Listen to this article

Scientific breakthroughs capture headlines, yet breakthroughs benefit from operating models capable of sustaining them.

New Jersey’s life sciences industry offers many such examples of successful operating models. The state’s biopharma sector contributes approximately 7.8% of the state’s economy, as it adds $121 billion to New Jersey’s GDP.^[i]

The scale is extraordinary. And so are the expectations. Across pharmaceutical, biotech, medtech, and contract development and manufacturing organizations, leaders indicate that a measure of discipline in life sciences is not merely growth; it is whether innovation continues to reach patients at scale and how to fuel it.

Challenges are present, as development costs are at an all-time high.^[ii]  Pipelines, manufacturing, and therapy delivery rest on capital discipline and portfolio rigor. At the same time, there are some bright spots amidst continuing pressures: the returns on pharma research and development (R&D) for the top 20 entities were up by 7% in Deloitte UK’s 16th edition Pharmaceutical Innovation Report (2026), done in collaboration with Deloitte US.

Moving ahead, there are some operational model trends worth watching.

Confident – but not complacent – amid volatility

Deloitte’s 2026 Life Sciences Outlook found that more than 75% of surveyed biopharma and medtech executives express confidence in their own organizations’ financial outlooks, yet only 41% report optimism about the broader global economy.

This optimism gap suggests a nuanced mindset. Leaders tend to believe in their pipelines and capabilities, but they appear ready for volatility.

Regulatory shifts, pricing pressures, and geopolitical uncertainty are among the most frequently cited forces shaping strategy.^[iii] Manufacturing and supply chain risks also rank high on this list.^[iv] In response, organizations  appear to be reassessing how finance, risk, operations, and digital functions intersect with core research and development decisions.

Innovation remains an engine of growth but sustaining that engine increasingly involves alignment across capital allocation and compliance oversight. The data suggests that planning for ecosystem uncertainty could be more critical than ever before and may be reflected by leaders prioritizing controllable operating levers.

Innovation as a managed portfolio

Of course, ecosystem uncertainty is just one management consideration alongside others – such as the increasing complexity and competition in research – that may ultimately impact an individual product launch as well as an organization’s broader, long-term strategy.

As noted above, Deloitte UK’s innovation report shows projected returns on pharmaceutical R&D rising to 7% in 2025, a positive signal amidst years of pressure. The report also shows that the average cost of developing a drug has increased to  $2.7 billion in 2025. This internal rate of return is largely driven by obesity drugs, with broader R&D pressures affecting other therapeutic areas.

In this environment, pipeline decisions cannot be solely scientific determinations. They are enterprise-wide investment choices that can power the potential for future cures.

Organizations appear to be increasingly evaluating programs through a portfolio lens — weighing risk-adjusted returns, time to market, regulatory exposure, and manufacturing scalability in parallel.

This disciplined approach may be visible in deal activity. After a slower start to 2025, life sciences M&A rebounded, with 193 transactions totaling $220 billion by late November and the emphasis has been on targeted, strategically aligned acquisitions rather than broad expansion^[v]. The nuance continues when considering exits: Looking at this from the emerging growth side, life sciences exits were down 7% YoY in 2025 and health tech was up 60%.^[vi]

At the same time, digital transformation adds another layer of complexity. Nearly 78% of surveyed executives expect artificial intelligence (AI) to play a central role in driving major change.^[vii] Yet only a minority report having successfully scaled AI across the enterprise.^[viii]

An implication is that AI may not simply be a technological initiative; it is an operating model opportunity. Governance, validation, data integrity, regulatory alignment, and measurable productivity gains all  involve coordination across functions.

In short, innovation is not becoming less ambitious. It appears to be more focused and integrated.

Strengthening New Jersey’s innovation ecosystem

New Jersey’s ecosystem can benefit from corporate anchors, a skilled manufacturing workforce, and a concentration of industry expertise. Those strengths tend to support scale overall.

The Deloitte UK 2025 report on innovation notes that there is growing reliance on external innovation. As global biopharma increasingly looks outward for early innovation and preclinical assets, this dynamic illustrates an opportunity. In addition to sustaining its strength in established organizations and later-stage assets, New Jersey can continue to nurture earlier-stage innovation through enterprise competitiveness by further connecting academic research, venture capital, corporate partnerships, and manufacturing capabilities as an entrepreneurial community ecosystem that may help ensure that innovation is not only acquired here, but also generated here.

The convergence of capital discipline, digital governance, regulatory complexity, and scientific ambition can reshape how value is created in life sciences. Yet one signal stands out: leaders appear to remain confident in their own organizations even as they acknowledge broader volatility. This seems to reflect deliberate choices — to strengthen balance sheets, stress-test portfolios, modernize manufacturing, and embed risk awareness earlier in decision-making.

For New Jersey, continued leadership will not depend on breakthroughs alone, but on the systems that support them. Scientific progress may inspire hope. Operating excellence can help ensure that hope reaches patients at scale.

^[i] BioNJ Life-Sciences-in-New-Jersey-Prescription-for-Sustained-Leadership.pdf; February 2026, p 5; Based on approximately $120.9 billion total estimated biopharma economic impact and $59 billion direct impact in 2022. “The Economic Impact of the U.S. Biopharmaceutical Industry.”

^[ii] Deloitte, 16^th edition Measuring the return from pharmaceutical innovation, 2026

^[iii] Deloitte, 2026 Life sciences outlook | Deloitte Insights, 2025

^[iv] Ibid.

Deloitte, ^[v] Life Sciences M&A Trends Report 2026 | Deloitte US, 2026

^[vi] Deloitte, Road to Next: Q2 2026 Exit Market, 2026, p 15, Pitchbook Data Inc, U.S. geography, as of Dec 31, 2025

^[vii] Deloitte, 2026 Life sciences outlook | Deloitte Insights

^[viii] Ibid.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

Copyright © 2026 Deloitte Development LLC. All rights reserved