have to balance the leveraging of speed and capacity of China’s developers with US scrutiny on clinical data provenance, trial diversity, and biosecurity.

CNBC. FDA chief warns U.S. is losing ground to China in early drug development, calls for faster trial approvals. February 18, 2026. 

https://www.cnbc.com/amp/2026/02/18/fda-chief-warns-us-is-losing-ground-to-china-in-early-drug-trials.html

US Food and Drug Administration. Investigational New Drug (IND) Application. Updated 2023. 

https://www.fda.gov/drugs/types-applications/investigational-new-drug-ind-application

National Medical Products Administration. China joins ICH and advances regulatory reform. Published 2017. 

Hwang TJ, Carpenter D, Lauffenburger JC, Wang B, Franklin JM, Kesselheim AS. Failure of investigational drugs in late-stage clinical development and publication of trial results. JAMA Intern Med. 2016;176(12):1826-1833. 

https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2565715

PharmCube. US Regulatory Tightening: Impact or Benefit on China's Pharma Industry?. LinkedIn. 2025, Sep 15. Accessed February 20, 2026.

https://www.linkedin.com/pulse/us-regulatory-tightening-impact-benefit-chinas-pharma-industry-pmvac/

IQVIA Institute for Human Data Science. Global Trends in R&D 2023. 

https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/global-trends-in-r-and-d-2023

FDA Commissioner Marty Makary warned that avoidable US startup frictions—hospital contracting, IRB workflows, and IND-related back-and-forth—are eroding competitiveness in first-in-human and early phase II development, potentially shifting sponsors toward China. China’s post-2017 reforms, including ICH alignment and implied IND approvals, have coincided with growth in China-originated early oncology trials and a rising share of global approvals. The core vulnerability is operational fragmentation more than statutory FDA timelines. Policy signals point toward centralized IRBs, harmonized contracting, expanded pre-IND engagement, and tighter scrutiny of cross-border data.

FDA commissioner warns US trial startup delays may cede early drug development to China, urging IND and IRB process reforms amid global competitions.

Reasons to Pay Attention to Makary's Comments Around Losing Drug Development Ground to China

J&J Pennsylvania Site | Image Courtesy of Johnson & Johnson

 recently announced a $1 billion investment in a next-generation cell therapy site in Montgomery County, Pennsylvania, just outside of Philadelphia.¹ This development underscores a broader strategic move to localize the production of advanced medicines to ensure supply chain resilience within the US. The facility is designed to support a growing pipeline of transformational treatments for neurological, immune-mediated, and oncological diseases. The integration of scientific excellence with state-of-the-art manufacturing is intended to bridge the gap between discovery and delivery. Joaquin Duato, chairman and CEO, Johnson & Johnson, noted the significance of this trajectory, in a press release,¹ “For 140 years, Johnson & Johnson has been a leading innovator in American healthcare, and we are honored to continue advancing that legacy in Pennsylvania.” He elaborated that,¹ “By uniting scientific excellence with state-of-the-art manufacturing and strategic investment, and by working collaboratively with our communities, we are delivering for patients and creating significant opportunities for workers and families.”

This initiative is a component of a larger $55 billion investment strategy focused on manufacturing, research and development, and technology across the United States through early 2029.¹ These investments indicate a long-term commitment to cutting-edge manufacturing processes that require a workforce specifically trained in advanced technologies. When fully operational, the site is expected to support over 500 skilled biomanufacturing positions, reinforcing the need for specialized expertise in the production of next-generation therapies.

Why Are Regional Ecosystems Critical for Large-Scale Pharmaceutical Manufacturing?

The selection of Lower Gwynedd, PA for this expansion highlights the importance of established life sciences hubs that offer a combination of skilled labor, research institutions, and manufacturing history.¹ Governor of Pennsylvania, Josh Shapiro emphasized the state's competitive stance in this sector, remarking in a press release,¹ “Pennsylvania is a powerhouse for innovation and manufacturing in the life sciences.” He explained the state's recent progress, saying,¹ “Just a few years ago we weren’t even on the field - but today we’re competing and winning. We’ve done it by creating the first economic development plan for Pennsylvania in 2 decades, and following through on it by cutting red tape, making strategic investments in key industries like the life sciences, and strengthening our workforce. That’s why companies like Johnson & Johnson are choosing to double down on their investments here in our Commonwealth - because they know we’ve got the strategy, the workforce, and the speed they need to succeed.”

