By Deena Beasley
SAN FRANCISCO (Reuters) – The biopharmaceutical industry is aiming for a 2025 reversal of last year’s slump in investor returns but remains wary over what President-elect Donald Trump’s priorities might be on hot button issues such as drug pricing reforms and vaccines.
The pharma industry faced its biggest regulatory change in decades with the Biden Administration’s Inflation Reduction Act of 2022, which allowed the federal government’s Medicare health plan for the first time to negotiate prices for its costliest prescription drugs.
“Nothing kills investment like uncertainty. The IRA led to a lot of uncertainty in the sector,” Steve Ubl, head of industry lobbying group PhRMA, said at the JP Morgan Healthcare Conference this week in San Francisco.
PhRMA is hopeful the new administration will be less focused on “attacks to 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, with the results largely in line with existing prices after discounts and rebates.
Names of the next 15 drugs up for price talks are due by Feb. 1 and could be announced this week, although it is also possible that the final list could change after Trump takes office on Jan. 20.
Last year, the Nasdaq Biotechnology Index fell 3%, compared with a gain of 23% for the bellwether S&P 500 and a jump of nearly 29% for the tech-laden Nasdaq. The NYSE Arca Pharmaceutical Index rose 1%.
The discrepancies came despite all-time stock price highs hit by obesity drug manufacturers Novo Nordisk and Eli Lilly. Lilly ended 2024 with a gain of 31%, while shares of Novo, which posted underwhelming trial results for a 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 cope with looming patent expirations, said Roel Van den Akker, pharma deals leader at PwC.
PATENT EXPIRATIONS
Morgan Stanley estimates that around $175 billion of 2025 U.S. large-cap biopharma revenue – 35% of the total – will go 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 significantly last year.
The value of life sciences mergers and acquisitions totaled around $80 billion in the year through November, less than half of 2023’s total, according to the Iqvia Institute for Human Data Science. No deals over $5 billion closed last year.
