Executive summary

Royalty interests are more widely held than many executives realize. Beyond major pharmaceutical companies, a broad range of organizations possess valuable, often underrecognized, royalty positions. Emerging biotechs may hold royalties from outlicensed products or codevelopment arrangements. Universities and research hospitals often retain the rights to discoveries licensed to commercial partners.

Foundations such as the Cystic Fibrosis Foundation have monetized royalty streams to reinvest in research and patient programs. In addition, aggregators like XOMA and DRI actively acquire and manage diversified portfolios of royalty assets.

However, royalty-related financing remains an often misunderstood source of capital in the biopharmaceutical industry. Once viewed as an expensive last-resort option, nondilutive royalty funding has matured into a strategically flexible instrument that should be considered alongside more traditional equity and debt options.

As the market has matured, the range of royalty deal structures and execution pathways has expanded significantly. For management teams, understanding the pros and cons of royalty financing as well as how the varied range of royalty-focused structures best align with different strategic objectives has never been more important (see Figure 1).  

L.E.K. Consulting has advised on nearly 100 royalty transactions over the past two decades. Our work has helped clients determine the fair value of their royalty assets, evaluate optimal structuring options and engage the right partners and processes to unlock value. In this edition of Executive Insights, we will share key learnings from our experience as well as considerations that should be top of mind for executives considering their capital formation options.

Why royalty financing is gaining momentum

Over the past 24 months, market dynamics have reshaped how biopharma companies think about their capital formation strategies. High interest rates, relatively closed-off equity markets and a more constrained credit environment have driven up the cost of traditional funding sources. At the same time, return expectations among royalty investors have remained relatively stable, typically in the high single to low double digits, narrowing the cost gap between royalty capital and conventional debt or equity.

In addition, while the supply of traditional capital has tightened, institutional investors such as pension funds, sovereign wealth funds and private credit platforms continue to allocate capital to royalties because these instruments offer steady uncorrelated cash flows that diversify their portfolios. For companies, royalty monetization continues to offer liquidity without dilution as well as freedom from the operational covenants associated with many forms of debt. As a result, what was once viewed as niche or expensive capital has become a more strategic component of the biopharma funding mix.

The growth of the royalty financing market underscores its evolution into a mature and competitive asset class. Global royalty deal value has risen from $5.2 billion in 2020 to $7.1 billion in 2025. Royalty financing has been relatively stable and rate-resilient. Greater royalty-related deal volume has been driven not only by the specialized royalty funds that have long dominated the space, but also by new entrants such as private credit and infrastructure investors whose participation has deepened liquidity and spurred innovation in deal structuring.

In addition to higher deal volume, the average royalty deal value has also risen. Some of this increase in average value can be attributed to multiasset portfolios, but it’s also being driven by greater competition. Syndicated transactions, which are often the result of competitive processes, now account for approximately one-third of total royalty market activity.

Collectively, these shifts point to a maturing ecosystem characterized by larger transactions; faster, more-sophisticated processes; and greater competition, all of which favor well-prepared buyers and sellers (see Figure 2).

The expanding range of deal structures

The modern royalty market offers a continuum of structures, each designed to balance risk transfer, upside potential and execution speed in different ways. In an outright sale, the seller transfers an existing royalty stream to the investor in exchange for a lump-sum payment, an approach best suited to mature in-market assets where simplicity and certainty are paramount. Capped royalty structures, in which investor returns cease once a predetermined multiple has been achieved, are particularly effective for assets with potential for life cycle expansion or additional label indications.

Synthetic royalties allow manufacturers to create royalty-like payment streams prior to FDA approval, enabling them to raise nondilutive capital for late-stage development or launch activities. Royalty-backed debt uses anticipated cash flows as collateral, providing flexibility for commercial-stage assets with predictable sales. Finally, hybrid structures combine elements of multiple formats, such as pairing a term loan with a capped royalty sale, which can broaden the number and type of investors that may be interested in participating.

The optimal structure depends on the product’s risk-return profile, the company’s financial objectives and the current market conditions (see Figure 3).