U.S. Senator Dave McCormick reinforced this perspective, noting in a press release,¹ “Pennsylvania leads in life sciences and advanced manufacturing because we consistently deliver what companies like Johnson & Johnson need to succeed: a skilled workforce, premier research institutions, and proven manufacturing strength.” He added that,¹ “This $1 billion-plus investment in a new Lower Gwynedd facility is a testament to that leadership and will produce life-changing treatments for patients, along with new and good jobs for our Commonwealth.” The presence of ten existing facilities in the state, covering over 2 million square feet, provides a robust foundation for this new cell therapy site to thrive. This strategic expansion ensures that the vast majority of advanced medicines will be manufactured in the US to directly serve the domestic market.

What Factors Drive the Concentration of Large-Scale Manufacturing to Pennsylvania?

The expansion of major facilities, including a 

$3.5 billion Eli Lilly site in the Lehigh Valley

, illustrates why Pennsylvania is a primary choice for large-scale pharmaceutical operations.² Strategic proximity to leading research universities ensures a consistent pipeline of specialized talent, which is vital for maintaining technical manufacturing standards. Additionally, the region provides established infrastructure, reliable utility access, and efficient transportation networks necessary for complex supply chains. State initiatives to simplify regulatory processes further enhance the local business environment. These hubs facilitate the adoption of advanced data analytics, ensuring operational reliability for critical therapies.

Johnson & Johnson. Johnson & Johnson expands U.S. footprint with more than $1 billion investment in next generation cell therapy manufacturing facility in Pennsylvania. News release. New Brunswick, NJ: Johnson & Johnson; February 18, 2026. Accessed February 19, 2026. 

https://www.jnj.com/media-center/press-releases/johnson-johnson-expands-u-s-footprint-with-more-than-1-billion-investment-in-next-generation-cell-therapy-manufacturing-facility-in-pennsylvania

Eli Lilly and Company. Lilly selects Pennsylvania as home for its newest injectable medicine manufacturing site. News release. Indianapolis, IN: Eli Lilly and Company; 2023. Accessed February 19, 2026. 

https://investor.lilly.com/news-releases/news-release-details/lilly-selects-pennsylvania-home-its-newest-injectable-medicine

Johnson & Johnson is investing more than $1 billion to build a next-generation cell therapy manufacturing facility in Lower Gwynedd, Pennsylvania, strengthening US-based production capacity for advanced medicines. The site is positioned to support a growing pipeline spanning oncology, immune-mediated, and neurologic diseases, and is part of a broader $55 billion US investment plan through early 2029. Once fully operational, it is expected to create more than 500 skilled biomanufacturing roles. The choice of Pennsylvania reflects the value of mature life sciences ecosystems, infrastructure, and workforce readiness.

A $1 Billion Pennsylvania cell therapy site investment bolsters domestic manufacturing, creating 500 skilled biomanufacturing jobs.

Johnson & Johnson Announces $1B Investment in Pennsylvania Manufacturing Site

Susan J. Schniepp is a fellow at Regulatory Compliance Associates, Inc. and a member of Pharmaceutical Technology's Editorial Advisory Board.

Siegfried Schmitt, PhD, is Vice President Technical at Parexel International, Siegfried.Schmitt@parexel.com.

Ask the Expert: Working with Regulators to Develop Orphan Drugs

 video series. This series is an extension of the 

 Group’s long-running print column in which industry experts answer common quality and regulatory questions from the industry. This video series expands on topic areas to include development and manufacturing concerns to help those working in the industry better understand bio/pharmaceutical requirements. Have a question you would like answered? Send it to 

, and it may appear in a future episode or print column.

