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This article is part of the Life Sciences Industry 2025 Market Update. Click here to read the full newsletter.
The life sciences industry continues to evolve rapidly, driven by technological advancements, shifting economic conditions, and global market dynamics. As companies navigate this complex landscape, several key trends are emerging that may have significant legal and business implications. This alert highlights four critical areas that industry participants should closely monitor when negotiating intellectual property licenses: artificial intelligence (AI), tariffs, financings, and manufacturing.
Data and Artificial Intelligence
Data and AI continue to play an increasingly prominent role in the life sciences sector, transforming research, development, and commercialization processes. As life sciences companies continue to create, develop, adapt, and apply data and AI platforms for drug discovery and other life sciences applications, data and AI are also becoming a focal point in licensing and other commercial contracting negotiations. For example, licensors and licensees are more focused on the ownership of data and the output generated by an AI platform, particularly any data that could become a valuable asset for training AI models. In some cases, a party can consider “use restrictions” that prohibit the use of the party’s data, proprietary models, and other intellectual property for training AI models by the other party. In other cases, a party may allow the use of its IP in connection with data and AI models, which may lead to further discussions about the ownership of any data, proprietary models, and other output from these models. These terms are often heavily negotiated to align with the applicable party’s needs. Parties are paying close attention to how AI can be used, shared, or further developed, making it essential to address these issues in any licensing or other commercial agreements.
Additionally, any transactions that involve transferring data also need to consider the newly implemented Department of Justice (DOJ) guidance effective April 8, 2025, which restricts the transfer of sensitive personal data and U.S. government data to “countries of concern” or “covered persons.” This Bulk Data Rule defines “bulk” as data exceeding defined thresholds within certain categories, including genomic data, biometric identifiers, geolocation data, personal health data, financial data, and personal identifiers; “countries of concern,” such as China, Cuba, Iran, North Korea, Russia, and Venezuela; and “covered persons” as certain foreign persons that are controlled by a country of concern. Licensors and licensees are paying closer attention to the transfer of data to ensure compliance with the new Bulk Data Rule.
Tariffs and Cross-Border Transactions
Globalization has made cross-border transactions a routine aspect of life sciences operations, but recent changes and uncertainty in U.S. federal policy have heightened focus on import costs. For example, recent changes in tariff policy and federal funding programs have been primary drivers of this uncertainty. When licensed materials or products are sourced from outside the United States, parties are increasingly concerned with the allocation of risks and costs associated with importation into the United States. Negotiations now frequently address which party is responsible for obtaining necessary permits and who bears the financial burden of tariffs and other import-related expenses, which may change over the course of the relationship. Parties may also want to consider each party’s rights in the event of a force majeure and whether the tariff risk is an appropriate event of force majeure that should excuse performance.
Financings
Capital raising remains a critical activity for emerging companies in the life sciences industry, but the environment has become more challenging. While financings are still occurring, the availability of capital has tightened due to macroeconomic pressures, including inflation, fluctuating tariffs, labor market uncertainties, and stock market volatility. These factors have led to more cautious investment behavior, particularly in early-stage companies. As a result, companies seeking funding must be prepared for more rigorous due diligence and potentially more aggressive deal terms. Licensing, collaboration, and other commercial agreements can offer alternative sources of revenue for emerging life science companies, provided that the financial, IP ownership and restrictive covenant terms, among other terms, are carefully considered, including in light of any future deal or capital raising the company may pursue.
Manufacturing
Manufacturing has moved increasingly to the forefront of business and legal discussions in the life sciences industry. Previously considered a secondary issue, manufacturing is now recognized as a critical factor in bringing life sciences products to market. Sophisticated parties understand that innovative and proprietary manufacturing processes and systems are essential for success, prompting a greater focus on manufacturing-related innovation and innovation from the outset. This trend is leading to more detailed negotiations around manufacturing capabilities, quality control, and scalability.
Conclusion
The life sciences industry is experiencing significant shifts in how companies approach technology, global trade, financing, and manufacturing. Staying informed about these trends and proactively addressing them in business and legal strategies will be essential for industry participants seeking to navigate the evolving and innovative landscape and achieve long-term success.
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