Our experience shows that tailoring structure can often be a way to bridge the divide between two parties’ views of the risk-adjusted value of a particular royalty stream, balance the varying risk tolerance of different investors and increase the appeal of a deal to a broader set of investors (see Figure 4).

Aligning objectives and process design

While deal structure defines the economics of a royalty transaction for each party, the process used to execute it often determines its success. Companies can pursue either a direct bilateral transaction or a syndicated process. In a direct deal, the seller engages with a single established royalty fund, such as Royalty Pharma or HealthCare Royalty Partners. These transactions offer speed, confidentiality and the signaling benefit of partnering with a well-known counterparty, but they may limit pricing tension and structural creativity.

Syndicated processes, typically led by an advisor or investment bank, invite multiple royalty funds and private credit investors to participate. This competitive dynamic can lift valuations and allows for more-bespoke multitranche structures, albeit with longer timelines and greater coordination requirements.

In practice, the optimal path depends on a company’s objectives. Organizations seeking speed and certainty may prefer a bilateral deal, whereas those focused on maximizing proceeds or flexibility can benefit from competitive tension. Regardless of approach, establishing a rigorous, data-driven valuation foundation is critical to ensure fairness and confidence in negotiations.

While either approach can be valuable under a different circumstance, L.E.K. has found that introducing even a modest amount of competition into a formal process can yield higher effective proceeds compared with direct deals (see Figure 5).

What this means for biopharma leaders

For today’s biopharma chief financial officers and business development executives, royalty financing is no longer a tactical fallback; it is a strategic capital formation lever that should be considered. Success begins with understanding the intrinsic value of one’s asset before entering the market. Companies must choose a structure that reflects product risk, life cycle stage and funding need, and they should view process design itself as a negotiating lever. Even a light competitive check can materially shift terms.

Timing also matters: Monetizing when visibility is high enough to support strong valuation, rather than while under duress, allows companies to optimize both proceeds and flexibility. Finally, engaging advisors who combine deep therapeutic understanding with transaction experience ensures that deals balance investor interest with long-term corporate objectives.

The L.E.K. perspective

We bring more than two decades of experience advising across the full spectrum of royalty transactions, from traditional single-asset sales to complex, multi-investor portfolio financings. Our teams combine deep clinical and commercial expertise with real-time insight into investor preferences and deal structuring trends.

For any company holding or able to create a royalty interest, now is the time to reexamine its strategic value. For more information about how to understand, optimize and unlock that value, please feel free to contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

L.E.K. Consulting’s latest analysis examines how Education M&A activity in North America is evolving in 2025 and what structural themes are shaping investment priorities for 2026. Drawing on transaction data and sector research, the report assesses momentum across K-12, higher education, professional upskilling and corporate training.

Following COVID-19-driven investment peaks in 2021-22, the volume of Education investments has grown year-over-year since 2023’s low. While 2025 M&A value was lower than 2024, this was driven was by a handful of 2024 mega deals – in fact, disclosed investment value for deals under $1B increased in 2025, reflecting both continued investor confidence in the sector and strategic acquisition activity.

As we look toward 2026, a number of key themes emerge:

• K-12 leaders are consolidating their technology ecosystems in response to rapid tool proliferation. The average number of edtech platforms used per district grew at roughly 23% CAGR in recent years, prompting a shift toward more integrated and interoperable systems, which creates both opportunity and risk depending on where you sit in the ecosystem.
• School choice expansion continues, with 33 state-level programs and OBBB creating tailwinds for private education and the providers that service that ecosystem Skilled trades are an area of investor focus given workforce demand, perceived AI defensibility and increasing focus on alignment of education to employment.
• Professional upskilling and reskilling take center stage as employers and professionals alike respond to changing workforce needs in the age of AI. However, certain business models are better positioned to succeed than others.  
• AI adoption across the education ecosystem is advancing steadily but remains at an early stage of maturity. Education represents about 2% of global AI-centric systems spending today, underscoring both measured uptake and meaningful long-term headroom 

Download the full analysis to explore the detailed trends and understand how investors and operators are positioning for growth in 2026.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC 

Biopharma has introduced a new design paradigm where success is less about highly iterative “discovery” and more about designing and assembling validated components. Rather than focusing on entirely novel targets or uniquely developed molecules for each design-make-test cycle, innovators are recombining proven building blocks to accelerate development, reduce biological risk and improve capital efficiency. The growth of the building-block tool kit, in turn, becomes an additional source of novelty and innovation for the modular medicines approach.