In this episode of the Ask the Expert video series, Susan J. Schniepp, Distinguished Fellow, Regulatory Compliance Associates, a Nelson Labs Company, and Siegfried Schmitt, Vice President, Parexel, answer the question:

“We are a medium sized company and are looking to develop a new drug and are thinking of applying for orphan drug status. Do you have any suggestions for working regulators?”

For medium-sized pharmaceutical companies considering developing a drug for orphan drug designation, the transition from traditional development to rare disease therapy requires a shift in regulatory, clinical, and operational planning. An orphan drug is defined by the size of the population it treats; in the United States, this generally refers to conditions affecting 200,000 or fewer people,

 while the European Union uses a threshold of approximately five in 10,000.

What are the regulatory and financial incentives

According to Schniepp and Schmitt, the orphan drug designation route offers government-backed incentives designed to offset the limited blockbuster potential of these products. These include financial support that includes government funding, grants, and tax credits. In the US, fees under the Prescription Drug User Fee Act may be waived for orphan drug developers. Regulators also offer more support for applications and faster approval timelines.

What challenges does the Orphan Drug pathway bring?

Orphan drugs must meet the same rigorous quality and compliance standards as traditional drug approvals , Schmitt and Schniepp emphasize. An accelerated approval process often means manufacturers must be more agileto apply high-level quality systems within a shorter timeframe.

Orphan drugs may also introduce specific manufacturing complexities. Producing smaller batches for clinical trials or commercial use is often more difficult than large-scale production.

Smaller companies without internal facilities may need to utilize contract development and manufacturing organizations (CDMOs). However, CDMOs may find it harder to integrate low-volume runs into their schedules compared to large-scale large tank production.

Because the patient population is small and globally dispersed, distributing small batches of product to far-reaching locations may also be a logistical hurdle.

Patient enrollment for rare-disease treatment development may be difficult, especially if multiple companies are competing for the same eligible participants. Medium-sized firms lacking regulatory experienceshould seek external expertise, according to Schmitt, and work in close collaboration with regulatory authorities. While these therapies may be commercial risks, they may lead to the discovery of broader indications for other diseases, Schniepp suggests, making them even more worthwhile to pursue.

FDA. Office of Orphan Products Development. FDA.gov. Oct. 1, 2024 

https://www.fda.gov/about-fda/office-chief-medical-officer/office-orphan-products-development

EMA. Orphan Designation. Overview. Ema.europa.eu. 

https://www.ema.europa.eu/en/human-regulatory-overview/orphan-designation-overview

Susan J. Schniepp is distinguished fellow at Regulatory Compliance Associates and a member of PharmTech’s Editorial Advisory Board.

Siegfried Schmitt, PhD, is vice president, Technical at Parexel and a member of PharmTech’s Editorial Advisory Board.

Editor's note: This transcript is a lightly edited rendering of the original audio/video content. It may contain errors, informal language, or omissions as spoken in the original recording.

Hi, everyone. Welcome back to Ask the Expert. I'm Sue Schniepp, and I'm with Nelson Labs, and I'm with my colleague, Siegfried Schmitt, with Parexel, and we're here to talk about, I think Siegfried has a question on orphan drugs. So, let's go for it, Siegfried.

Thank you, Sue. Yes, thanks for the introductions. In fact, yes, the question that came in is:

"We are a medium-sized company, and we are developing a new drug, and we are currently thinking of perhaps applying for orphan drug status with the regulators. Would you have any suggestions, comments, recommendations in that context?"

So, Sue, maybe you would like to start off with this.

Well, that's interesting, 'cause sometimes companies do choose the orphan drug route. Now, there's some advantages to choosing that. So first, we should clarify, an orphan drug is a drug that's treating a condition in people. In the United States, I think it's two hundred thousand or less people are affected by the condition, and I think it's a little different in the European Union.

It's, like, five in a thousand or something, or do you know, Siegfried, what that...?

I don't know the precise figure, but I know that there are slight differences between EU, US, and I believe also in other jurisdictions. You have not exactly the same threshold. Right.

But I believe in most cases, when you're looking at an orphan drug designation, you're probably looking at a rather small population that is affected by the particular disease for which you're developing your drug. Right.

