From AI to Smart Factories: How Pharma Is Preparing for 2026

PharmTech connected recently with Manish Garg, PMP, PSM, the newest member of our Editorial Advisory Board and principal engineer and associate director, Hikma Pharmaceuticals to look back and 2025 and ahead into 2026. Garg reflects on the forces that most reshaped the industry in 2025, from AI-driven R&D to the rise of personalized and high-value therapies. The discussion explores how companies are rethinking supply chains, manufacturing strategies, and digital capabilities to build resilience amid geopolitical and economic uncertainty. Looking ahead, the Garg also examines what will drive innovation in 2026 and how drug manufacturers should prepare their operations for the next phase of competition and growth.

PharmTech: What impacted the pharmaceutical industry the most in 2025?

Garg: The most impactful trends were the widespread adoption of AI in drug discovery (R&D), manufacturing supply chain and operation efficiency, the rise of personalized medicine, and the shift toward complex, high-value therapies. AI dramatically cuts costs and timelines for identifying new drug candidates by efficiently analyzing vast data, a significant improvement over traditional trial-and-error methods. Personalized medicine, leveraging genetic data to tailor treatments (especially in oncology), gained traction, offering more effective outcomes and transforming R&D strategies to focus on niche, high-value therapies.

How is the sector reimagining supply chains to protect against various global disruptions?

The sector is moving away from purely cost-efficient, just-in-time models toward building resilience through diversification and regionalization. Strategies include multi-regional sourcing to reduce dependence on single-country suppliers (e.g., beyond "China+1") and exploring nearshoring or reshoring manufacturing for critical APIs. Companies are also using advanced data analytics and strategic inventory management to anticipate shortages and minimize the impact of sudden disruptions or new tariffs. I noticed significant investment in expanding US manufacturing footprints, which supplies most of our US sales and positions companies well to mitigate the impact of potential US tariffs and geopolitical trade tensions.

What roles do AI and digital technologies play in accelerating drug discovery and manufacturing efficiency?

AI and digital technologies accelerate drug discovery by predicting molecular interactions and optimizing clinical trial design, while in manufacturing, they enable predictive maintenance and real-time process monitoring. Unresolved barriers to full adoption include issues with the quality and fragmentation of available data, the "black box" nature and lack of interpretability of some AI models for regulatory approval, and a significant shortage of professionals with combined AI and pharmaceutical domain expertise. Other significant barriers to full adoption include data silos and high upfront implementation costs.

How does the industry plan to maintain competitive advantage as margin pressures intensify?

The industry plans to maintain advantage by strategically focusing on high-barrier-to-entry products, such as complex injectables and biosimilars, and streamlining operations through enhanced R&D efficiency. Companies are also leveraging AI to boost R&D efficiency, enabling faster identification of novel, profitable drug candidates to fill pipelines depleted by patent expirations. Strategic mergers and acquisitions (M&As) are also being used to quickly acquire innovative pipelines and consolidate market share. At Hikma, we are investing significantly in our pipeline of differentiated products (e.g., respiratory and nasal sprays) and leveraging our strong presence in the MENA region to offset price erosion in the US generics market. Strategic M&A also plays a key role in acquiring new capabilities and expanding market share.

What will drive innovation and drug development in 2026?

In 2026, the primary drivers will be the advancement of generative AI for de novo drug design and the use of real-world evidence (RWE) in regulatory submissions. Generative AI will enable the design of more complex molecules faster, while RWE gathered from digital health technologies will streamline clinical trials and help prove product value in real-world settings. This convergence demands that we have robust digital foundations to capture, secure, and analyze this data effectively, a key area of focus for my IT and data teams.

How should drug manufacturers plan for facility, equipment, or other upgrades in 2026?

Drug manufacturers should plan for significant investment in upgrading existing facilities to become "smart factories," incorporating Internet of Things (IoT) sensors, robotics, and advanced automation to achieve Industry 4.0 standards. This includes integrating IoT sensors for real-time monitoring, advanced robotics, and cloud computing infrastructure to handle large data volumes. These upgrades are essential for improving agility, enabling the production of diverse product portfolios (from generics to complex biosimilars), and ensuring the robust data integrity required for enhanced quality control and regulatory compliance. Such investments are critical for long-term competitiveness and resilience against future operational challenges.