Trade and policy: Health as sovereign infrastructure
Governments are now treating health the way they historically treated energy or defense: as sovereign infrastructure essential to national competitiveness and geopolitical resilience. Germany, the U.S., China, India, and the UAE, for example, are investing heavily in domestic manufacturing, strategic stockpiles, genomic sovereignty, and local research and development (R&D) incentives. These efforts extend far beyond industrial policy, they redefine the rules of engagement for global pharma. CEOs increasingly act as geopolitical negotiators, engaging directly with governments on pricing, trial acceleration, local production mandates, and supply assurance. Davos made this explicit: companies must be prepared for politicized decision-making, not just regulated environments. At the same time, trade fragmentation across the U.S., China, the EU, India and the Gulf Cooperation Council (GCC) is reshaping how and where innovation can be deployed. Each bloc now operates with different speeds, expectations, data norms, and market access requirements. This geopolitical realignment determines not only where breakthrough science is invented, but where it can reach patients.
What this means for industry leaders: Companies must design country-specific partnership models, build scenario-based global footprints, and implement government-affairs strategies built for structural policy volatility. This requires deeper alignment with national health agendas and embedding these insights directly into portfolio, market access, and footprint decisions.
Innovation: Speed, scale, and affordability decide winners
For decades, life sciences innovation was defined by scientific novelty. In 2026, that definition no longer holds. Novelty without scalability has become commercially irrelevant. Increasingly, the winners are those who can innovate at speed and at scale, with affordability baked in from the start. The bottlenecks have shifted away from basic science. Advanced modalities and enabling technologies, such as RNA therapies, engineered cell therapies, CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) gene editing, often stall not because the science fails. They stall because manufacturing is fragile, delivery depends on highly specialized staff, supply chains are inflexible, and reimbursement frameworks lag behind. Clinical workflows cannot absorb the added complexity. Limiting factors and advantages are also market specific. Drugs entering the U.S. market face a persistent 40 percent failure rate, despite modality breakthroughs. The EU experiences up to two-year approval delays, slowing adoption, and delaying access. China now leads in advanced therapy trials and production efficiency, compressing timelines and costs.
Political support is also a decisive factor. Science lays the groundwork for innovation, but business funds it, policy provides the framework, and the public benefits. Many cutting edge modalities, from cell and gene therapies to RNA platforms, CRISPR, and AI enabled diagnostics, are coming under growing political scrutiny. Funding volatility and regulatory inconsistencies increasingly slow their progress. Overall, multi-stakeholder alliances of academics, non-profits, start-ups, and industry players must conduct science diplomacy and coordinate global governance.
AI’s role has shifted from enabling workflows to governing them, as it becomes a core operating layer of healthcare. Recent examples underscore this shift. For instance, Eli Lilly × NVIDIA partnered on a one-billion-dollar AI lab redesigning drug discovery through multimodal foundation models and massive in silico experimentation. Microsoft’s $19.7 billion Nuance acquisition, the company’s third-largest, is embedding ambient clinical intelligence across U.S. hospitals. OpenAI + Gates Foundation’s $50 million initiative is deploying AI copilots in 1,000 African clinics, a leapfrogging model for regions with workforce shortages. These recent moves reveal an economic shift underpinning industry development. Profit pools are moving from IP owners to model owners and ultimately platform orchestrators.
What this means for industry leaders: Innovation strategies must integrate ecosystem readiness, early manufacturability, payer alignment, data infrastructure, and AI-native R&D from the earliest development stages, not as afterthoughts. Leaders must develop offerings and clinical models that support prediction, screening, and risk stratification rather than late‑stage intervention.
Operations: Workforce shortages and regional fragmentation
Across nearly every health system, workforce scarcity has become the defining operational constraint. Healthcare demand continues to rise, yet skilled labor, such as clinicians, engineers, and technicians, is rapidly shrinking. For example, up to 30 percent of frontline clinical capacity is absorbed by administrative work, leaving face time with doctors dwindling. Further, many nations lack the specialized talent needed for biomanufacturing or advanced modality production, with roles persistently underfilled creating a “ghost factory” phenomenon. This shortage intersects with regionalized production, creating a new operational landscape where companies must deliver more outputs with fewer skilled workers, often in markets requiring local capacity.
Companies face a structurally volatile supply environment as geopolitical blocs push for local production, strategic stockpiling, and redundant capacity, all while driving rapid tariff and regulatory shifts. This means that operational success depends increasingly on differentiated approaches. Leaders are accelerating automation in both labs and plants and increasingly using digital twins to simulate and optimize processes. They are also shifting toward modular “factory-in-a-box” production models, hub-and-spoke and risk-informed manufacturing footprint, and localized resilience planning tied to geopolitical risk. Climate remains a quiet, yet present influence on the industry that should not be forgotten or underestimated. Climate-linked disruptions and ESG (Environmental, Social and Governance) requirements increasingly shape aspects such as facility design, sourcing decisions, regulatory approvals, and even investment incentives in some geographies. Sustainability, once thought to be reputational, is becoming an operational imperative, especially in Europe where opportunities are emerging for global leadership.
What this means for industry leaders: Operational excellence must evolve from efficiency to resilience-by-design, ensuring that critical therapies can be produced reliably in a volatile world with fewer workers and more regionally oriented production mandates. It also demands differentiated regional strategies. Treating major regions (e.g., the U.S., China, India, and Africa) as distinct operational theaters, each requiring a tailored approach.
Competition: Big Tech's growing role in Life Sciences
The competitive landscape is being reshaped by two simultaneous forces: widening global access gaps and the rise of Big Tech as both partner and competitor. The access challenge is becoming foundationally existential. Despite unprecedented scientific progress Europe saw 1.1 million preventable deaths due to insufficient access to innovative therapies. 80 percent of noncommunicable diseases (NCDs) are preventable, yet most health systems remain oriented around late-stage intervention, requiring a move towards value over volume. On the opportunity side, early detection is projected to generate over one trillion dollars in economic benefit by 2030, helping to make overburdened systems sustainable again. Access, like sustainability, is a strategic and reputational determinant of market legitimacy.
With more than 1,500 partnerships between Life Sciences and Big Tech since 2021, the balance is shifting. Tech companies control cloud, data, compute, AI models, and patient interfaces, while pharma companies control biological insight, regulatory pathways, supply chains. Collaboration is key, though competition intensifies between the higher-overlap spaces of MedTech and Big Tech. Overall, the industry is shifting from data ownership to data orchestration, requiring collaboration but also vigilance as value migrates toward platform controllers. Pharma itself risks disintermediation if it does not define where it leads and where it leverages partners.
What this means for industry leaders: Competitive strategy must incorporate AI partnerships, data governance, access commitments, and digital-first patient engagement, while defending against value migration toward platform players. Leaders must also clarify where to lead and where to leverage partners, defining distinctive roles in an ecosystem where tech giants increasingly shape data flows and patient interfaces.