So having clarified that, then the thing that always comes to mind with me is there's a couple of advantages. So, if you go the orphan drug route, you do get assistance from governments, because they realize that if you develop the orphan drug, you probably will not make a lot of money on it, right?

It's not gonna be your next blockbuster because of how few people you're going to really affect with the drug. Once they get out on the market, they're high-priced too, but they are reimbursed typically by insurance. But, you still need to meet all the standards of quality when you're developing an orphan drug.

The thing that I think you need to work the closest with the regulators on are on your clinical trials, because it can be difficult to get patients enrolled in your clinical trial, and that's what the success of your drug is based on.

You know that better than I do, Siegfried.

Well, you're right, Sue. You need to think about where you can find eligible patients, and of course, not every eligible patient will also want to take part in a trial. And interestingly, just because you may be developing a drug for a rare disease, doesn't mean that you're probably the only company doing that.

There are often many competing companies developing drugs for a similar rare disease. So, it's not that you're out there on your own, and you are without competition.

As you quite rightly say, you need to work closely with the regulators, and the regulators offer a lot of support there. And what is also very important is you have to have the same quality and compliance standards as if you go the normal drug approval route.

Yes, you have advantages time-wise. You don't have to wait as long for approval as you have to do with the normal approval pathway, but because things happen faster, you also have to be more agile. You have to work harder and faster to have the same standards, the same levels of quality, and just apply them in a shorter timeframe.

So, perhaps this is something that some companies may not fully understand, particularly when we look at the type of companies that often develop these rare disease drugs.

Very often, these are fantastic scientists, spin-offs from universities, perhaps, and as this particular person who put the question forward said, they're a medium-sized company, and that means they may not have as many people with the right experience in regulatory affairs, in bringing drugs to market, et cetera. So perhaps you need more external help there. What do you think, Sue?

I think so. I think it is a desirable route to go, too, though, because you do get some advantages. I know even in the EU, right, as a developer, so you do get funding, right? And you do get some tax credits, at least in the US. I don't know if you do in the EU.

I think both. We have a Prescription Users Drug Act here, where you pay a fee, and those fees are waived for people who are developing orphan drugs and as you said, grants or help from other sources.

So, I think it's kind of, it's not where I've actually played in the game, but I understand the attraction of it. If you are doing that, oftentimes, too, and I'd like to hear your comments on this, once the orphan drug is developed, it can go on to prompt, develop [other drugs] I think the statins came out of the development of an orphan drug; although, I'd have to check that.

But it started with an orphan drug that they somehow found at the time. I can't remember what it was for. I'm gonna have to look up my history, but they found at the time it lowered the cholesterol of the patients that were getting the orphan drug, and that turned into the statin that we now prescribe readily to patients with cholesterol. Am I remembering that right, Siegfried?

I don't know this particular case, but it's quite possible, because very often you'll find, that a particular drug that you developed for one indication is very helpful with another indication you didn't even know about, you didn't think about. So that doesn't have to come from an orphan drug designation, but it could indeed.

So, I think what companies need to weigh up very carefully is, yes, you have lower fees, you have expedited pathways, you have, much more support for your applications if you go the orphan drug route. But on the other hand, it comes with obligations, as I said, to do things faster, but to the same high standards.

Whether this is, the best possible way, again, is something you need to discuss on a regulatory perspective, but also from a commercial perspective indeed. So, it all has to be balanced out to be right.

Yeah, and your commercial perspective, I like in terms of, sometimes you don't have access. This is where it gets a little bit tricky, too. You need to make sure that you have a contract manufacturer if you're doing that route. You don't have access toa manufacturing facility. You're a smaller company, right, without that, so you're gonna have it contracted. You need to make sure that you have space on their line, line time. It's harder for a contract manufacturer to produce a smaller batch clinical trial material, than it is to produce, you know, a large batch.

At least from my experience, I would say it's easier to do, you know, a big tank and thousands of vials than a smaller clinical trial.

Indeed, and also, once you commercialize your product, again, we know it is a small population that you are servicing here, and, so the batch size, again, with a CDMO will be relatively small.

