Published September 21, 2021 | 4 min read
Key Points
- Ongoing uncertainty around COVID-19 variants, coupled with proposals to waive IP patents on vaccines, could impact investment and innovation in biopharma.
- The growth of telemedicine could change the dynamics of new drug launches and diagnosis of diseases, and potentially offer convenience and lower costs.
- Developments in in vivo gene editing hold much promise for rare genetic conditions, cancers, and some infectious diseases, though their long-term impact has yet to be established in trials.
- New-to-market drugs may face stricter scrutiny from public payers, which are mirroring private insurance by requiring further studies ahead of greater coverage.
Required Disclosures and Disclaimers
This year has seen a brace of activity in biopharma that will shake up the orthodoxy on healthcare delivery for decades to come. A range of disruptive technologies, epidemiological dynamics and legal developments are set to have a transformational impact on the sector’s long-term value. Seeing the big picture will be key to harnessing and adapting to these thematic drivers of change.
From the approval of new Alzheimer’s drug aducanumab to the continuing impact of the coronavirus pandemic, transformative activity is causing disruption on a number of fronts. There is growing attention on patent waivers, the impact of telemedicine on approaches to treatment, and for the first time, how the approval of new drugs hasn’t guaranteed rapid access on Medicaid and Medicare.
From the approval of new Alzheimer’s drug aducanumab to the continuing impact of the coronavirus pandemic, transformative activity is causing disruption on a number of fronts. Against this backdrop, there is growing attention on patent waivers, the impact of telemedicine on approaches to treatment, and for the first time, how the approval of new drugs hasn’t guaranteed rapid access on Medicaid and Medicare.
Ongoing uncertainty around COVID-19 variants – coupled with proposals to waive IP patents on vaccines – could also potentially impede investment and progress in the sector across clinical, commercial and regulatory fronts. The post-pandemic paradigm is already demonstrating how products and technologies will not go back to how they were. We believe that the second half of 2021 will see a need for companies to respond to this fluid environment by pivoting their commercial strategy to reflect longer term trends influenced by various legal, epidemiological and technological factors.
That said, the fundamentals of biopharma have shifted to the extent that the future investment landscape is an exciting place to be. Here, we look at some of the industry pivot points that could inform your investment strategy over the next year.
Patent waivers – opening the door to opportunity or existential threat?
The drive to vaccinate the planet urgently against COVID-19 has prompted the World Health Organization (and subsequently the Biden Administration) to push for patent waivers from the principal vaccine providers.
Agreeing to waive, however, leaves the biopharma sector facing threats both to fair competition and IP, setting a precedent for similar scenarios in future. This is not a new phenomenon either, similar debates have occurred in the cases of HIV, Hep C and rare or orphan diseases, and there have been 160 cases of compulsory licensing since 2001. For this reason, we see risks remaining above the norm for therapeutics providers.
At this time, not everyone is enthusiastic about the idea of patent waivers. Germany has voiced its current opposition to proposals and biopharmas are lobbying governments to reconsider. As the pandemic subsides, the debate may weaken, but there are other factors to consider, including further discussions at the World Trade Organization (WTO) and President Biden’s potential choice of Head for the Patent and Trademark Office (PTO).
Telemedicine – set to change the longer-term dynamics of care
Remote consultation has achieved a remarkable level of normalcy during the COVID-19 crisis. And post-pandemic, the combination of lower costs and convenience for medics and patients alike are also set to create challenges and opportunities in the biopharma industry.
The complexity of regulations, however, may yet frustrate the growth of telemedicine. While laws at both state and federal level were changed during the pandemic to allow for more extensive provision of virtual care, they may revert once the COVID-19 threat is sufficiently weakened. Biopharma companies may also choose to pivot their strategies and reduce business costs in response.
For telemedicine to succeed, administrators will need to find the right balance of virtual and in-person care.
Meanwhile, the commercialization of new treatments has often failed to meet expectations in the last 18 months, most likely due to the limited opportunity given to prescribe them under pandemic consultation restrictions. For telemedicine to succeed, administrators will need to find the right balance of virtual and in-person care.
In vivo gene editing – can the revolution meet its promises?
One of the most revolutionary arms of biopharma, in vivo gene editing carries the hopes of large swathes of the industry in transforming treatment of the world’s rarest and most stubborn conditions. Treatments could potentially target and correct mutations that drive rare and genetic diseases, cancers, and some infectious disease with high durability and efficiency.
In vivo gene editing carries the hopes of large swathes of the industry in transforming treatment of the world’s rarest and most stubborn conditions. Further progress is not guaranteed, however, without more work on engineering wider human tissue, and ensuring the longer-term safety of these methods.
Further progress is not guaranteed, however, without more work on engineering wider human tissue, and ensuring the longer-term safety of these methods. Patients may also be reluctant at this time to explore under-proven treatment technologies, particularly if they only offer incremental advantages over simpler and more scalable technologies.
The path from discovery to access could become more complicated
The Centers for Medicare and Medicaid Services (CMS) have traditionally been quick to add new drugs following FDA approval. However, attitudes have become cautious following the controversy surrounding the approval of the Alzheimer’s treatment Aduhelm.
CMS may take a more private insurer-style approach by requesting further supporting evidence before widening access to new drugs or treatments.
For biopharma, such delays can increase commercialization risks across the sector. This trend may be simply a targeted response to Aduhelm, and company strategies such as competitive pricing models or active lobbying from patients may help take the heat off wider current regulatory challenges.
Depression – short-course therapies are reshaping the market in psychedelics
The treatment of depression no longer relies only on long-term therapies. With an increased understanding of both psychiatric conditions and the relative effectiveness of available drugs, newer, single-dose or short-course therapies have now come to market - bringing a healthy boost to an already competitive marketplace.
Studies on acute psychedelic treatments are very favorable overall, but the lack of benchmark evidence supporting their durability could push practitioners back to the comfort zone of traditional, chronic approaches.
Brian Abrahams and Gregory Renza authored “Game Changers: Disruptive Forces in Biotech” published on July 28, 2021. For more information about the full report, please contact your RBC representative.
RBC Imagine™
This report is part of our RBC Imagine initiative, which assesses the long-term impact of emerging disruptive forces, thematic drivers of global change, and opportunities across the rapidly evolving equities landscape through management interviews, cross-sector case studies, and differentiated research reports.
