Read our Pharma Market Update for our insights on the sector this quarter. In our view, the pharma industry needs to ‘double-down’ on organic and inorganic innovation to navigate a challenging marketplace in the coming years. First is a looming “patent cliff” with the top 20 biopharma companies collectively facing as much as $180B of potential revenue headwind through 2028. Also, with the election of President Donald Trump, we see an ongoing effort to put downward pressure on drug pricing using legislation and/or regulation. In our view, any pressure on Medicare (and Medicaid) pricing could have a ‘ripple’ effect into commercial pricing

Key Takeaways

1. President-elect Donald Trump announced the nomination of Robert F. Kennedy Jr. (RFK) as his Secretary of the Department of Health and Human Services. RFK is perhaps best known for his criticism of what he considers to be lax regulatory oversight of vaccines. RFK has also supported measures to cap drug prices. To us, RFK’s past commentary on drug pricing seems consistent with Trump’s attempt to implement a “Most Favored Nation” policy late in his first administration.
2. Also, the U.S. House of Representatives passed the BIOSECURE Act by a wide bipartisan margin. This bill now awaits a vote in the Senate and signature by the President (Biden or Trump). In our view, passage of the BIOSECURE Act coupled with potential tariffs on imports could be very disruptive to the global pharma supply chain and it could require many pharma companies to significantly revamp their sourcing strategies.
3. We continue to see broad-based workforce reductions by large pharma and small/mid-sized biotech companies. Workforce cutbacks seem to have accelerated since the “easy” capital markets of late 2020 and 2021. Since the “bubble years” of 2020 and 2021, pharma and biotech companies have had to increasingly rely on creative financing alternatives and cost cutting to sustain their operations.
4. As an example, Bourne Partners successfully advised Nicox (XPAR: ALCOX) on a $16.5M royalty monetization and concurrent equity financing. We see royalty monetizations and structured financings as important pathways for biopharma companies to raise non-dilutive capital and fund innovation in more restrictive capital markets.

We hope you find this information valuable. If you’d like to discuss further, please reach out to our Research team.

Read our Q2 2024 Pharma Market Update here.