But it's also the distribution of the product, because it's very likely that your population is distributed, spread out, maybe all over the world, and it can be more challenging to distribute smaller size product batches, than it would be if you have a large commercial product.

Yep, exactly. Well, I don't really have any other advice for people other than, you know, it could be a viable pathway. Just make sure you get the right help and assistance, and work closely with your authorities.

That's exactly it. Seek help, seek expertise. If you don't have it inside, there are plenty outside, and also the regulators.

Thanks, Siegfried. I look forward to our next conversation.

Videos

In this episode of Ask the Expert, Susan J. Schniepp, Nelson Labs, and Siegfried Schmitt, Parexel, discuss the benefits of orphan drug development and how a mid-sized company can work with regulators through the pathway to approval. 

Lilly and CSL Partner on Clazakizumab | Created with Canva

CSL and Eli Lilly have struck a strategic licensing agreement regarding clazakizumab, an anti-interleukin-6 (IL-6) monoclonal antibody.¹ Under the agreement’s terms, CSL receives an upfront payment of $100 million and remains eligible for future clinical, regulatory, and commercial milestones, as well as royalties on global net sales. Lilly will be responsible for exploring development, global regulatory approval, and distribution of the treatment to 

patients with end-stage kidney disease (ESKD).

 This collaboration demonstrates an industry trend of targeted therapies being simultaneously advanced across disparate therapeutic areas to maximize life-cycle value.

How Does This Collaboration Influence the Development Trajectory of Clazakizumab?

The agreement effectively splits the development path of the monoclonal antibody based on specific therapeutic indications.¹ CSL is maintaining its focus on the primary indication through the ongoing POSIBIL6ESKD Phase III clinical trial, which is currently evaluating the safety and efficacy of the treatment in preventing cardiovascular events for patients with ESKD who are on dialysis. This targeted approach addresses a specific high-risk patient population. On the strength of this collaboration, Bill Mezzanotte, EVP and head of R&D, CSL, commented in a press release,¹ "This agreement marks a significant step forward in our mission to bring innovative therapies to patients worldwide. Clazakizumab is a promising therapeutic candidate with the potential to significantly impact the treatment landscape for various immuno-inflammatory and cardiovascular conditions. Lilly is another patient-focused organization, and we look forward to working with them to maximize the potential of this important medicine."

What Are the Clinical and Manufacturing Implications of Targeting the IL-6 Pathway?

Originally developed by Vitaeris Inc. and acquired by CSL in 2020, clazakizumab functions by preventing IL-6 from binding to its receptor, thereby mitigating the inflammatory cascade.¹ The molecule represents a sophisticated intervention in the pathogenesis of diseases in which the overproduction of IL-6, a mediator of immune regulation, hematopoiesis, and vascular inflammation, is a key driver. By addressing this cytokine, clazakizumab may provide therapeutic benefits across a range of immuno-inflammatory conditions beyond the initial focus on cardiovascular events in the ESKD population. The success of this molecule hinges on demonstrating consistent efficacy in managing these complex biological processes across the different indications now being explored by the two partner organizations.

How Else Is Eli-Lily Continuing to Build its Manufacturing Portfolio?

Eli-Lilly is building on the strategic partitioning of antibody rights.² The recent acquisition 

biotechnology firm, Orna Therapeutics, specializing in circular ribonucleic acid (oRNA

) technology for up to $2.4 billion further illustrates a focus on scaling advanced immunology platforms. The move from traditional cell-based therapies to 

 chimeric antigen receptor T-cell therapies represents a significant shift in production logistics. While 

 approaches are often hampered by high costs and complex supply chains, this oRNA platform allows for simplified production and improved formulation into lipid nanoparticles (LNPs).

By leveraging LNPs to deliver circular ribonucleic acid directly to the patient, the manufacturing process bypasses the need for individualized cell harvesting and re-infusion.² This approach allows the body to generate its own therapeutic proteins, offering potentially more durable expression than current cell therapy platforms. These programs target B cell-driven autoimmune diseases, aligning with the broader strategy of addressing immuno-inflammatory conditions through diverse therapeutic modalities.