A vivid proof point was the rapid deployment of a personalized gene-editing therapy at Children’s Hospital of Philadelphia in spring 2025 (Baby KJ). While the scientific details of each of these cases will be unique, the operating model enabling these breakthroughs will be the highly modular therapeutics design: Leverage validated components, adjust to patient-specific circumstances, move fast as a disciplined quality and leverage the Food and Drug Administration’s emerging regulatory pathways.

This edition of L.E.K. Consulting’s Executive Insights builds on our prior work on advanced modalities to explain why “design modularity” is emerging, where its impact is most pronounced and what it means for manufacturing partners and toolmakers.

Modular medicines defined

Unlike traditional drugs — constructed as individually optimized unique molecules resulting from intensive iteration and screening — modular medicines separate core functions into components that work together as an integrated system. Those components can be reused and recombined to design (rather than to discover de novo) new therapeutics, and the components themselves can improve over time, expanding the scope of design space.

A practical segmentation is three technology layers:

1. Payloads: the therapeutic “work” (e.g., genetic payloads, high-potency active pharmaceutical ingredients) that drives the biological effect
2. Functional controllers: regulatory/tuning elements (e.g., untranslated regions, promoters, linkers, “kill switches” that turn off expression and mediate safety) that shape potency, pharmacokinetics, localization or expression
3. Targeting/delivery effectors: the mechanism (e.g., adeno-associated virus (AAV) capsids, lipid nanoparticles (LNPs), monoclonal antibodies) that governs biodistribution and uptake

Food delivery is a useful analogy: The payload is the meal itself, the controller is the specific order instructions (“leave on the doorstep”) and the targeting/delivery effector is the driver (see Figure 1).

Why modularity and why now?

Three demand-side pressures are driving biopharma toward modular design, while a growing technology tool kit and supportive regulatory stance are making it more feasible.
 

1. Addressing potential biopharma revenue gaps
   The upcoming patent cliff increases urgency to refresh pipelines with assets that can be developed efficiently. Investors and acquirers have become more risk aware, often gravitating toward later-stage or “de-risked” programs. Modularity supports a middle ground: generating more shots on goal while presenting fewer unvalidated novel components within any single program.
2. A growing need for differentiation against a crowded pipeline
   When competing programs address the same biological targets, product differentiation comes from delivery, tissue specificity, controllability and durability. Modular design enables sponsors to pair a validated target or payload with a novel targeting/delivery effector or controller element — potentially delivering a differentiated profile by increasing precision, safety and/or efficacy without taking on the technical risk of an entirely novel drug platform.
3. Ongoing mandates to increase R&D efficiency
   Advanced biologic modalities — including complex analytics, long lead times, constrained capacity and inflexible infrastructure — raise the CMC burden. Modularity can mitigate this by enabling comparability strategies, reuse of analytical methods and select preclinical data and process precedents that shorten the path to investigational new drugs (INDs) and reduce preclinical costs.

What is enabling the shift toward modularity?

Growing toolbox of validated components for modular designs
The library of components is expanding (antibody scaffolds, LNPs, AAV capsids, cell therapy backbones, linkers, promoters). As validation accumulates, sponsors can increasingly mix and match with higher development throughput by leveraging precedent, similar to what is done with excipients and other highly validated components of drug formulation.

Increasing traction of artificial intelligence (AI)-enabled design
AI-enabled platforms are emerging as powerful design engines — optimizing sequences (including guide ribonucleic acids (RNAs)), predicting structure/function relationships for proteins and creating next-generation delivery vehicles (capsids, lipid compositions). These workflows compress the design-make-test loop and shift more work upstream into in silico exploration in the dry lab.

Supportive regulatory stance for ‘platforms’
Regulators are evolving alongside the shift. Emerging initiatives explicitly recognize platform reuse, creating pathways to reuse elements of CMC and preclinical learnings across related programs when anchored to a well-characterized platform and a strong comparability strategy.

