No other healthcare sub-sector generates as much of its sales in the US as the biotechnology sector. Questions regarding the future direction of healthcare policy under the Trump administration are therefore likely to be the greatest factor of uncertainty hanging the sector for the next two to three quarters.
What is certain is that the healthcare reform introduced by Trump’s predecessor Obama will cease to exist in its current form. Tom Price, the new health secretary and an outspoken opponent of Obamacare, will be setting the new agenda for healthcare policy in the US. Debate is likely to center on how spending on healthcare is financed in the future.
Here it appears that the role of the government will become much smaller, regardless of the shape or form it takes, but policy specifics are still scarce, regarding for instance drug pricing.
What is also obvious is that the biotech sector stands to profit from positive signals on the regulatory front. The 21st Century Cures Act passed by Congress in December is viewed as a big step in the right direction.
With regard to drug pricing practices, payers have been putting more pressure on the prices of newly approved drugs, especially those targeting diseases where the market is big and several products are already available (for example diabetes). That contrasts with the situation in oncology, where drug manufacturers probably have the best cards when negotiating prices due to the high unmet medical needs.
Positive news flow
Most of the biotech firms at the conference were in good spirits. There were positive signals regarding the fundraising climate as well as the sector’s innovative strength. Incyte, a science-led biopharmaceutical research company specializing in oncology product development, gave a particularly convincing presentation at the conference. It already outperformed the general market by a wide margin in 2016 but positive clinical readouts could lead Incyte shares higher in 2017.
Other positive news included Ionis Pharma receiving FDA approval for Spinraza in late December; a spinal muscular atrophy (SMA) treatment in pediatric and adult (late-onset) patients.
