What are some of the biggest changes CMOs and their partners will see in 2025? We discuss developments in Annex 1 compliance, the BioSecure Act, AI drug development, supply chain challenges amid new tariffs, and pandemic preparedness strategies.

1. Annex 1 Continues to Drive Sterile Manufacturing

Annex 1 represents the updated regulatory standard for sterile medical products sold in the EU, which focuses best practices for aseptic and terminal sterilization through equipment use, contamination control strategies, personnel training, environmental monitoring, and other techniques. Even outside the EU, Annex 1’s guidelines function as globally recognized benchmarks in the industry. Companies had until August 2024 to fully comply with the new regulation.

Going forward, Annex 1 will continue to influence decision-making, especially when manufacturers install new equipment or expand their facilities. Implementing the detailed guidance on the use of RABS (Restricted Access Barrier Systems) and isolator technology will keep the industry moving toward best practices in sterility. Partnering with a CMO experienced with following Annex 1 guidelines can help ensure full compliance and regulatory confidence for any medical products sold in EU markets.

2. BioSecure Act Still Uncertain

After congress removed the BioSecure Act from the 2025 US defense bill in December 2024, its future remains uncertain. The incoming White House administration may or may not choose to revive the bill. The BioSecure Act would prevent US companies receiving federal funding from working with several Chinese life science companies due to national security concerns. Some opponents of the act are concerned cutting off trade with China-based pharma companies could increase overall costs and lengthen clinical trial timelines.

With the future of the BioSecure Act in question, pharmaceutical companies are keeping a close eye on the bill and what it might mean for their operations. Many are drafting plans to minimize the potential disruption and identify alternative suppliers and manufacturers. Pharmaceutical companies may need to prepare to pivot from contracting with Chinese businesses toward other partnerships should the new administration bring the issue back into play.

3. Manufacturers Can Help Turn AI Drug Discoveries into Results

More and more researchers are leveraging AI to predict molecular structures and chemical interactions in order to explore new therapeutic options. The tool has been especially helpful in reducing time for small molecule and biologics drug discovery.¹ Improved algorithms and access to larger data sets are helping AI models improve their ability to quickly find real-world solutions.

A trusted CMO partner can help turn drug candidates into clinical trial batches using their expertise in formulation development. The COVID vaccine’s success helped launch RNA therapeutics into the mainstream, and innovators have been successful in the past few years using small molecule and biologic drugs to target a broad range of disease states. With the influx of new small molecule therapeutics and biologics from AI discovery entering the pipeline, CMOs with experience in producing those modalities will be at an advantage.

4. Evaluating Supply Chain Strength Ahead of Proposed Tariffs

As of the time of this post in early January 2025, the administration says it plans to levy a 25% tariff on all goods from Canada and Mexico and a 10% tariff on goods from China.² Other countries could be next, including Brazil, India, and Russia. While tariffs during the 2016-2020 administration had a small effect on the pharma industry overall, the newly proposed tariffs would include imported raw materials and APIs used in American drug manufacturing.

Like with the proposed BioSecure Act, pharmaceutical companies are planning to approach potential tariffs by monitoring the evolving political landscape and turning toward onshoring and nearshoring operations. Prioritizing supply chain diversity and building redundancy options will help prevent stockouts and disruption to patient supply.

5. Pandemic Preparedness Remains Critical

Researchers estimate that the COVID-19 vaccines likely saved the lives of over 14 million patients around the world during its first year of public availability.³ To protect patient supply of vital vaccines and therapeutics in the case of a public health emergency, both the government and pharmaceutical companies have prioritized securing access to a range of production locations in onshore and near-shore locations.

A strong CMO conducts risk assessments, employs predictive analytics, and keeps a safety stock of critical materials to help protect their supply chain from disruption. Experience with staying on top of evolving regulatory guidelines and adapting production methods is also key in emergency situations. Working with a CMO with proven experience operating under pandemic conditions can help companies and authorities respond with more confidence to the next health crisis.