Authors: John Doernberg John Farley
The life sciences industry is powered by a culture of mission-driven collaboration. Teams are united by shared goals of advancing scientific discovery, improving patient outcomes and delivering innovations that can transform lives. The broader life sciences ecosystem has many partners — academia, clinical sites, contract research organizations (CROs), contract manufacturing organizations (CMOs), contract development and manufacturing organizations (CDMOs), technology vendors and regulators. This environment encourages the sharing of ideas, cooperative problem-solving and eagerness to embrace new technologies. Collaboration accelerates scientific breakthroughs. Organizational resilience and agility are also essential. The ability to adapt quickly to regulatory scrutiny, market shifts and technological advancements enables businesses to remain competitive and responsive in a dynamic landscape.
The practices that drive success also carry cybersecurity risks. The open, collaborative nature of life sciences means sensitive data — proprietary research, clinical trial results and patient information — is frequently shared across organizational and geographic boundaries. Rapid adoption of new technologies and integration of legacy systems can create vulnerabilities, while broad access privileges and a culture of trust may inadvertently expose organizations to insider threats and accidental data leaks. The high value of intellectual property and patient data makes life sciences businesses prime targets for cybercriminals, nation-states and industrial espionage.
Explore some of the most significant risks faced by life sciences businesses.
Information security risks
Theft of patient health information: Many life sciences companies have access to patient health information (PHI), including sensitive matters such as test results, diagnoses, genetic information and clinical histories. Attackers target PHI because it retains value longer than financial data and can be used for medical fraud or extortion long after it is stolen. HHS' Office of Civil Rights (OCR) has obtained many substantial settlements — in the millions of dollars — from organizations following breaches of PHI. The OCR's post-breach settlements have led to charges that the organizations had not been doing enough to safeguard PHI before the breach was investigated.
Legacy systems risk: It's common for life sciences companies to combine modern and legacy IT systems, often because certain legacy systems perform highly specialized and critical functions. Legacy systems often don't receive cybersecurity updates promptly (if at all) and may introduce vulnerabilities to a network when integrated with more current systems.
Misconfigured cloud environments: Many life sciences businesses store all their sensitive data on cloud-based platforms. They may believe that keeping their information "in the cloud" largely insulates them from information security risks, yet cloud misconfigurations are surprisingly common and introduce vulnerabilities that are often exploited by attackers.
Compliance risks
Data privacy regulations: Life sciences companies often collect, use and transmit sensitive data across multiple jurisdictions. Cross-border data flows are often essential for global clinical trials, centralized analytics or regulatory filings. Different regulatory standards for the handling of sensitive personal data make compliance challenging — and compliance failures can lead to costly fines and penalties.
Collection or use of biometric or genetic information: Many life sciences companies may collect biometric information such as fingerprints, retinal scans, facial geometry, voiceprints or genetic data. A growing number of laws impose strict requirements on notice, consent, use, retention and destruction of biometric data. Failing to obtain written consent before collecting biometric information can trigger regulatory action or, under some of these laws, class action lawsuits.
Web tracking and session replay technologies: Many life sciences companies use tools like cookies, session replay scripts and other tracking technologies to understand user behavior and enhance user experience. These tools may capture detailed personal information, including mouse movements, typed inputs and sensitive health queries. Those uses carry significant risk.1 Plaintiffs' lawyers have filed a number of class-action lawsuits asserting that the use of these technologies trigger wiretapping laws, most often the California Privacy Act.1 In the EU, the GDPR requires explicit opt-in consent for cookies and trackers, and regulators have fined companies that rely on pre-checked boxes to secure user consent.
Ransomware/business interruption risks
High-value data: Life sciences companies have access to a lot of highly sensitive data — about patients, drug and device development, clinical trials, proprietary manufacturing processes, regulatory submissions and much more. A ransomware or other malicious attack can cause major setbacks to drug and device development timelines and cascading legal and financial consequences for the many businesses dependent on them.
