Pharma Outlook 2021: COVID-19, Oncology to Drive Sector

Pharmaceutical Investing
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All eyes will be on the pharma space in 2021, as the sector is set to receive a boost from the ongoing rollout of COVID-19 treatments.

Click here to read the latest pharma outlook.

Last year brought revitalized interest and understanding to pharmaceutical investments thanks to the urgent need to combat the effects of the global COVID-19 pandemic.

As 2020 drew to a close, large funds moved toward the entire life science sector, offering much relief to the industry after the market crash seen in February and March.

The performance of the iShares US Pharmaceuticals ETF (ARCA:IHE) and the SPDR S&P Pharmaceuticals ETF (ARCA:XPH) indicates more general investor interest in the pharma space as well.

By the end of 2020, IHE had posted a 12.95 percent increase in value to close the year at US$179.44. For its part, XPH managed to reach a price tag of US$52.06 thanks to a 15.92 percent jump.

Moving forward in 2021, the pharma sector is looking to continue capitalizing on that attention as trial work slowly begins again and the market settles into established trends. The impact of a new incoming US president could also come into play in the development of the pharma investment landscape.

Here the Investing News Network (INN) looks ahead at what companies and insiders are expecting for the 2021 operating year in the pharmaceutical space.

Pharma outlook 2021: Oncology to lead the way for Big Pharma

In its 2021 market preview report, research firm Evaluate indicates that while many investors will be drawn to COVID-19 efforts, oncology will remain the biggest driver of pharmaceuticals.

The two biggest sales-generating drugs in 2021 are expected to be Keytruda, a cancer drug from Merck & Co (NYSE:MRK) that is expected to reach US$2.7 billion, and Dupixent, a drug for eczema and asthma by Sanofi (NASDAQ:SNY) and Regeneron Pharmaceuticals (NASDAQ:REGN) at US$1.6 billion.

Of course, that’s not to say COVID-19 won’t have a key role. While the big names in pharma will continue to profit off of successful money-making drugs, Evaluate believes the overall the effectiveness of COVID-19 vaccines may end up determining which way pharma investments go in 2021.

“At the very least, signs that the pandemic is being brought under control are surely required,” it states.

Pharma outlook 2021: COVID-19 efforts highlight need for investment

The pharmaceutical market is enticing to investors given its direct correlation to medical benefits for patients. That urgency was galvanized in 2020 as the drug pipeline model came into the forefront for those looking to help boost the COVID-19 response cycle.

Support from investors is an effect that the market at-large will have to monitor heading into the new year. The Evaluate study highlights that this increase in support can be tracked via the recovery of the NASDAQ Biotechnology Index (INDEXNASDAQ:NBI).

“The extent to which this support will be maintained in 2021 is a big unknown,” the report states.

Robert Foster, CEO of Hepion Pharmaceuticals (NASDAQ:HEPA), told INN he is expecting to see a positive year for the entire sector, potentially with renewed interest in the market from investors.

He said the attention garnered by the development of COVID-19 vaccines was a key attention-grabbing event that has drawn new eyes to the entire life science space.

“COVID-19 has certainly taken the sector by storm, and it has been great to see life science companies the world over rise to the challenge of developing potential new treatments and a vaccine,” said Foster.

“As a lifelong industry participant, I’m thrilled to see the increased investor interest and awareness on the sector and the important role it plays in the health of populations around the world.”

Pharma outlook 2021: Drug pricing conversations may begin again

Early on during his term as president, Donald Trump routinely criticized the pharma industry for its drug pricing models and the overall costs of medicines.

Trump’s administration explored different methods of bringing down drug prices. However, real, effectible proposals were hard to come by.

In 2021, as Joe Biden begins his time in the White House, investors will want to keep an eye on the relationship the new administration develops with pharma makers.

“The emerging healthcare policies of the new Biden administration in the US will be another major focus for biopharma investors,” the Evaluate report explains.

For now, the pharma industry has started 2021 by continuing a longstanding tradition of hiking prices for prescription drugs. Recently, research firm 46brooklyn Research showed that over 500 drugs will become more expensive this year.

In a breakdown of the impact a Biden presidency may have for drug pricing in the US, health experts told Vox it is likely that no real reform will come into play during Biden’s term.

“You don’t have as fertile an environment for more extreme drug measures,” Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, said.

Pharma outlook 2021: Investor takeaway

As it stands, the pharma sector will be closely monitored based on the efficacy and rollout of the COVID-19 vaccines approved so far. More opportunities to aid in the end of the pandemic may become clearer and provide space for smaller companies to find research avenues.

Don’t forget to follow @INN_LifeScience for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, 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.

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