5/15/16
Biotechnology: more
than re-growing hair and prolonging erections!
Political rhetoric and brinksmanship may have to take a holiday
in the upcoming legislative session. In
order to maintain a friendly face for the masses, the politicos will work on
passing legislation to fast track bio therapeutic medications. The legislation, the Lifesaving Treatments
Act, will fast track the process of bringing new pharmaceuticals to market, specifically
already developed ones, thus increasing the profitability of bio pharm sales
and development.
Who gains? :
Industry/investors: Most importantly the legislation will open
doors from foreign markets, allowing countries that the federal govt deems “trust
worthy” (cruz.senate.gov). This will cause a boom in the short term for biotech
firms who have already lead successful R&D efforts overseas.
Highlights of the
RESULT Act include:
• Amending the Food, Drug and Cosmetic Act to
allow for reciprocal approval of drugs, devices and biologics from foreign
sponsors in certain trusted, developed countries including EU member countries,
Israel, Australia, Canada and Japan.
• Encouraging the FDA to expeditiously review
life-saving drug and device applications, this legislation would provide the
FDA with a 30-day window to approve or deny a sponsor’s application.
Qualifying medical products are already approved and sold in developed
nations with a satisfactory history of clinical trials and data.
• The HHS Secretary is instructed to approve a
drug, device or biologic if the FDA confirms the product is:
◦ Lawfully
approved for sale in one of the listed countries;
◦ Not a banned
device by current FDA standards;
◦ There is a
public health or unmet medical need for the product.
• If a promising application for a life-saving
drug is declined Congress is granted the authority to disapprove of a denied
application and override an FDA decision with a majority vote via a join
resolution.
• Quick and safe reciprocal approval would
help relieve some of the drug shortage problems by allowing numerous safe and
qualified alternatives to enter the U.S. market. Health care providers and
their patients who need critical and commonly used generic medications
including cancer drugs, antipsychotic drugs for mental health emergencies,
anesthetics and much more could will benefit from increased competition and a
greater supply of drugs and devices.
The biotech industries that have already had
approved treatments in these countries, many of which are not highly profitable
in overseas markets, due to socialized health care which capitates the amounts
charged for medications, stand to gain considerably form the market share
opened up in the united states where a semi capitalistic health care market
still exists. Presently costs associated
with bringing drugs or devices to market range from $2billion to $3billion
dollars, depending on the device or drug (www.bostonglobe.com). Bio pharm, though cutting edge and highly
profitable, is especially risky because costs pertaining to a substance
developed in a living cell are much higher than those of a chemical. It is worth noting that the patent and intellectual
protection rights for most bio pharm advances start at the time when testing
begins. This makes the margin even
slimmer, and the potential benefit even less for developers, since their
biologic molecule can be copied readily in the short window and released as a biosimilar
(jargon for a generic). This is well
illustrated in the case of Humira marketed by AbbVie, *ABBV on NYSE. The impending release of a biosimilar has resulted
in an evaluation and increase in price of their product, as AbbVie fights to
make as much as possible before their product is outsold by a generic (businessfinancenews.com).
For a list of historic advances in biotech view: http://www.biotechinstitute.org/go.cfm?do=Page.View&pid=22
, pharm stocks increased markedly after these events. It is likely that similar gains will occur as
markets open, and advances become more profitable, and indeed possible.
Patients: In the US Litigatory burden
alone makes up over 2.4% (55.4 billion) of health care costs in 2008 (www.ncbi.nlm.nih.gov), and while this
cost may not go down any time soon, customers of the US health care system may
at least see some relief in the form of a reduction in medical device, and drug
prices. Many of the bio therapeutics on
the market today are, in biotechnology terms, archaic. They have been replaced
in countries that have fast track processes by much more successful, and cost
effective, therapies. While the health care standard in the USA is high above
many third world countries, it does indeed rank nearly dead last in outcomes
per dollar spent in comparison to the rest of the world (data.worldbank.org). This is largely because of, pharmacotherapeutic, and administrative
costs.
Politicians: It’s as easy to find an honest politician as a
unicorn. Politicians need to seem like
they genuinely care, and to do that is to they must have non-controversial
legislation. With such a divisive
political climate, it is likely that a piece of legislation as politically
benign as this will slip past. Politicians
are eager to gain back their shares of voters, which seem to be leaving in mass
from the two parties in power. They must
therefore, sell themselves and increase their market share of voters by passing
legislation that gives the other party nothing, but makes them look
compassionate. This type of legislation
is exactly that.
Companies to
consider:
Limited down side:
ONSIU (recent IPO): http://finance.yahoo.com/q?s=ONSIU&fr=uh3_finance_web&uhb=uhb2
Higher end more stable:
Disclosure: The
author owns both GERN, and AST shares.
No comments:
Post a Comment