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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.