Real-world proof points for personalized genetic medicine
Personalized genetic medicines are also demonstrating a scale-out operating model where elements of a platform are standardized (e.g., delivery system, unit operations, analytics, quality controls), and the variable layer can be changed quickly and predictably. Programs like Baby KJ (and earlier exemplars such as the personalized antisense oligonucleotide (ASO) drug Milasen) show that individualized therapeutic sequences can leverage validated process know-how and testing frameworks to reach patients on dramatically compressed timelines.
 

Modularity is a spectrum (and the industry is moving along it)

Design modularity is not binary; it sits on a spectrum (see Figure 2). Legacy small molecules tend to be the least modular because each target requires de novo hit identification and an iterative structure-activity relationship. Single-molecule biologics have tunable domains but remain individually optimized. Multicomponent conjugates (e.g., antibody-drug conjugates (ADCs)) combine known parts to create new functionality.
 
Programmable biologics (viral vectors, engineered cells) use a chassis as the delivery/targeting layer for swappable payloads and control parts. At the end of the spectrum, with the highest design modularity, are programmable nucleic pair sequence-defined payloads with standardized delivery layers (e.g., LNPs, or bioconjugates such as GalNAc).
 

Real-world examples: Modular logic across modalities and historical trends

Several approved therapies illustrate modularity as a common innovation pattern (see Figure 3):

• Enhertu (ADC): combines a validated human epidermal growth factor receptor 2 (HER2) antibody scaffold with a linker-toxin system, expanding segmentation to HER2-low
• Zolgensma (AAV gene therapy): pairs a known capsid with a promoter/payload system to treat spinal muscular atrophy
• Carvykti (autologous cell therapy): uses tuned binder and signaling modules on an established chimeric antigen receptor backbone
• Onpattro (small interfering ribonucleic acid (siRNA)/LNP): pairs a sequence-defined payload with a prevalidated delivery approach, de-risking delivery and immunogenicity

Both the R&D pipeline and drug sales end markets are evolving toward higher levels of design modularity. Increasing along the modularity spectrum yields practical advantages: faster design-make-test cycles, greater leverage of prior CMC and preclinical precedent and (in some cases) access to regulatory pathways that recognize platform reuse.

Historically, the R&D pipeline has shifted from 25% more modular modalities in 2020 to 35% more modular modalities by 2025. Similarly, the end market for these more-modular drug classes has grown dramatically, from approximately $8 billion in 2020 to around $34 billion estimated for 2025, a five-year growth rate of more than 30% (see Figure 4).

Combining design modularity with manufacturing 'platformization' to unlock scale

The value of design modularity can be force multiplied when combined with high manufacturing platformization - when a codified set of raw materials and process inputs plugs into an established manufacturing workflow and quality system so each new program is a controlled modification of a base "recipe," not a bespoke process for every product.
 

In practice, manufacturing platformization means common unit operations, qualified raw materials, shared analytical methods, digital enablers (chain of identity, chain of custody) and comparability playbooks that are widely shared across programs. The result is a smaller CMC lift, faster changeover time and reduced regulatory review friction.
 

When drugs with high design modularity plug into a workflow with high manufacturing platformization, it becomes possible to successfully address very small indications, as evidenced by successful "N-of-1" projects for ASO- and RNA-based gene editing therapies (see Figure 5). Conversely, low manufacturing platformization can require intensive CMC optimization ahead of launch, as evidenced by the "Process is the product" mantra for early cell and viral gene therapies, as well as the supply challenges that have characterized several early cell and gene launches (e.g., Kymriah, Carvykti, Casgevy).

