State of the Industry 2026 Virtual Panel: Biologics

Gardiner Smith (GS): For one, it’s clear that decision-making at the FDA has shifted — there is more political influence over who stays, who leaves, and which programs are prioritized. That creates uncertainty, and the question is whether this becomes the new normal or if the pendulum swings back. Second, the funding environment has changed dramatically. For the first time, we’ve seen roughly a quarter of smaller public biotechs disappear over the last 12–18 months. That’s unprecedented. Finally, while biologics have long had an advantage in specificity, small molecules are catching up. Subtype specificity once thought exclusive to biologics is now being achieved in late-stage small molecule trials. That could pressure biologics, given small molecules’ advantages in cost of goods, distribution, and commercialization.

Nick Hutchinson (NH): We’re seeing constrained government funding for early-stage discovery and development, which could have a knock-on effect in the years ahead. At the same time, there’s a strong governmental push, especially in the U.S., to onshore biologics manufacturing. We’ve seen major announcements of large plants being built in North America, and concerns about reliance on China are still very real in company decision-making.

Eduard Viladesau (EV): From a European CDMO perspective, several issues stand out. FDA policy and resourcing are critical, particularly the availability of inspectors for pre-approval and follow-up inspections abroad, which could become deprioritized given staffing pressures. Tariffs are another factor: not existential, since drug substance costs are small relative to final drug prices, but still a source of uncertainty. Finally, the U.S. pricing model is in flux. If reference pricing changes substantially, that could affect the economics of innovation and further weaken the already difficult funding environment for early-stage companies. Overall, the fundamentals of the biologics market remain strong, but which modalities and geographies thrive may shift.

Kristian Becker (KB): Many companies are effectively on pause, waiting to see where the political and economic situation settles, particularly around the U.S. Biosecure Act. From a technical perspective, we’re seeing increasing demand for more complex molecules and processes, not just traditional monoclonal antibodies produced via fed-batch. Interest in bispecifics, multispecifics, and continuous processing is growing. So, while there is uncertainty, there’s also a wave of innovation in both product design and manufacturing technology happening in parallel.

EV: In our view, a biologic is a biologic: we genetically engineer and transfect cells to produce the molecule, whether it’s a mAb, a bispecific, or a fusion protein. Where we draw the line is with cell and gene therapies, which involve DNA and present contamination risks requiring completely separate infrastructure. Similarly, ADCs bring high-potency APIs into play. We don’t currently handle cytotoxics, so while larger CDMOs can offer integrated antibody, linker, and conjugation services, we can only support the biologic side. But ADC developers increasingly want a one-stop shop, so that is an area we are considering.

KB: It’s still valuable to have a flexible baseline platform, but you also need to be realistic about limits. Collaboration and specialization will be essential. One company might focus on biologics, another on conjugation, and together they deliver a complete solution. It’s not always feasible — or wise — for a single CDMO to try to do everything.

KB: I think parts of the process can still be standardized. Filters, tubing, and certain chromatography resins can cover most Fc-based molecules without the need to maintain massive inventories. Only a few unit operations really need to be customized for each molecule.

NH: Scale matters, too. Large stainless-steel plants are less adaptable to new molecules; you can’t just bolt on another chromatography step. We’re also seeing more poorly expressing molecules now compared to the days when everyone expected 6–7 g/L titers. Facilities that can’t flex to handle low-yield processes will struggle.

EV: For us, it often comes down to client agreements. Where possible, we treat very expensive resins and components as pass-through costs, so the client bears them directly. That way we avoid carrying heavy inventory on our own books. Of course, some clients push back, but we try to reserve our inventory spend for lower-cost, routine components. That said, the advantage of us being part of the broader HIPRA group which has a fully integrated E2E supply chain for our own products means that we can get preferred procurement agreements that shield us from cost impacts most CDMOs carry with heavy inventories, and therefore our focus is how we develop processes that meet client needs and take advantage of our infrastructure.

GS: Standard protein expression and binding processes are well understood for mAbs, and planning for consumables is straightforward. Bispecifics make things somewhat more complex, but not radically so; it’s usually just swapping binding domains. Where things get more complicated is with receptor fusions or constructs involving multiple linkers, like what we’re developing at Fab. In those cases, optimization becomes critical. If a CDMO is proactive — catching expression or stability issues early and working closely with the client — they can accelerate development. If not, misalignment over even small details, like whether to add protease inhibitors, can cause weeks of delay. The quality of the CDMO–client relationship at the lab level is often what makes the difference.