Disruption of operations: Many life sciences manufacturers rely on interconnected operational technology (OT) and manufacturing execution systems (MES) to ensure batch consistency, compliance with quality standards and timely production. A ransomware attack that encrypts these systems can halt production lines, corrupt quality control records and force the disposal of in-process materials. Even partial downtime can jeopardize delivery of time-sensitive products.
A cyberattack on a contract manufacturing organization (CMO) or logistics provider can cause cascading delays in drug manufacturing, packaging or distribution — particularly for products with short shelf lives or cold chain requirements. Companies that rely heavily on a single-source supplier for specialized components or packaging materials are especially vulnerable to cyber incidents affecting the critical supplier.
Vendor/supply chain risks
Impact of supply chain incidents: Life sciences companies depend on a network of subcontractors, third-party laboratories, academic collaborators and data processors to perform essential functions. These partners often have access to sensitive information such as clinical trial data, patient identifiers or proprietary algorithms, making them attractive targets for cyber attackers. The level of cybersecurity among these partners can vary significantly. If a partner experiences a data breach, the primary sponsor can be held responsible for the failure of its downstream partners to implement reasonable privacy safeguards. If a downstream partner does incur a breach, contractual agreements may not provide protocols for forensic investigations, notifications or communications in the event of a cyber incident, limiting the life sciences company's ability to understand what data was accessed or stolen during the breach.
Misalignment between rights and obligations: There are often wide discrepancies between a company's rights and obligations in the event of a network outage — whether on its network or the networks of its outsourced providers — arising under various sources:
- Disclosure obligations may conflict with the availability and extent of information received from vendors responsible for a breach
- Contractual reporting, indemnification and other requirements and limitations in contracts with customers
- Indemnification rights and limitations in contracts with outsourced IT providers and other vendors and suppliers
- Rights and obligations under various potentially applicable insurance policies may be inconsistent across policies
Artificial intelligence risks
Risk from inaccurate or opaque AI-generated information: AI is increasingly used across core elements of life sciences businesses. When AI outputs are incorrect — whether due to training data, model drift, or adversarial inputs — the errors may be difficult to detect or trace, and the consequences of the errors can be severe.
Risk from AI training datasets: Pharmaceutical and biotechnology companies, particularly those engaged in AI-driven drug discovery, may develop proprietary training datasets using information from several sources. The compromise of training data derived from patient-level or identifiable clinical trial information may require notification under data privacy laws and this could cause thorny regulatory compliance problems if it's difficult to pinpoint the affected individuals.
Use of AI by threat actors to improve attacks: Every business is under threat from adversaries using AI to find and exploit vulnerabilities quickly, quietly and effectively. AI also helps attackers craft more convincing and targeted cyberattacks. They can generate phishing emails that mimic internal communications in tone and formatting, convincing employees that the emails are legitimate.
Oversight and governance gaps in AI lifecycle management: Firms may feel pressured to integrate AI technologies without first establishing solid enterprise-wide governance structures for responsible development, deployment and monitoring. Key activities such as model validation, performance benchmarking and data labeling may be inadequately documented or inconsistent across use cases. Post-deployment monitoring for data drift may be sporadic or limited, especially for non-clinical AI models used in operations, marketing or supply chain optimization. In addition, AI tools licensed from third parties may be deployed without adequate security review, with the assumption that third-party certifications or disclaimers are sufficient to mitigate risk.
Employee/social engineering risks
Phishing and credential theft targeting research and development, and regulatory personnel: Pharmaceutical developers, biotechnology and medical device companies, CROs and CMOs/CMDOs often have employees with access to proprietary research, regulatory filings and clinical trial data — making them high-value phishing targets. AI technology has enabled attackers to craft very realistic and convincing phishing campaigns that persuade recipients to compromise their credentials into spoofed portals or download malware. Once a network is compromised, attackers may gain access to sensitive files or cloud environments where draft clinical protocols, investigator communications or investigational new drug (IND)/new drug application (NDA) submissions are stored. Attacks may coincide with major product launches or regulatory milestones, increasing the likelihood of employee action without verification due to time pressure.