Implications for life sciences tools suppliers and contract development and manufacturing organizations (CDMOs)

• Opportunities for innovation and risk move downstream into CMC and supply chain
  As drug design becomes more configurable, competitive advantage shifts toward executing fast, high-quality configuration cycles. That elevates CMC design, analytical strategy and manufacturing agility; CDMOs may increasingly help define manufacturable configurations, not just produce batches.
• Platform manufacturing becomes a commercial differentiator
  Sponsors will increasingly ask how easily new programs can plug into a partner’s validated platform. CDMOs with reusable process/analytics templates, comparability precedent and strong digital traceability can reduce sponsor burden and accelerate timelines.
• Precision therapies expand addressable micromarkets
  Faster design-to-IND and permission space to reuse platform data support continued indication fragmentation and subsegmentation, unlocking smaller populations that historically would not have been commercially viable under bespoke development models.
• Scale-out economics challenge scale-up mindsets and reshape supply chains 
  Programmable modular therapies imply smaller batches and more-frequent changeovers. Cost advantage shifts from economies of scale to economies of repetition: Suite utilization, parallel closed processing and rapid release become central, while supply chains must support smaller quantities with tighter delivery tolerances and variable demand.

Taken together, modular medicines will reward partners that treat manufacturing and analytics as configurable platforms rather than one-off projects. Tools companies and CDMOs with flexible capacity, standardized component libraries and data-rich quality systems will be best positioned to grow alongside the next generation of modular medicines.

For more information, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

As executives wrestle with where artificial intelligence (AI) truly fits in their company’s strategy (cost takeout, growth, resilience, product advantage, etc.), they are running into a blunt constraint: The talent that turns intent into production is scarce and increasingly challenging to retain. This goes beyond the flashy headlines about large technology firms’ top talent, such as Microsoft agreeing to pay Inflection about $650 million (licensing and related terms) while hiring most of the team (Reuters, March 21, 2024). 

This challenge is not limited to Big Tech; in the past 12 months, many of the corporate roles with the highest combined hiring and attrition are AI- or machine learning-related roles (see Figure 1).

The problem on many executives’ minds has shifted from “Should we hire AI talent” to “Can we hire and keep the AI talent?” When AI roadmaps are fluid, integration into the operating model is unsettled and platform bets are in flux, AI teams feel like they are sprinting on shifting ground. The result is a costly loop: Overpay to hire, underclarify the objective, and then lose people before value lands. As a consequence, the organization likely concludes that “AI doesn’t work here.”

Employee sentiment data reinforces why retention is fragile. Across North America, employee sentiment about AI dipped through 2024 and then partially recovered into 2025, implying the existence of a window where uncertainty (strategy, funding, leadership conviction) drives churn in the most marketable roles (see Figure 2).

Critical moves to stabilize AI talent:

• Sufficient ambition: People are looking for challenging problems, not cost reduction through automation; define a sufficiently ambitious AI strategy.
• Roadmap clarity: Throwing talent at vague problems creates uncertainty in remit and progression; define the few bets well, what good looks like and a meaningful and clear end game.
• Role architecture: Unclear job families (builder vs. translator vs. product vs. platform) create mismatched expectations; standardize roles, levels and growth paths.
• Retention beyond compensation: Pay is table stakes; retention hinges on clear objectives, learning velocity and recognition calibrated to a hot market.
• Operating model for speed: Ambiguity in decision rights (data, model risk, platform choices) slows progress; tighten ownership so work ships, not spirals.

Companies need to focus on retaining — not just hiring — AI talent. That requires an integrated workforce plan that links strategy to demand to supply to retention, so that AI investment translates into repeatable delivery outcomes rather than episodic wins.

For more information, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

Foodservice companies are investing in packaging innovation, specifically in substrates that enable them to reach goals related to sustainability and food safety, while both consumer packaged goods (CPG) and foodservice brand owners are optimizing stock-keeping units (SKUs) in order to minimize supply chain complexity, more effectively align with demand and manage their costs. In the meantime, even as the use of digital tools becomes standard practice and artificial intelligence (AI) increasingly becomes a source of differentiation in the packaging value chain, packaging multisourcing remains a core procurement strategy.

Indeed, packaging is extremely important to brand owners and continues to be a compelling use of investment because it not only conveys the brand message but also represents a very small portion of spend relative to total retail value. Micro and challenger brands in particular view packaging as highly important to their success, while in terms of end markets the importance of packaging is emphasized most in food and beauty and personal care.