EV: There’s never a “good” time to launch a business — there will always be challenges. We’re confident in our decision and believe much of the volatility is more visible in headlines than in day-to-day operations. That may change, of course, but for now, as a relatively small player, we’re not as directly affected by those big market waves. In fact, starting in a period of turmoil may give us stronger foundations for when conditions improve. I remain optimistic that we’ll navigate this one just fine.

NH: From our perspective at Just-Evotec Biologics, we’re focused on supporting companies advancing innovative approaches, particularly highly intensified processes, where we’re seeing rising demand. In that sense, I share Eduard’s view: the volatility is real, but for organizations of our scale, the broader “waves” are much larger than we are. As long as we have strong demand for our specialized expertise, our strategy remains sound.

Michael Torres (MT): An end-to-end CDMO partner is highly attractive, but there are only a handful of players that can truly deliver it at scale. That’s why it’s critical for us to start working with the right partner early in development, before we’re locked in.

Another factor for us is geography. We’re based in Houston, Texas, which benefits from CPRIT — the Cancer Prevention and Research Institute of Texas — a $6 billion state fund that provides substantial non-dilutive grants to companies developing oncology drugs. Last year, we received $3 million, hit all our milestones, and have now applied for a $17 million grant. One of CPRIT’s stipulations is that you spend as much of the funding as possible in-state.

The challenge is that, while there are a few groups in Texas that can handle antibodies, there aren’t CDMOs here with full end-to-end ADC capabilities — linker synthesis, payload production, conjugation, and so on. That’s allowed us to justify outsourcing beyond Texas for now. But if a capable end-to-end ADC CDMO were to establish operations in Texas, it would be very hard for us not to use them, given CPRIT’s requirements. I think that represents a real opportunity for CDMOs — Texas is fertile ground for emerging companies, but they need partners who can support more than just antibodies.

MT: On the CRO side, I’ve seen cases where we brought a screening paradigm to a partner, only to see a very similar offering appear for new customers shortly after. That could happen anywhere, though — it’s not unique to China. With CDMOs like WuXi, it’s a mixed picture. On one hand, it’s uncomfortable that they offer their own linker–payload technologies after working with clients. On the other hand, they serve such large numbers of major clients that it would be self-defeating to risk reputational damage.

GS: I’ve had similar reflections. In theory, IP is always transmissible — once knowledge exists in someone’s head, you can’t erase it. We considered a partnership with a Chinese CRO/CDMO tied to a major investor, and the market environment nearly pushed us to do it. Ultimately, we went with a Western partner. What I’ve observed is that Chinese companies tend to focus less on breakthrough innovation and more on optimization — incremental advances that can quickly generate revenue. Look at atopic dermatitis: multiple bispecifics on similar targets have been picked up by pharma but with limited novelty. For that reason, I’m less worried today than I used to be. The risk isn’t so much that they’ll steal a transformative idea, but that they’ll flood the market with optimized “fast follows.”

MT: I’ve seen deals fall apart in diligence when IP or regulatory gaps surface. For example, some ADC programs from China use non-GMP “homebrew” enzymes for conjugation. Even if they generate patient data, that won’t hold up with regulators. So, while assets may look interesting on paper, development paths often collapse because of quality issues. Pharma takes this seriously — if diligence uncovers IP conflicts, the deal dies. China produces volume, but there are still major barriers when it comes to true innovation and regulatory credibility.

KB: It goes both ways. Some clients are attracted to China because of the breadth of service offerings, but others are pulling back due to political uncertainty, especially around the Biosecure Act. We’re adjusting constantly; how programs were managed last month can look very different this month. Western CDMOs, including ours, are actively looking at collaborations to expand services, particularly in areas like ADCs, so we can offer integrated solutions that compete with Chinese providers.

EV: For us, Chinese CDMOs are absolutely a reality. Even Spanish biotechs in our backyard are engaging with them. Ten or 15 years ago, technical competence might have been a concern, but not anymore — they’re excellent scientifically and extremely cost effective. We can compete by emphasizing EU GMP standards, regulatory certainty, and freedom from customs or geopolitical risk. We may not always beat their price, but we can get close enough that clients value the added certainty.

