Biopharma business eyes 2025 bounceback, grapples with uncertainty over Trump return

By Deena Beasley

SAN FRANCISCO (Reuters) – The biopharmaceutical business is aiming for a 2025 reversal of final 12 months’s hunch in investor returns however stays cautious over what President-elect Donald Trump’s priorities is likely to be on sizzling button points corresponding to drug pricing reforms and vaccines.

The pharma business confronted its greatest regulatory change in a long time with the Biden Administration’s Inflation Discount Act of 2022, which allowed the federal authorities’s Medicare well being plan for the primary time to barter costs for its costliest pharmaceuticals.

“Nothing kills funding like uncertainty. The IRA led to loads of uncertainty within the sector,” Steve Ubl, head of business lobbying group PhRMA, stated on the JP Morgan Healthcare Convention this week in San Francisco.

PhRMA is hopeful the brand new administration can be much less centered on “assaults to the ecosystem” of the business and as a substitute search to scale back inefficiencies that will decrease prices for sufferers, he stated.

Costs for the primary 10 Medicare-negotiated medication have been launched final August, with the outcomes largely in step with present costs after reductions and rebates.

Names of the subsequent 15 medication up for worth talks are due by Feb. 1 and could possibly be introduced this week, though it is usually attainable that the ultimate listing might change after Trump takes workplace on Jan. 20.

Final 12 months, the Nasdaq Biotechnology Index fell 3%, in contrast with a achieve of 23% for the bellwether S&P 500 and a soar of almost 29% for the tech-laden Nasdaq. The NYSE Arca Pharmaceutical (TADAWUL:2070) Index rose 1%.

The discrepancies got here regardless of all-time inventory worth highs hit by weight problems drug producers Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY). Lilly ended 2024 with a achieve of 31%, whereas shares of Novo, which posted underwhelming trial outcomes for a next-generation weight-loss drug, fell 9%.

“Development has been uneven throughout the sector. There are haves and have nots” as traders assess how drugmakers address looming patent expirations, stated Roel Van den Akker, pharma offers chief at PwC.

PATENT EXPIRATIONS

Morgan Stanley (NYSE:MS) estimates that round $175 billion of 2025 U.S. large-cap biopharma income – 35% of the overall – will go off patent by the tip of the last decade. 

To interchange that income drugmakers want new merchandise, both from their very own analysis or by buying firms with promising belongings, however these transactions slowed considerably final 12 months.

The worth of life sciences mergers and acquisitions totaled round $80 billion within the 12 months by means of November, lower than half of 2023’s complete, in line with the Iqvia Institute for Human Information Science. No offers over $5 billion closed final 12 months.

The expectation that the subsequent chair of the Federal Commerce Fee can be extra deal-friendly than Lina Khan has been is considered as optimistic for drugmakers.

On Monday, a flurry of offers have been introduced together with a $14.6 billion acquisition by Johnson & Johnson (NYSE:JNJ).

Trump nominated present Commissioner Andrew Ferguson to succeed Khan. Traders are much less obsessed with a few of Trump’s different high-profile nominations to prime positions in his subsequent administration.

“RFK’s views on vaccines might actually influence among the main pharmaceutical firms,” stated Foley Hoag accomplice Beth Neitzel, referring to Trump’s choose to steer Well being and Human Providers, Robert F. Kennedy Jr, who has been an outspoken vaccine skeptic.

“I believe the target can even be to seek out frequent floor. Making America wholesome is what we’re all about,” Biogen (NASDAQ:BIIB) CEO Chris Viehbacher stated in an interview through the convention.

PHARMA EXECS TO EXERT INFLUENCE

Pfizer (NYSE:PFE) CEO Albert Bourla underscored the business’s uncertainty in his session on the convention with traders, however stated on Monday he would attempt to affect the setting.

“There are a number of those who assume, for our business, the dangers outweigh the alternatives. There are different individuals, amongst them myself, which they assume that the alternatives outweigh the dangers. I assume we’ll see,” he stated.

J&J CEO Joaquin Duato instructed traders “it is tough for me to estimate what is going on to occur,” including that he could be pushing insurance policies with the Trump administration on innovation and entry.

Traders are centered on the influence of presidency coverage on drug costs, together with any adjustments to the IRA that would have an effect on how shortly particular person medicines change into eligible for Medicare worth negotiations.

These adjustments could be tough to make as a result of they’re written into the regulation, stated Priya Chandran, biopharmaceuticals sector chief at Boston Consulting Group.

“It’s unlikely that something goes to drastically change within the first 12 months,” she stated.

Foley Hoag’s Neitzel stated reviews of Trump’s “heat and cordial” December dinner with pharmaceutical executives in Florida have led to some optimism.

Nonetheless, “the beautiful common statements by each Trump and RFK up to now about drug pricing don’t recommend that this incoming Trump administration goes to be useful to the business,” she stated.