What Role Does Diverse Modality Integration Play in Future Immunology Pipelines?

Integrating genetic medicine alongside monoclonal antibodies creates a comprehensive toolkit for resetting the immune system.² This integration provides long-term innovation potential in cell engineering, enabling the development of therapies for patients who have limited options. By combining these technologies, Eli-Lilly can pursue potential best-in-class programs that address the underlying mechanisms of complex diseases.

CSL Limited. CSL and Lilly enter licensing agreement for clazakizumab [news release]. Melbourne (Australia): CSL Limited; 2026 Feb 18.

​Eli Lilly and Company. Lilly to acquire Orna Therapeutics to advance cell therapies [news release]. Indianapolis (IN): Eli Lilly and Company; [cited 2026 Feb 18]. Available from: 

https://investor.lilly.com/news-releases/news-release-details/lilly-acquire-orna-therapeutics-advance-cell-therapies

Eli Lilly & CSL seal a deal for clazakizumab partitions rights to maximize lifecycle value. CSL retains ESKD focus as Lilly prioritizes commercialization. 

Lilly and CSL Partner on Clazakizumab Antibody Development

, specializes in business development, new product planning, and early brand strategy. He helps companies lay the foundation for successful launches through data-backed strategies spanning indication assessment to portfolio strategy. With a strong background in pricing and market access, Nathan integrates both commercial and access insights into early asset development to maximize market opportunity.

 specializes in brand strategy, product launch, and advanced analytics. He helps companies navigate critical decisions across the asset lifecycle, from early strategy through launch execution, with a focus on maximizing patient access to treatment. Drawing on expertise in analytics, ML, and AI, Michael combines quantitative rigor with cross-functional insight to support more robust strategy and informed decision-making.

For decades, the blockbuster drug model has defined pharmaceutical value creation. A small number of high-revenue products could support expansive pipelines, global commercial infrastructure, and sustained shareholder returns.

The blockbuster model drives a boom-and-bust cycle rooted in revenue concentration, accelerating patent cliffs, and rising capital requirements. For a limited subset of capital-rich pharmaceutical companies, this approach continues to deliver strong outcomes in which they are able to acquire or develop new assets to overcome cycles of bust. However, for much of the industry, the blockbuster model is wholly unsustainable.

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Internally developing a true blockbuster is uncommon, costly, and statistically unlikely. As scientific complexity increases and competition intensifies across major therapeutic areas, many companies find that internal pipelines alone cannot reliably generate large-scale commercial assets.

This dynamic forces greater reliance on external acquisition, where competition for late-stage blockbusters is intense and valuations are high.

 The result is heightened portfolio volatility and increased strategic risk.

In contrast, rare disease drugs offer a structurally different value proposition. Rather than functioning as niche or opportunistic assets, orphan drugs can serve as portfolio stabilizers that deliver durable revenue, reduced volatility, and meaningful downside protection.

This article examines how revenue concentration and patent cliffs expose systemic portfolio risk, why orphan drug economics differ fundamentally from traditional blockbusters, and why portfolio construction, rather than asset-level optimization, is emerging as the key for sustained, long-term value creation in biopharma.

How is the blockbuster model structurally fragile?

The traditional blockbuster paradigm is built on scale and concentration. In many large and mid-cap pharmaceutical portfolios, a small number of products account for a disproportionate share of total revenue. While this concentration can amplify growth during peak years, it also creates structural fragility. Portfolio-level analyses consistently show that dependence on one to three mega-franchises exposes companies to significant downside risk when competitive dynamics shift or products approach loss of exclusivity.

The degree of revenue concentration across biopharma portfolios is staggering. In many cases, non-blockbuster assets collectively contribute far less to overall revenue than a single top product (

). This imbalance leaves portfolios highly sensitive to asset-specific shocks, whether from regulatory changes, competitive innovation, or pricing pressure.

Figure 1: Analysis of 2024 gross revenue among pharmaceutical manufacturers, including revenue from subsidiaries, subdivided between revenue from “blockbuster” drugs (≥$1B in 2024 revenue) and “non-blockbuster” drugs (<$1B in 2024 revenue). Revenue may include ex-US revenue. Figure courtesy of the author.

