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Life sciences is on the cusp of a new era of innovation. The convergence of breakthrough technologies, widespread access to data, and deeper insights into complex biological systems is revolutionizing how the industry approaches R&D. For instance, venture capital funding for machine-learning-enabled drug discovery surged more than sevenfold from 2019 to 2022, according to McKinsey analysis. Interest in innovative modalities such as antibody–drug conjugates (ADCs) remains strong, with the top…

The competition among biopharmaceutical companies for externally sourced assets is heating up. Despite recent successes delivering innovative therapies at a faster pace and achieving solid returns for shareholders, demand persists across a range of unmet needs. And yet, companies are increasingly pursuing the same disease areas and targets. This “herding” behavior makes it less likely that any company can outperform. Further, the breadth and complexity of all available targets and…

Innovation is flourishing in the biopharmaceutical industry. Over the past decade, the volume of Phase I candidates in the drug development pipeline has grown by 60 percent, promising potential breakthroughs in treating a wide range of diseases. At the same time, there has been a noticeable shift across the industry toward outsourcing R&D activities. Driven by the need for flexibility, specialized expertise, and wider global reach, pharmaceutical organizations have engaged…

In this episode of McKinsey on Building Products, McKinsey partner Rikki Singh sits down with Yuhki Yamashita, chief product officer at Figma, a company that provides collaborative online design tools. With a career in product and design at companies of all sizes, Yamashita has an approach to product development that centers on generating “user love.” During their conversation, Singh and Yamashita discuss building and tapping into communities to make better…

Power politics. Wars. Trade battles. Climate change. Pandemics. Geopolitics is increasingly influencing how businesses operate, pushing senior leaders to look well beyond the walls of the corner office. Council on Foreign Relations president Michael Froman has spent his career bridging these worlds, from senior positions in the administrations of Presidents Bill Clinton and Barack Obama to executive roles at Citigroup and Mastercard and serving on the board of The Walt…

Since 2019, the United States healthcare industry has experienced substantial financial pressure, with industry EBITDA as a proportion of the National Health Expenditure declining by an estimated 150 basis points (Exhibit 1). The decline has hit payers and providers particularly hard—payers’ estimated margins in 2024 could be at their lowest in a decade. Inflationary pressures have not yet been fully absorbed within the healthcare system, and providers continue to face…

Digital payments in the B2B arena have lagged far behind consumer e-commerce, even with the big shift to digital brought about by the COVID-19 pandemic. The vast majority of B2B payments occur between small and midsize businesses (SMBs), which are the target market for the B2B financial operations platform BILL. The company seeks to streamline and simplify SMBs’ financial operations, including accounts payable, receivables, and expense management. In addition, BILL…

Back in July 2023, researchers at the McKinsey Global Institute estimated that gen AI could unlock between $60 billion and $110 billion a year in economic value for the pharmaceutical and medical products industries, boosting productivity and innovation in domains across the industry’s value chain—from the way new treatments are discovered to how they are marketed and administered by physicians. Six months later, McKinsey experts dug deeper into those numbers,…

Life science companies have traditionally kept patients and consumers at arm’s length. Pharmaceutical, biotech, and medtech companies have viewed providers and payers, not patients, as their key customers and have rarely interacted with them as end customers. This approach has had to evolve in recent years. Consumers are now accustomed to apps and smartwatches that provide a 360-degree view of their well-being, and they engage with direct-to-consumer brands such as…

Despite dedicated efforts across the biopharmaceutical industry to streamline clinical development, clinical trials remain complex, costly, and time-consuming. These challenges are compounded by an increasingly competitive and crowded trial landscape. Yet accelerating clinical development remains crucial—not just for patients but for the enterprise. A 12-month reduction in the clinical development timeline can add more than $400 million in net present value (NPV) across a sponsor’s portfolio while delivering immeasurable benefits to…

We are in a moment of vast potential in life sciences—of diversified investments, breakthrough discoveries, and rapid expansion of therapeutics into new modalities and platforms. And AI is increasingly enabling data-driven decision-making across the product life cycle, from AI-supported drug candidate selection to real-time clinical trial site monitoring. However, overall industry productivity—whether measured in terms of speed, cost-effectiveness, or ROI—has been stagnant for decades. While there are undoubtedly multiple causes…

Amid growing complexities, escalating costs, and a heightened demand for innovative therapies, biopharmaceutical R&D organizations are under pressure to find ways to boost their productivity. Preclinical studies are increasingly using diverse assays, complex “omics” data, and humanized models to evaluate drug candidates. Clinical trials are adopting new trial designs and incorporating personalized-medicine approaches and even more end points. In this challenging environment, pharma leaders are turning to advanced technologies such…

The journey to bring new medicines to market remains long and costly, despite recent technological and process improvements in biopharma R&D. It takes about a decade, on average, from candidate nomination to launch, and study and application costs for investigational new drugs (INDs) have soared in recent years by 20–30 percent.These challenges stem partly from the growing complexity of research and early development, fueled by an explosion of data and…

Brazilian farmers have endured multiple challenges since 2023, including crop failures, commodity price declines, and intensified droughts, rain, and wildfires. The result is greater caution, with two-thirds of producers expecting profits to remain stable or decrease in 2024, according to a McKinsey survey. Rising input costs were Brazilian farmers’ main concern when surveyed two years ago, but now extreme weather events are seen as the biggest threat. And to navigate…