biopharmadiveDecember 27, 2017
Tag: Biopharma , drug prices
The drug pricing debate will likely stay in the headlines in the new year, while M&A could get a jumpstart after Congress passed a new tax law that could make deals more lucrative. Here are BioPharma Dive's picks for hot trends to watch in 2018:
It’s been a hot topic for more than two years, and it’s not going away in 2018. Expect this debate to be reignited with some fresh vigor when Spark Therapeutics announces the price of its recently approved gene therapy in January.
While the current administration hasn’t taken any action to lower drug prices just yet, President Trump has chimed in about the prospect a handful of times over the year. And more recently, Trump’s pick for Health and Human Services Secretary Alex Azar said during his Senate confirmation hearings that lowering drug prices would be a top priority.
But don’t expect the industry to take the changes lying down. Industry lobbying group PhRMA has been working tirelessly to change the conversation around drug pricing, redirecting the public’s ire away from drugmakers and toward pricing middlemen like pharmacy benefit managers (PBMs). The group has launched multiple advertising campaigns on the topic and PhRMA President Steven Ubl told BioPharma Dive in November that he is starting to see a sentiment change.
While drug pricing will definitely be part of the conversation in 2018, expect drugmakers to do more self-regulating. We already started to see several drugmakers price newly approved drugs either below competition or well below expected value, hoping to come in at a price that would get payer praise and help boost marketshare.
M&A
2017 was a tough year for dealmaking in the pharma space. Uncertainty around tax reform had most big pharmas sitting on the side lines. But now that the GOP has pushed its rewrite of the tax code through, expect pharma to join the dealmaking fray once again.
Not only is uncertainty cleared up, but the new tax measures mean that corporations can bring back cash held overseas at a much cheaper rate. Expect several of the big pharmas and big biotechs to repatriate some green – while most of it will likely go to share buybacks, at least some of it will be used on deals.
Analysts and investors are also itching for companies to start making deals again as they watch pipelines progress and worry that pharma needs new innovations to move into the pipeline. The Food and Drug Administration has already approved a record number of new drugs this year, so expect pharma to look for early-stage compounds or platform technologies with the hope of producing blockbusters in five to seven years.
There has also been chatter that 2018 will be a year of megadeals. The industry hasn’t seen any monster mergers since 2009 and a few of the smaller big pharmas (Bristol-Myers Squibb Company, Eli Lilly & Co., Allergan Inc.) are all looking ripe for take out. Check out BioPharma Dive’s list of potential takeout targets.
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