These are some of the top takeaways from L.E.K. Consulting’s annual proprietary study of CPG and foodservice brands’ packaging needs, which we conducted during the fourth quarter of 2025 and first quarter of 2026. Now in its eighth year, the L.E.K. 2026 Brand Owner Packaging Study provides longitudinal insights into the needs of decision-makers and their perspectives on packaging trends. It reveals how much packaging is impacting CPG and foodservice brands’ success, how they’re leveraging digital tools and AI, and the types of packaging innovation foodservice companies specifically are investing in, as well as which procurement strategies they’re using.

Key topics for 2026

For our brand owner packaging study, we posed a series of questions related to the most pressing issues currently facing brand owners, then summarized their answers in four distinct articles, arranged by topic:

For our brand owner packaging study, we posed a series of questions related to the most pressing issues currently facing brand owners, then summarized their answers in four distinct articles, arranged by topic:

• The impact of packaging on brand success — How important is packaging to a brand’s success? How does relative spend on packaging vary, both by end market and customer segment?
• The importance of digital tools and AI to brand owners — Which digital tools and AI use cases are brand owners using or planning to use? What impact are the tools they’ve already implemented having on the packaging value chain?
• Foodservice companies’ approach to packaging — What’s important to foodservice companies when it comes to evaluating packaging choices? Are they investing in packaging-related innovation?
• How brand owners’ sourcing strategies are evolving — How many suppliers do brand owners typically utilize for packaging materials? What is the typical share of spend for each supplier?

The impact of packaging on brand success

Packaging remains a critical driver of brand success. Nearly all — 98% — of our 2026 survey respondents rated packaging as highly important to brand success, which was in line with our 2023 (98%) and 2024 (99%) survey findings (see Figure 1).

Brand owners across end markets also rated packaging as highly important to the success of their brands, led by food and beauty and personal care; healthcare was the only laggard on a relative basis (see Figure 2).

Brand owners are also actively planning changes to their packaging. Nearly all brand owners (roughly 99%) indicate that they expect to make changes over the next three years, primarily driven by a desire to increase sustainability, change aesthetics and extend shelf life (see Figure 3). 

To learn more about brand owners’ packaging needs in 2026, be sure to read each of our deep-dive summaries of survey findings. Our second article looks at how brands are leveraging digital tools and AI across the packaging value chain, and in our third article we break down how foodservice brands are approaching packaging and how that differs from CPG brands . The fourth and final article in our series makes clear how brand owners’ sourcing strategies are evolving.

About the study

We surveyed 450 U.S. CPG and foodservice brand owners and packaging stakeholders for our eighth annual proprietary study to understand their packaging needs and get their views on the trends driving demand.

In addition to surfacing packaging trends and spend by CPG and foodservice brands, the study looks at how sustainability in packaging is evolving. It also breaks down current SKU dynamics and the impact they’re having on packaging demand, packaging sourcing and digital/AI use cases, as well as how perspectives on all of these topics have changed over the past few years and are expected to change going forward.

For this year’s study, we targeted brand managers and other packaging decision-makers at CPG (N=389) and foodservice (N=61) companies who were:

• Responsible for or directly involved in making packaging decisions for a brand or foodservice establishment
• Responsible for a CPG or foodservice brand that is sold in the U.S. but may also be sold into international markets 
• Responsible for a brand within the food, foodservice and beverage, beauty and personal care, household and wellness, healthcare, and consumer electronics end markets
   

If you would like access to the full results, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

Sustainability has been — and, at least for the next three years, will continue to be — a top consideration for foodservice companies when it comes to choosing, and choosing to change, their packaging. Both consumer packaged goods (CPG) and foodservice brand owners have been prioritizing sustainability in their packaging since 2022, and around 72% of brand owners surveyed expect to achieve all of their related goals by 2030.

Those were among the core findings from L.E.K. Consulting’s survey of 450 U.S. brand managers and packaging stakeholders in the fourth quarter of 2025 and the first quarter of 2026 for our proprietary U.S. Brand Owner Packaging study, which broke out foodservice companies for the first time in eight years.

Foodservice companies are most concerned about sustainability and the environment

 In foodservice, sustainability and environmental concerns are overwhelmingly the primary considerations when selecting packaging (around 84%), followed by food safety and compliance (around 55%) and cost (around 28%) (see Figure 1). 
 

