Biopharma industry expects recovery in 2025, struggles with uncertainty over Trump return Reuters
By Deena Beasley
SAN FRANCISCO (Reuters) – The biopharmaceutical industry aims to reverse last year’s decline in investor returns by 2025, but remains wary of what President-elect Donald Trump’s priorities might be on hot-button issues such as drug and vaccine price reforms.
The pharmaceutical industry faced its biggest regulatory change in decades with the Biden administration’s Inflation Reduction Act of 2022, which for the first time allowed the federal government’s Medicare health plan to negotiate the prices of its most expensive prescription drugs.
“Nothing kills investment like uncertainty. The IRA has led to a lot of uncertainty in the sector,” Steve Ubl, head of industry lobby group PhRMA, said at a JP Morgan Healthcare conference this week in San Francisco.
PhRMA hopes the new administration will be less focused on “attacking the ecosystem” of the industry and instead seek to reduce inefficiencies that would lower costs for patients, he said.
Prices for the first 10 Medicare-negotiated drugs were released last August, and the results are largely consistent with existing prices after discounts and rebates.
The names of the next 15 drugs to discuss prices are due by February 1 and could be released this week, although it is also possible that the final list could change after Trump takes office on January 20.
Last year, the Nasdaq biotech index fell 3%, compared with a 23% gain for the leading index and a nearly 29% jump for the tech-heavy Nasdaq. NYSE Arca Pharmaceutical (TADAWUL:) The index rose 1%.
The deviation came despite all-time high stock prices hit by obesity drug makers Novo Nordisk (NYSE: ) and Eli Lilly (NYSE: ) . Lilly ended 2024 up 31%, while shares of Novo, which reported inconclusive trial results for its next-generation weight-loss drug, fell 9%.
“Growth has been uneven across the sector. There are haves and have-nots,” as investors assess how drugmakers are coping with looming patent expirations, said Roel Van den Akker, head of pharmaceuticals at PwC.
PATENT EXPIRATION
Morgan Stanley (NYSE: ) estimates that about $175 billion in U.S. large-cap biopharma revenue in 2025 — 35% of the total — will disappear off patent by the end of the decade.
To replace that revenue, drugmakers need new products, either from their own research or by acquiring companies with promising assets, but those transactions slowed considerably last year.
Life sciences mergers and acquisitions were worth about $80 billion in the year to November, less than half of the total for 2023, according to the Iqvia Institute for Human Data Science. Last year, no deals of more than 5 billion dollars were concluded.
Expectations that the next Federal Trade Commission chairwoman will be more favorable than Lina Khan was seen as positive for drugmakers.
A slew of deals were announced on Monday, including the $14.6 billion acquisition of Johnson & Johnson (NYSE: ).
Trump nominated current commissioner Andrew Ferguson to succeed Khan. Investors are less enthusiastic about some of Trump’s other high-profile nominations for leadership positions in his next administration.
“RFK’s views on vaccines could certainly influence some of the big pharmaceutical companies,” said Foley Hoag partner Beth Neitzel, referring to Trump’s choice to head the Department of Health and Human Services, Robert F. Kennedy Jr., who was an open skeptic of vaccines.
“I think the goal will also be to find common ground. Making America healthy is what we want,” Biogen (NASDAQ: ) CEO Chris Viehbacher said in an interview during the conference.
PHARMA EXECS TO MAKE INFLUENCE
Pfizer (NYSE: ) CEO Albert Bourla emphasized the industry’s uncertainty in his session on the conference call with investors, but said Monday that he would try to influence the environment.
“There are a few people who think the risks outweigh the opportunities for our industry. There are other people, myself included, who think the opportunities outweigh the risks. I guess we’ll see,” he said.
J&J CEO Joaquin Duato told investors “it’s hard for me to gauge what’s going to happen,” adding that he would push policies on innovation and access with the Trump administration.
Investors are focused on the impact of government policy on drug prices, including any changes to IRAs that could affect how quickly individual drugs become eligible for Medicare price negotiations.
These changes would be difficult to implement because they are written into the law, said Priya Chandran, head of the biopharmaceutical sector at the Boston Consulting Group.
“It’s unlikely that anything will change drastically in the first year,” she said.
Foley Hoag’s Neitzel said reports of Trump’s “warm and cordial” dinner with pharmaceutical executives in Florida in December led to some optimism.
However, “the fairly universal statements from both Trump and RFK in the past about drug prices do not suggest that the new Trump administration will be helpful to the industry,” she said.