Historically, internal research and development occasionally produced blockbuster outcomes that refreshed portfolios organically. Today, that pathway is increasingly constrained. Rising clinical trial costs, longer development timelines, and higher attrition rates have reduced the probability that internal pipelines will consistently generate blockbuster-scale assets.

 In addition, many of the largest therapeutic categories have become crowded, with multiple competitors targeting similar mechanisms of action, further diluting upside potential.

As internal innovation becomes less predictable, acquisition pressure rises. Companies must increasingly rely on mergers and acquisitions or in-licensing to secure growth.

 These transactions require substantial capital and often occur in competitive bidding environments, compressing returns. For organizations without the balance sheet strength to repeatedly pursue large acquisitions, reliance on blockbusters becomes less a strategic choice and more a structural vulnerability.

How are patent cliffs a portfolio-level threat?

The risks associated with revenue concentration become most acute at loss of exclusivity. Over the coming decade, a significant share of global pharmaceutical revenue is projected to face patent expiration. Between 2025 and 2037, nearly 600 drugs are expected to lose patent protection, placing more than $330 billion in forecasted revenue at risk among multi-blockbuster products with annual revenues exceeding $3.5 billion (

Figure 2: Analysis of total anticipated patent expiries in the United States by year, from 2025–2037, including only patents limiting exclusivity of the respective drugs. Figure courtesy of the author.

What distinguishes the current environment from prior patent cycles is the speed and effectiveness of post-loss-of-exclusivity (LOE) competition. Biosimilars and generics are no longer incremental entrants that slowly erode market share; they now operate within a mature, well-capitalized ecosystem designed to capture share rapidly following exclusivity loss. Recent changes to the FDA biosimilar program, including the removal of the comparative efficacy study requirement, have further lowered development time and investment barriers, requiring demonstration of molecular similarity rather than functional comparability.

 Together, these shifts signal a regulatory intent to accelerate biologic price competition, resulting in immediate and often steep price erosion once exclusivity ends.

Payer behavior further amplifies this effect. As cost-containment pressures grow, payers increasingly encourage rapid switching to lower-cost alternatives, particularly in high-volume indications. This dynamic compresses revenue replacement timelines and magnifies the financial impact of LOE events.

Figure 3: Sample of highest-revenue drugs with anticipated patent expiries in the United States by year, from 2025–2037. Includes drugs with ≥$3.5B in 2024 revenue.* Total loss of revenue by year calculated in green boxes. Manufacturer listed reflects parent company primarily responsible for marketing drug in the US, and does not account for co-commercialized drugs. *Note: revenue may include ex-US revenue. Figure courtesy of the author.

For portfolio leaders, the challenge is not simply that patent cliffs exist, but that they often overlap across multiple high-revenue assets within the same portfolio. Clustered expirations can create simultaneous revenue shocks that overwhelm incremental growth elsewhere in the portfolio (

). Late-stage pipelines frequently lack sufficient scale to offset these losses, and internal R&D timelines rarely align with the urgency imposed by near-term LOEs. These dynamics reinforce the need for portfolio-level solutions that mitigate volatility, rather than reactive, asset-by-asset responses that address symptoms rather than structure.

How do orphan drugs as stabilize revenue?

Against this backdrop, orphan drugs exhibit a fundamentally different economic profile. While rare disease markets are smaller by definition, orphan assets often demonstrate greater revenue persistence, reduced competitive churn, and more predictable lifecycle performance than non-orphan drugs. On average, orphan drugs not only achieve comparable or higher peak revenues, but they often reach peak more quickly and decline more slowly (

). The cumulative effect is materially greater total lifecycle revenue despite smaller patient populations.

In part three of this four-part series regarding rare diseases, the authors examine how revenue concentration and accelerating patent cliffs undermine the traditional blockbuster model, whereas orphan drugs offer a structurally different strategy for stabilizing biopharma portfolios through more durable, predictable, and risk-adjusted long-term value creation.

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