Insider threats from departing or overworked employees: Organizations in high-pressure sectors like diagnostics, clinical research or regulatory affairs may experience burnout, frequent turnover or restructuring — factors that increase the risk of mistakes. Inadequate offboarding procedures — such as failure to disable VPN credentials, cloud access or shared folder permissions — can allow ex-employees to retain access for sustained periods after they leave the organization. Contract employees, especially in labs or IT support roles, may have access to sensitive systems without being subject to the same background checks or training as full-time staff. In addition, firms that rely on external collaborators or academic partnerships may extend credentials to non-employees without adequate monitoring, increasing the risk of credential sharing or misuse.
Exposure from poorly trained or overprivileged users: Companies with small or fast-growing IT teams, particularly startups and research-heavy organizations, often fail to apply least-privilege principles across departments. For example, employees may be granted access to entire shared drives, cloud storage buckets or data repositories beyond the degree of access needed for them to do their jobs. A compromise of their credentials can lead to wide-ranging infiltration of the company's network.
Operational technology risks
Vulnerabilities in manufacturing systems: Pharmaceutical and medical device manufacturers often rely on operational technology (OT) systems to manage automated production lines, monitor batch quality and maintain regulatory compliance. These systems may run on legacy software or custom firmware that is difficult to patch without disrupting production, especially in continuous or multi-shift manufacturing environments. A cyberattack on these systems could cause problems such as the unauthorized alteration of batch parameters, disabled alarms or interference with temperature and humidity controls — compromising product safety or rendering lots unusable. Some manufacturers permit vendor remote access to OT environments for support or calibration purposes. Attackers that compromise a vendor's credentials can gain a foothold in the manufacturer's network — and may also gain access to the manufacturer's IT network if it's insufficiently segregated from the OT network.
Acquisition/integration risks
Inherited cybersecurity vulnerabilities from acquired entities: Companies often use acquisitions to expand pipelines, enter new therapeutic areas or internalize critical capabilities. Acquirers may find themselves managing a patchwork of identity and access systems, as well as disparate security practices and protocols. Acquirers may struggle to inventory digital assets involved in the target's operations. Post-acquisition IT harmonization may be delayed or uneven, resulting in prolonged periods where users, infrastructure or data repositories are only loosely governed and inconsistently monitored.
Acquisitions can also affect post-acquisition cyber insurance placements. The security practices of the target company may weaken the combined company's overall risk profile, or the buyer's lack of detailed knowledge about the security practices of the company it bought may constrain it from providing greater assurances on its post-acquisition cyber insurance application. Either of those scenarios may lead to less favorable pricing and coverage on subsequent cyber insurance placements.
Cyber insurance issues
Effective cyber risk management by a life sciences company requires striking — and continuously recalibrating — the right balance between implementing the strongest possible cybersecurity controls throughout the enterprise, and preserving the innovation, collaboration and sense of urgency central to its mission. Cyber insurance policies can support the life sciences sector by helping businesses transfer cyber risks for cybersecurity incidents. Many stand-alone cyber policies provide access to crisis services, including breach coaches, IT forensics investigators and several other breach response experts. Cyber insurance pricing and coverage remain favorable for buyers with strong security controls and claim histories, but outcomes can vary considerably based on underwriters' assessments of a company's perceived vulnerabilities.
Many life sciences companies face cyber risks that put cyber underwriters on high alert: highly valuable data, reliance on uninterrupted access to supply chain and other partners, and dependence on the cybersecurity practices of third parties with access to their data and network. A life sciences cyber insurance buyer and its broker need to work closely with cyber insurers to help them understand why its cyber risk management choices were appropriate to address its risks under particular circumstances. Underwriters are unlikely to achieve that understanding from simply reading a company's cyber insurance application, especially — as is usually the case for a life sciences company seeking to preserve the culture that fuels its mission — if the company's security controls might not be considered the "optimal" choices on an underwriter's checklist.
Gallagher's Cyber practice team works closely with our life sciences clients. We deeply understand the importance of providing sustained and diligent attention throughout the year to help you assess and mitigate your cybersecurity exposures. We know how to help you work with the different stakeholders and constituencies affected by the cybersecurity process and its outcome. We also help you effectively communicate your current strengths and plans for improvement to Cyber insurers.