NH: The technical capability is highly respected, and clients give very positive feedback. But concerns about the Biosecure Act are driving some to seek alternatives outside China. Another factor we’re hearing more about is sustainability: carbon budgets, travel distances, and the ease of visiting a site all influence decisions now. Proximity is becoming part of the CDMO selection criteria.

MT: For early-stage companies like ours, cost is always important, but so is timeline. If a CDMO can shorten the path to material by even a few months, that’s worth paying 10–20% more. You’re not going to shrink a 12- to 15-month process to 8 months overnight, but if you can deliver faster because you’re closer or more agile, that’s a major advantage over a cheaper but slower provider.

EV: “Strategic partnership” is the holy grail everyone talks about, but in my 15 years I’ve never seen a truly balanced one. Even some of the big, publicized co-investments between large CDMOs and big pharma look less harmonious behind the scenes. We’ve tried co-investments ourselves, but smaller biotechs rarely want to co-own equipment at a CDMO. They’d rather pay over time than take on that burden. So, while partnerships make good headlines, I’m not sure they often work in practice.

GS: From the small company side, I’ve seen CDMOs offer flexibility — adjusting payment timing, giving deferrals, or even small cost-sharing. Earlier this year, there seemed to be more leverage for cell and gene therapy developers than for protein drugs, mainly because post-COVID investments left capacity underutilized. That gave smaller companies a stronger negotiating position in that space.

NH: We have entered into large-scale agreements — for example, Sandoz secured a substantial share of our capacity and may even acquire one of our facilities. Deals like that can make sense if both sides see clear value, but they’re rare. From our perspective, we’re also interested in partnerships that expand the use of our continuous manufacturing platform without requiring us to endlessly build new facilities.

MT: From the innovator side, the biggest factor is timelines. If a CDMO says they can’t fit us in for nine months, that’s a non-starter. Flexibility on scheduling, invoicing, or payment mapping can be a lifesaver for startups. I’ve also seen creative models, like leveraging a CDMO’s existing platform in a way that extends their capacity to more programs. We once negotiated a project discount that was applied entirely in year one — critical for extending our runway until we hit a major data milestone. Flexibility like that can really differentiate a CDMO for early-stage companies.

EV: Payment flexibility often depends on relative size. A CDMO can’t easily offer favorable terms to big pharma, but many CDMOs have stronger balance sheets than small biotechs. In those cases, offering deferrals or extended terms can make deals happen.

NH: At Evotec, we use AI and machine learning for in silico developability assessments, and that works extremely well. That’s an application with clear value. On the manufacturing side, I think the potential is huge, but the reality is a bit overhyped right now. We’re not yet at the stage where AI is delivering major operational impact.

EV: Many of the useful applications we see are fairly generic: things like deviation investigations, report drafting, or quality documentation. Those benefit anyone running a pharma plant, not just CDMOs. Where AI might be more specific to us is in business development, but honestly, we’ve been disappointed there, as tools like Copilot or ChatGPT often return very inaccurate information about target portfolios and contacts. Potentially, AI innovators and discovery CROs could partner with CDMOs to ensure that manufacturability is part of their platform and that they have preferred CDMOs lined up to ensure quick, efficient tech transfer of new molecules, including rapid scale up and proving runs to demonstrate the AI models produced what was needed for manufacturing.

KB: I think AI has promise in early process development — in silico work, documentation, reporting — where there’s still flexibility. Once you move into GMP manufacturing, the bar is much higher. We’re not there yet, and building reliable in-house tools requires significant investment and expertise. Adoption will increase over time, but it’s gradual.

GS: AI has been most effective earlier in the R&D and clinical chain. It’s already shown value in analyzing patient data, and now it’s starting to shape indication prioritization for molecules, which can save enormous resources if a drug finds the right use early. But when it comes to what companies like Fab Biopharma do — designing and optimizing molecules — AI still falls short. Decisions regarding target selection, binding affinities, druggable characteristics, potential adverse pathways are still best left to experienced scientists weighing multiple factors.

KB: The increasing complexity of projects means we need more specialized people in process development — scientists with advanced training who can handle complex development settings. At AGC, we collaborate with universities to build programs that align with industry needs and give us access to new graduates. Competition for talent is intense here in Denmark as well, but strong partnerships with universities help create a pipeline.

