At the dawn of a new year, INN offers a preview of potential developments in the pharmaceutical market throughout 2020.
The pharmaceutical sector is poised for continued growth, but also the emergence of key challenges, meaning investors have a lot to look forward to in 2020.
With an upcoming presidential election in the US and increased attention on drug pricing, the market is set to experience its fair share of volatility. Meanwhile, steady growth products in the drug space are expected to offer some relief for the biggest firms operating.
Here the Investing News Network (INN) offers a closer look at what’s ahead for the market based on the perspectives of industry players and experts.
Pharma outlook 2020: Capitol Hill adds drug price pressure
The life science space can expect to face increased scrutiny from the White House in 2020 based on the challenges surrounding prices for drugs and treatments in the US, which have been steadily rising.
It is expected that US President Donald Trump will adopt an international pricing index in order to get ahold of the situation, which has been a long-lasting one for pharma companies — and one that voters have really honed in on.
“There’s not one of us that isn’t impacted in some way by medicine and insurance, and drug pricing is a big part of that. I think it’s going to definitely become a talking point for these candidates as we go into the elections,” LaToya Lee, quality and regulatory services leader at Clarkston Consulting, told INN.
Pharma outlook 2020: Cancer treatments lead growth
A report published by research firm Evaluate, dubbed the Vantage 2020 Preview, indicates that leaders in the pharmaceutical space will continue to reap the benefits of sales generation from key oncology products. Data projects total yearly sales of US$18.7 billion for this category.
Another area of growth is rare disease treatments. These drugs attract higher prices given the spending on research and development and because they serve a small patient count.
The astounding sales of Vertex Pharmaceuticals’ (NASDAQ:VRTX) cystic fibrosis treatment are highlighted by the report, alongside Novartis’s gene therapy Zolgensma, which is set to command a large part of the anticipated US$900 million drawn in from spinal muscular atrophy.
Along with the oncology sector, vaccines in 2020 will represent a steady area of growth for the pharmaceutical market. According to the report, this segment will be led by GlaxosmithKline (NYSE:GSK), Merck & Co. (NYSE:MRK) and Sanofi (NASDAQ:SNY).
Pharma outlook 2020: Challenges for new listings
According to Evaluate’s report, the biopharma segment will face hiccups when it comes to a flurry of new initial public offerings throughout the new year.
“Much depends on broader market conditions next year; as well the US political situation,” the report states, indicating that investors will decide on their interest in new initial public offerings based on “macro-economic factors.”
Carolyn Ng, managing director at cancer-focused venture firm Vertex Ventures, told the researchers that the private firms she’s in conversation with are worried about the potential to go public at all in 2020.
“It would be surprising to see preclinical companies managing to get away next year, for example,” the report quotes her as saying.
Pharma outlook 2020: Investor takeaway
It is clear the prospect of drug investing still offers investors with upside potential, as many drug makers work towards critical approvals in 2020. The industry, however, will face a critical eye from the government in the US as patients demand fair prices for new products.
With a presidential election on the way, investors will have to remain wary of increased volatility around the corner for the industry.
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.