The JPMorgan Chase & Co (JPM) annual healthcare conference ended in San Francisco on January 13. This event with a forty-year history is considered one of the most significant in the medical community: pharmaceutical company executives participate in it, important statements about mergers and acquisitions are made on its site, new drugs are presented and breakthrough research is announced.
Taking into account the new realities, for the second year in a row, the event is held in an online format. Let's list the most interesting industry trends that were outlined in the speakers' speeches.
The use of RNA is recognized as the main trend in pharmacology
Ribonucleic acid (RNA) is one of the three main macromolecules in the cells of all living organisms. Although the functions of RNA are not yet fully understood, studies show that this acid plays an important role in the coding and regulation of genes.
Ribonucleic acid has attracted increased attention in connection with the development of vaccines against Covid-19. The previous generation of vaccines involved the introduction of a weakened virus into the body to form a subsequent immune response. Moderna (MRNA) and Pfizer (PFE) vaccines, created on the basis of informational RNA, work differently: they ”teach" human cells to produce a protein that triggers an immune response to prevent infection with coronavirus. Thus, the immune system of a vaccinated person is trained to recognize a protein containing Covid-19 and produce antibodies to it.
As part of the conference, Pfizer announced the conclusion of three agreements with smaller industry players to accelerate RNA developments. The company sees a huge potential for RNA-based drugs - in particular, in the treatment of cancer and rare diseases. Amgen's interest in collaborating with Arrakis Therapeutics in the study of RNA is widely discussed, which could result in an order for several billion dollars for the latter. Pharmaceutical giants Johnson & Johnson (JNJ) and Eli Lilly (LLY) have so far limited themselves to restrained statements that they are exploring the possibilities of RNA technologies.
Coronavirus pushes for partnerships instead of mergers
For the second year in a row, the healthcare sector has not heard about major deals. The coronavirus has shuffled all the cards. Previously, when a breakthrough technology was discovered, a pioneer was usually expected to be absorbed at a premium to the market, but the pandemic has taught companies to think in a new way, and now they are increasingly inclined to partnerships.
The most telling example was the collaboration in the development of a coronavirus vaccine between Pfizer and BioNTech (BNTX). Through partnership, large players actually place an order for development to specialized companies with lower turnover. As a result, both sides benefit: pharmaceutical giants save money, and their partners receive orders and financing.
Having not had time to fully vaccinate against Covid-19, humanity faced a threat in the form of a new and more contagious variant of the coronavirus - "omicron". A strain from South Africa sets anti-records for morbidity in developed countries, involving pharmaceutical giants in a new development race.
Some companies at the conference reported on the supply of their drugs against coronavirus. So, Moderna reported that its sales in 2021 amounted to $ 18.5 billion. GlaxoSmithKline (GSK), in partnership with Vir Biotechnology (VIR), reported on the supply to the US government of 600 thousand doses of the drug for the treatment of Covid-19 sotrivimab. Novavax (NVAX) announced that it has already made the first shipments to Europe of its Covid-19 vaccine, but did not specify the volume of orders. And Gilead Sciences (GILD) has informed that its drug remdesivir may soon be approved by the US regulator for the treatment of coronavirus.
As for the development of drugs aimed directly against the omicron strain, only Regeneron (REGN) and Pfizer have made statements about this. Regeneron is going to test the treatment of omicron with antibodies in the first quarter, and Pfizer spoke about the progress in creating a new vaccine against Covid-19, which will also work against the new strain.
There is an opinion that omicron as an opportunity rather than a threat. Perhaps omicron is our salvation from coronavirus restrictions, since the body of vaccinated people, having met with a new strain of virus from South Africa, gives an immune response, which can be considered as an alternative to booster vaccination. Which, in a global effect, can give massive protection against coronavirus infection.
Large pharmaceutical companies are in a hurry to reassure investors who are beginning to pay attention to the patent terms of drugs that occupy a large share in their sales.
As a rule, after the expiration of a patent for a particular drug, the market is flooded with its cheaper copies, which significantly reduces the revenue of the manufacturer of the original drug. Therefore, investors expect a diversified portfolio of developments from pharmaceutical giants, which will include not only expensive cancer drugs, but also a wide range of medicines for other diseases.
For example, the patent of the anti-cancer drug from Merck & Co (MRK) Keytruda expires in 2028. Total sales of this drug for 2020 amounted to $14.4 billion, which accounted for 30% of Merck's revenue. If the company does not explain to investors before the expiration of the exclusivity period how it is going to compensate for the upcoming "loss” of sales volumes, the market reaction can be very negative.
An endless "arms race" continues in the pharmaceutical sector. Since breakthrough technologies and patents provide only a temporary competitive advantage, companies have to constantly set themselves new and new goals.
However, the JPMorgan conference reflected some changes in the behavior of both pharmaceutical companies and their investors. Industry representatives confirmed their propensity to create partnerships, and investors confirmed their demands for diversification of development portfolios.
The most obvious new trend among the elite of pharmacology has been the use of ribonucleic acid to encode the human immune system. It is assumed that with the proper development of technology, scientists will be able not only to achieve the necessary immune response to various infectious diseases, but also to eliminate defects in hormones or blood quality.
And the main intrigue remains who will be the first to develop a vaccine against the omicron strain. Leading pharmaceutical giants are studying its characteristics, causes of origin and the reaction of previously vaccinated people to it. Thus, the beginning of this year is similar to the beginning of the previous one. Back then, we were also on the verge of creating a working version of the vaccine and watched the deadly virus walk around the planet uncontrollably.