Sustainability’s primary importance to foodservice companies is not new. While approximately 99% of CPG brand owners expect to make changes to their packaging over the next three years, about 48% cited moving to sustainable packaging as the top reason. But foodservice brands have already been making sustainability their top priority when it comes to packaging. Of the approximately 79% of foodservice organizations that changed packaging substrates in the past three years, meeting sustainability goals was the No. 1 reason for approximately 83% of them (see Figure 2). 

Packaging innovation continues to be a top priority for foodservice companies

Packaging innovation is another area of importance for foodservice brands, as some 72% have invested in packaging innovation over the past three years — a number that is expected to rise to roughly 79% through 2028. Currently, the vast majority of foodservice operators (roughly 81%) cite improving cost efficiency as among the approaches they’re taking, followed by transitioning to sustainable materials (roughly 69%) (see Figure 3).

Be sure to read the fourth and final article in our 2026 packaging study series, which delves into how brand owners’ sourcing strategies are evolving. And don’t miss our breakdown of how brands are leveraging digital tools and AI across the packaging value chain and our overview of how packaging is impacting brands’ success.

If you would like access to the full results of the study, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

The discrete (factory) automation market is entering a new phase of growth, driven by structural megatrends and rapid advances in AI-enabled technologies. The global market is valued at approximately $150 billion in 2025 and is expected to reach around $200 billion by 2030.
 
Manufacturers are facing increasing pressure from labour shortages, supply chain volatility and rising quality and sustainability requirements. As a result, automation has become a strategic necessity rather than a discretionary investment. At the same time, advances in physical AI, intelligent robotics and digital twin technologies are enabling more flexible, adaptive and data-driven production systems.

These dynamics are accelerating the shift towards intelligent factories, where software-defined automation platforms improve throughput, quality and operational resilience. New models such as Robotics-as-a-Service and lifecycle analytics are also reshaping how value is delivered across the automation value chain.

In this report, L.E.K. Consulting and Harris Williams explore key market trends, emerging technologies and investment themes shaping the sector, alongside M&A activity and investor priorities.

Download the full report to find out more.

You can read part one of series here: Process Industry Automation: Control, Resilience and Investment Opportunities 
 

The packaging supply chain has faced significant disruption since 2021, prompting many brands to reevaluate their supply chains and consider potential actions to increase supply chain resiliency. But reduced supply chain risk is just one of several reasons why the vast majority (roughly 91%) of brand owners multisource their packaging — improved cost competitiveness, shorter lead times and better geographic coverage are all considered to be of roughly equal importance.

The reasons were revealed through L.E.K. Consulting’s eighth annual U.S. Brand Owner Packaging study, for which we surveyed 450 U.S. brand managers and packaging stakeholders in the fourth quarter of 2025 and first quarter of 2026.

Brand owners spread the risk — but not the spend

Nearly two-thirds of brands utilize both a primary and secondary supplier to source packaging for a particular format, with the lion’s share of spend going to the primary supplier (see Figure 1).

Among brands that use both a primary and secondary supplier (around 64% of respondents), roughly a quarter allocate 60% or less to their primary supplier, about half allocate 65%-75%, and the rest concentrate 80% or more (see Figure 2).

For brands that go further and use three or more suppliers (roughly 27% of respondents), the vast majority of them (about 80%) allocate a maximum of 60% of spend to their primary supplier; the rest (around 20%) allocate more (65%-75%).

This push to diversify suppliers also has a geographic dimension. Brand owners have been steadily shifting toward domestic packaging suppliers — and by 2028, the percentage of packaging across surveyed end markets sourced from outside the U.S. is forecast to be half of 2019 levels, just 10%, driven in large part by the resilience advantages of domestic supply chains and the tariff risk from imported materials (see Figure 3).

To learn more about brand owners’ packaging needs in 2026, read about how brands are leveraging digital tools and AI across the packaging value chain, how foodservice brands are approaching packaging and how that differs from consumer packaged goods brands, and how packaging is impacting brands’ success.

If you would like access to the full results of the study, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC