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Patent expirations threaten $175 billion in biopharma

revenue by

decade end

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Pharma CEOs hope to influence Trump policy

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Industry wary of some Trump nominees

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PhRMA hopes for focus on reduced inefficiencies under new

administration

By Deena Beasley

SAN FRANCISCO, Jan 14 (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 ( LLY ). 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.

The expectation that the next chair of the Federal Trade

Commission will be more deal-friendly than Lina Khan has been is

viewed as positive for drugmakers.

On Monday, a flurry of deals were announced including a

$14.6 billion acquisition by Johnson & Johnson ( JNJ ).

Trump nominated current Commissioner Andrew Ferguson to

succeed Khan. Investors are less enthusiastic about some of

Trump's other high-profile nominations to top positions in his

next administration.

"RFK's views on vaccines could certainly impact some of the

major pharmaceutical companies," said Foley Hoag partner Beth

Neitzel, referring to Trump's pick to lead Health and Human

Services, Robert F. Kennedy Jr, who has been an outspoken

vaccine skeptic.

"I think the objective will also be to find common ground.

Making America healthy is what we are all about," Biogen CEO

Chris Viehbacher said in an interview during the

conference.

PHARMA EXECS TO EXERT INFLUENCE

Pfizer ( PFE ) CEO Albert Bourla underscored the industry's

uncertainty in his session at the conference with investors, but

said on Monday he would try to influence the environment.

"There are several people that think, for our industry, the

risks outweigh the opportunities. There are other people, among

them myself, which they think that the opportunities outweigh

the risks. I guess we will see," he said.

J&J CEO Joaquin Duato told investors "it's difficult for me

to estimate what's going to happen," adding that he would be

pushing policies with the Trump administration on innovation and

access.

Investors are focused on the impact of government policy on

drug prices, including any changes to the IRA that could affect

how quickly individual medicines become eligible for Medicare

price negotiations.

Those changes would be difficult to make because they are

written into the law, said Priya Chandran, biopharmaceuticals

sector leader at Boston Consulting Group.

"It is unlikely that anything is going to drastically change

in the first year," she said.

Foley Hoag's Neitzel said reports of Trump's "warm and

cordial" December dinner with pharmaceutical executives in

Florida have led to some optimism.

However, "the pretty universal statements by both Trump and

RFK in the past about drug pricing do not suggest that this

incoming Trump administration is going to be helpful to the

industry," she said.