Pharma has helped in saving the world from COVID-19, yet still, the field of biotechnology has many of the crosshairs, concerning politicians.
Though, along with plenty of anti-pharma politicians and as well as the regulatory encouraged within the present time environment, and also with more of the aggressive tax and spending policies in the work, there are several risks to biotech over the upcoming 1-2 years, out of Washington.
below are the five themes that can create sleepless nights; drug pricing, uncertainties in approvals of drugs, deal-making constraints, inflationary pressures, and adverse tax regulation changes. However, as per the reports of biotech consulting firms, some of these are being quoted with different prices in the markets while some are still not. This merely depends on one can reveal such risks that could even be resolved to the upside, in more favourable ways rather than the present time expectations.
Moreover, all of these such threats are likely to have the capability to shape the market sentiment, specifically for the biopharma and also to push up the sector rotations including benefit class reorganizations.
Here’s my rather long-winded take on these five macro risks and some possible implications to the sector.
Drug Rating Renovation Can Hurt Revolution
Throughout the election for the year 2020, there was almost a Pollyannaish vision that Biden’s reasonable position and the COVID vaccine/rehabilitation halo would put off any kind of material pricing that reforms for a few of the years. Top life science consulting firms claimed that the sentiment is actually no longer and we are stimulating only the rumoured, that too coming from expected announcements on the related issue. Meanwhile, the drug cost of farming precisely as a source of funding is used to support other ideas of the administration that makes it look more palatable to the public, regardless if in the end it gives similar results.
FTC can block future deals of M&A
For consecutive years, there has been a noise of people who are less informed and are making claims that the biopharma M&A was anti-competitive and that this coalition is being set high with a high price ratio. Overall this has been a topic of anti-pharma discussion. Though this new working group occurred after a period of collective conversation in Washington. For instance, Rep Katie Porter’s ‘bombshell’ revealed that the M&A is likely to kill the innovation within the small-scale firms of biotech. Later on, it was found that the report was not accurate which also indicated the lack of insight on how biopharma ecosystems work.
FDA Can Make Approval Process Harder
Two decades back, the FDA was commonly entitled as being counterproductive to the invention and served more as an opponent than a supporter. Since that day, because of the true leaders and also because of several numbers of very productive initiatives, the entire FDA changed the whole perception dramatically and has been highly considered within the favourable light in the present years. However, it is quite obvious that the FDA is still not easy to go on many of the drug developments but, overall it has been actively working in the development of new medicines.
Since all of the aforementioned risks are independent variables in several ways, thus, is likely to have the potential to boost each other. If this has resulted in compounded and negative consequences, that doesn’t fall in the favour of the sector. Hence, then this downdraft within the markets can increase significantly while tightening up the financial surroundings.