What's (not) cooking: Biotech sector investment
By Eric Laub
Barron's recently gathered professional investors and market strategists who expressed genuine exuberance for the innovation and prospects of the life science industry and what it may mean for patients. Yet, with excitement comes much debate about the recent perils of investing in the biotech sector.
Biotechnology market action has been tepid and there’s been a 25% slide in the NASDAQ Biotech index from its 2015 peak. This pessimism has been driven by:
- Looming political uncertainty
- Difficult pricing environment
- Regulatory challenges
We are in unprecedented times, as our quest for finding the next biotech unicorns often tests the boundaries of antiquated financial models. We have a generally supportive FDA, especially for rare and orphan diseases, and a new generation of entrepreneurs and VC investors will to advance new medicinal approaches such as gene and cell-based therapies. But, as the next generation of “miracle medicines” emerges, the underlying question that will continue to drive investor interest in the sector: is there long-term value for my investment and will I be rewarded for my patience during the sometimes lengthy R&D process?
Barron’s reporting, while a tad gloomy, underscored why we feel so passionately about the potential of biopharma innovation and have faith that it will fulfill its promise. As our industry faces significant perception challenges, it will continue to be the innovations in science that attract new investors and help drive cutting-edge treatments for patients who need them most.
Pulse on Pricing: Advancing Amendment
By Paul Tyahla
This week the House Energy and Commerce Committee advanced H.R. 3, the Lower Drug Costs Now Act. It is now expected to pass the full House of Representatives as soon as this month. The bill’s likelihood of becoming law is very low, but it will drive a significant amount of media coverage.
The legislation would make several changes, and as the bill advances, the pressure is to make it more aggressive toward the industry, including:
- Direct negotiation. Requiring the federal government to directly negotiate with manufacturers over the price of up to 250 prescription drugs per year.
- Average International Market (AIM) price. Directing that the Department of HHS to will limit the price for drugs that do not have competition marketplace competition to be no more than 20 percent higher than the price paid by other countries with advanced economies.
The Congressional Budget Office estimates the bill would reduce Medicare spending by $345 billion - about 25% of its prescription drug program – if fully implemented.
What it means:
It is unlikely that the legislation, in its current form, will become law. The Senate Majority Leader has said the Senate would not consider this version of the bill. Instead, the bill and its core tenets – including Medicare negotiations and the differences between US and ex-US prices – will be news drivers and election topics during the next 12 months. In 2018, drug prices were the third most-common discussion point in the hundreds of thousands of campaign TV ads that aired. A similar volume is possible next year.
Life science companies need to be prepared to discuss their positions on the various components of the bill – and be prepared for a storm of scrutiny to continue.
We’re continuing to monitor the situation so stay tuned!
Who wrote this? The managing editor of TWTW is Randi Kahn, who got assistance for this week’s edition from her cat, Tabitha (among many others), who seemed to greatly enjoy lying on her warm computer. Happiness is a warm kitty, too, Charlie Brown. Syneos Health Communications' Reputation & Risk Management Practice is a team of healthcare communications consultants, policy-shapers and crisis response specialists. We provide unique solutions to the evolving communications challenges in today’s healthcare industry, using evidence-based approaches to help our clients successfully navigate the most sensitive of situations.
Got thoughts? Contact Randi
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