GS: From a U.S. perspective, especially in Boston, the situation looks a bit different right now. Substantial layoffs in biotech and pharma have released a lot of experienced R&D talent into the market. Professional recruiters tell me there’s more availability, and at more affordable compensation levels, than two or three years ago. You can even see it on LinkedIn: companies saying, we just had to let go of 120 great people, please reach out if you need them. The dynamic may be shifting in ways that make it a little easier to find qualified people, at least in the short term.

EV: A couple of our clients are running trials in Australia, and what’s interesting is that many of them are very small companies without much experience in import/export procedures for clinical materials. The traditional model is Ex Works — once the drug leaves the CDMO, it’s the client’s responsibility — but in these cases, they’ve been asking us to take on more of that logistics role. Because we already have a proprietary portfolio in Australia, we’re quite familiar with the regulatory and customs procedures, so we can provide that support, but it’s not something CDMOs typically do.

GS: One of the most valuable things for a small company is getting the ball rolling early, especially around expression and optimization. Those are huge gating items, and having a CDMO partner who can help accelerate that work is critical. It makes a real difference in how quickly you can move forward.

KB: We’re seeing more interest in very early manufacturability assessments —asking “is this protein even going to work at scale before we commit?” That’s something CDMOs are starting to package as a standalone service, and it lowers the barrier for small companies to engage earlier.

EV: The flip side is sometimes heartbreaking. You meet an early-stage biotech with a benchtop process that you know simply won’t scale. In those cases, the manufacturability study only confirms that it’s not viable. Of course, processes can be redeveloped, but if that’s all they have, it’s a tough message: what they thought was a drug is, at least for now, nothing.

MT: We’re also seeing more interest in immunogenicity and developability testing. Even modest assays — $10K or $15K — can be really valuable when you’re heading into a fundraising round. Investors want confidence that you’ve thought about long-term liabilities like deamination or other liabilities that could kill a program later. Some CDMOs handle that better than others. In silico tools are useful but limited. Getting real data on immunogenicity and manufacturability early helps companies both scientifically and in fundraising.

MT: They don’t guarantee a yes, of course, but they absolutely help keep the process moving. They demonstrate sophistication and reduce uncertainty for investors, which matters a lot.

NH: We combine in silico with biophysical characterization, which clients really value. Sometimes a candidate just won’t make it, but often companies have several variants with subtle efficacy differences. Manufacturability assessments can reveal bigger differences in stability or yield, which can be decisive in selecting the right one.

MT: In ADCs, it’s not just about expression — you want to know how variants perform after conjugation. If the same group making the protein can also handle basic conjugation and cell-based assays, you save months of shipping samples between CROs, CDMOs, and different labs. The more you can integrate those steps early, even at small scale, the faster and more confidently you can lock in a lead candidate.

GS: I think FDA policy will continue to shift in ways that could put more focus on large-prevalence diseases than on rare diseases. Not to diminish the value of rare-disease work, but the health economics argument is becoming harder to ignore. On the investment side, people are watching U.S. rate cuts very closely. After years of disappointment, there’s a real sense that deal flow will surge in Q4. If that happens, it could be a rising tide for the entire sector.

MT: The next few years are going to be defined by increasingly complex biologics and modalities. ADCs are finally having their moment, and we’re seeing expansion beyond oncology into areas like inflammation and even cardiometabolic disease. What excites me are combinations: different payloads, different mechanisms of action, different formats. These concepts will demand sophisticated CDMO support. On top of that, advances like subcutaneous delivery for antibodies could make these therapies far more accessible. That’s an area with real potential.

GS: To connect that with my earlier point — chronic, multifactorial diseases may actually be especially well-suited to these more complex, multi-targeting approaches. I see those trends reinforcing each other.

NH: For us, the biggest driver is continuous manufacturing. More complex biologics actually fit the platform really well — shorter residence times, higher productivity, smaller, more efficient facilities. We’re seeing strong interest from big pharma, many of whom have their own continuous programs but are now looking to externalize. It’s a space we expect to grow rapidly.

KB: Continuous is going to move forward quickly, and it will be fascinating to see how far and how fast. I’m also very interested in how AI and automation evolve in parallel. There’s still a lot of work to do before they’re truly transformative in GMP, but I think we’ll see meaningful progress in the years ahead.

These perspectives feed into the broader findings of Nice Insight’s 2026 State of the Industry report, which contextualizes biologics alongside small molecules, advanced therapies, and drug product trends.