Knowing what pharma trends influenced the market this year may be key for new and ongoing investing opportunities.
Knowing what pharma trends influence the market may be key for new and ongoing investing opportunities.
2018 was another transformative year for the pharmaceutical market. Drug pricing, mergers and acquisitions (M&A) and clinical trial news have helped drive the market throughout the year. However, these developments have also brought new challenges to the space.
As the year comes to a steady close, and as the pharma market gears up for the excitement around the annual JP Morgan Healthcare Conference in early 2019, the Investing News Network (INN) is rounding up some of the biggest pharma trends of 2018. Read on to learn more.
Pharma trends 2018: FDA maintains pricing concerns
US President Donald Trump’s pledge to lower drug prices when he won the presidency has been a continued pharma trend since then.
William Looney, executive editor for In Vivo at Informa Pharma Intelligence, told INN that in the US “public shaming on drug pricing led to voluntary pledges of restraint by many big pharma companies.” But the effect was short lived, and pricing remains well above the consumer price index.
Coupled with this was the “aggressive action” by US Food and Drug Administration (FDA) Commissioner Scott Gottlieb to increase generic availability, Looney said. This was a new pharma trend from the FDA, which had previously not addressed medicine access issues.
“Nearly 90 percent of the US drugs market is now compromised of off-patent products,” he said.
In October, the FDA released a statement from Gottlieb on “new efforts to advance the development of generic copies of complex drugs.” The statement is part of a series of guidance documents to advance the development of complex drugs, which may “have an outsized impact on access and drug spending.”
Bonnie Bain, global head and executive vice president of healthcare operations and strategy at GlobalData (LSE:DATA), and Kelly Lambrinos, senior editorial analyst at GlobalData, said this has led to speculation that Amazon will begin selling prescription drugs via its online marketplace.
GlobalData believes customers will welcome Amazon moving into pharmacy, and it could be an opportunity to increase competition and reduce prices.
This came after the news that Amazon, Berkshire Hathaway (NYSE:BRK.A) and JP Morgan (NYSE:JPM) have created a new company to reduce healthcare costs and improve services for their employees and patients. The expertise, capital and scale of these companies increases their likelihood of successfully maneuvering healthcare and insurance complexities via technology, GlobalData says.
Pharma trends 2018: Takeda leads M&A activity
M&As always seem to take the lead in pharma trends due to its strength as a catalyst. This year’s M&A activity was led by Japan’s biggest-ever acquisition, where Takeda Pharmaceuticals (TSE:4502) snapped up Shire (NASDAQ:SHPG).
Although the acquisition is still pending — it is currently awaiting regulatory approvals and is set to close in the first half of 2019 — this deal is set to “leapfrog” Takeda into the global biopharmaceutical market, as per GlobalData. This would position the company as a real competitor for the likes of Pfizer (NYSE:PFE) and Roche Holding (SQX:ROG).
Kelsey Oliver, senior industrial analyst at IBISWorld, says this was the biggest news the pharma industry faced this year. Once completed, the US$62-billion acquisition will make Takeda the ninth-largest pharmaceutical company globally, according to data from BioPharmaDrive.
CVS says the acquisition is intended to fill a void in the current healthcare system for high-quality care at a lower cost and local setting. Cigna’s acquisition has similar intentions, along with expanding distribution of health services for employers, health plans and government agencies.
The deals “drew scrutiny and concerns of antitrust” due to the potentially negative impact of these newly formed integrated health systems for US healthcare consumers.
In September, Cigna passed antitrust scrutiny from the US Department of Justice, allowing the acquisition to proceed further. The second acquisition may go through similar antitrust scrutiny, and Cigna’s success lends positivity to its outcome.
Pharma trends 2018: Trial data spikes share price volatility
Clinical trials are the backbone to drug approvals, which tunnel revenue and sales for companies. This year’s clinical trials were another pharma trend and featured a number of innovative drugs. Some garnered positive attention from investors, whereas others went south.
Starting off with the positive, Amarin’s (NASDAQ:AMRN) Phase 3 REDUCE-IT trial of Vascepa (icosapent ethyl) for cardiovascular outcomes resulted in a 314-percent share price increase, GlobalData says. Over 8,000 patients were treated in the study and demonstrated a 25-percent relative risk reduction. The firm says Vascepa is essentially a highly purified omega-3 fatty acid.
Before the news, the market had been precarious about the drug. GlobalData says that based on Mochida Pharmaceutical’s (TSE:4534) comparable drug, Epadel, receiving positive Phase 4 results, experts felt more optimistic about Amarin’s trial outcome.
Proteostasis’ (NASDAQ:PTI) doublet PTI-801 and PTI-808 also had encouraging results for cystic fibrosis, sending the stock up nearly 300 percent. The positive results were from the company’s Phase 1 clinical trial.
This information surprised some investors after a “highly debated forced expiratory volume benefit (FEV)” in PTI-428 was added to Orkambi with disappointing FEV data. This solution resulted in disappointing FEV data with PTI-801 added to Orkambi, which is Vertex Pharmaceuticals’ (NASDAQ:VRTX) approved CF drug.
Menlo Therapeutics (NASDAQ:MNLO) announced its Phase 2 trial data for serlopitant, saying that in treatment for refractory chronic cough it had failed to demonstrate efficacy relative to the placebo. This sent the company’s share price down 45 percent.
The study consisted of 185 patients in the trial, TUSSIX. The serlopitant group had 31 percent less reduction in 24-hour cough frequency compared to the placebo group.
Pharma trends 2018: Investor takeaway
Although these trends continue to push the pharmaceutical market forward, the coming year may bring even more success and uncertainty to the space. With many catalysts currently in play, a slew of companies have the goal of lowering healthcare costs in the US.
Investors interested in more news from the year can take a look at our top pharma news stories from 2018 to see which news garnered the most attention.
Don’t forget to follow @INN_LifeScience for real-time updates!
Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.