Global Economic Trends: Implications for the Pharmaceutical Sector in 2024

Current Global Economic Landscape and Healthcare Spending

The current global economic landscape is impacting healthcare spending, with trends such as delayed procedures and reduced physician visits noted by JNJ. GSK highlights stockpiling and patient demand affecting sales, while PFE reports lower drug demand, particularly in China. Conversely, MRK and JNJ see opportunities for innovation and premium pricing amidst these challenges.

"Changes in the behavior and spending patterns of purchasers of healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing healthcare insurance coverage, as a result of the current global economic downturn, may continue to impact the Company’s businesses." --- (JNJ, sec filing, 2024/Q2)

"owing to stockpiling and patient demand. It’s still early in the year, and we are continuing to assess and manage the impact of the AMP Cap removal in the U.S. As a reminder, there was a US$150 million impact in 2023, and we continue to expect up to US$550 million of sales at risk for the full-year." --- (GSK, earning call, 2024/Q1)

"Dampening our growth in the quarter was the expected lower global demand for Ibrance, and Sulperazon, driven largely by lower demand in China in the first quarter of 2024 versus last year." --- (PFE, earning call, 2024/Q1)

"We have the potential to bring as many new drugs to market in the next 5 years as we launched over the last 10 years, across a greater number of therapeutic areas and modalities, and with a significant proportion having blockbuster-plus potential.We’ve made tremendous progress building on our past successes, enabling the creation of a sustainable engine that will drive future innovations for patients." --- (MRK, earning call, 2024/Q1)

"I do think we benefit from the global nature of our business. While there are pockets cost containment efforts that we're managing, like VBP in China, we see tremendous opportunity to really secure a premium pricing, especially where we have differentiated innovation.And especially now that we're entering or are entering is like cardiovascular of significant unmet need, there is tremendous opportunities for us to ensure that we secure premium pricing for truly differentiated innovations, especially in areas like electrophysiology, in heart recovery with Abiomed, and more recently with Shockwave. Thank you." --- (JNJ, earning call, 2024/Q2)

Impact of Inflation on Drug Pricing and Supply Chains

Inflation is exerting significant pressure on drug pricing and supply chains, with companies facing increased pricing controls and reimbursement challenges. Government actions to combat inflation are impacting sales, while demand fluctuations may lead to supply tightness, complicating the landscape for pharmaceutical firms.

"Trends Affecting Pharmaceutical Pricing, Reimbursement, and Access and Certain Other Regulatory Developments Reforms, including those that may stem from political initiatives, periods of uneven economic growth or downturns, or as a result of high inflation, the emergence or escalation of, and responses to, international tension and conflicts, or government budgeting priorities, are expected to continue to result in added pressure on pricing and reimbursement for our products." --- (LLY, sec filing, 2024/Q2)

"Economic and Market Factors Governmental Actions Our products continue to be subject to increasing pressures across the portfolio from pharmaceutical market access and pricing controls and discounting, changes to tax and importation laws and other restrictions in the U.S., the EU and other regions around the world that result in lower prices, lower reimbursement rates and smaller populations for whom payers will reimburse, which can negatively impact our results of operations (including intangible asset impairment charges), operating cash flow, liquidity and financial flexibility." --- (BMY, sec filing, 2024/Q2)

"But all of us, and I will speak about Pfizer right now, we did the utmost to ensure that these vaccines will find their way on an equitable way everywhere. And for that, we took significant measures by pricing the product in a tier pricing that was the cost of a takeaway meal in the high income countries, half of that in the middle income countries." --- (PFE, event transcript, 2024/04/25)

"Furthermore, product sales continue to be impacted by actions from governments and other entities to curb high inflation, provisions of the IRA and growth in numbers of Medicaid enrollees and uninsured individuals." --- (AMGN, sec filing, 2024/Q2)

"While supply and demand has come into better balance, we expect increase in demand may result in periodic supply tightness for certain presentations and dose levels." --- (LLY, earning call, 2024/Q2)

Regulatory Changes and Their Implications for Pharma

Regulatory changes are significantly impacting the pharmaceutical sector in 2024. Companies like Sanofi and Teva are adapting to exclusivity losses and macroeconomic pressures, while AbbVie and AstraZeneca highlight the importance of regulatory approvals for market expansion and product access, underscoring the critical role of compliance in strategic planning.

"Let me now give you some additional information on our coming quarter. In Q2 2024, we expect Dupixent on the new pharma launches to grow further, while we continue to see the impact of the Aubagio loss of exclusivity in Europe." --- (SNY, earning call, 2024/Q1)

"We have implemented certain measures in response to such events and are continually considering various initiatives, including price adjustments where we are not restricted contractually or regulatorily, enhanced inventory management, alternative sourcing strategies for our raw material supply and backup production plans for key products, to allow us to partially mitigate and offset the impact of these macroeconomic and geopolitical." --- (TEVA, sec filing, 2024/Q1)

"And in neuroscience, we continue to make good progress with 951, where we have received regulatory approvals in 33 countries thus far and anticipate an approval decision in the U.S. in the second quarter." --- (ABBV, earning call, 2024/Q1)

"Importantly, as shown on the right of the slide, new interim results from the open-label Phase 3 ASSURE study of seladelpar for PBC were consistent with the pivotal RESPONSE study that formed the basis of our global regulatory filings." --- (GILD, earning call, 2024/Q2)

"And you can see on this slide are the results of our Phase 3 MIRACLE study studying Chinese patients where Fasenra demonstrated a super strong 74% reduction in severe exacerbations and indeed across the different secondary endpoints and forms the basis of our application for regulatory approval in China, which we expect by the end of this year. Now if approved, this will give us a significant opportunity to further expand the number of patients we can serve with Fasenra and certainly consolidate our leadership position in China." --- (AZN, event transcript, 2024/05/21)

Trends in Pharmaceutical Innovation for 2024

In 2024, pharmaceutical innovation is marked by expanding pipelines and new technologies, as seen in Regeneron's thriving drug development efforts. Vertex anticipates significant milestones in pain management, while Sanofi's growth is driven by new product launches. Bristol-Myers Squibb introduces innovative administration methods, underscoring a trend towards diverse therapeutic advancements.

"Heading into 2H 2024, we take pride in the expanding impact of our medicines, our thriving pipeline, and exciting technologies that sustain our approach to drug development and manufacturing." --- (REGN, Twitter, 2024/08/01)

"In addition, as we move through 2024, we anticipate further important achievements, including multiple milestones in our pain portfolio, such as a Phase 2 data readout with Suzetrigine in LSR, Phase 2 initiation of VX-993 studies in acute pain and in diabetic peripheral neuropathy, as well as progress towards pivotal development in T1D." --- (VRTX, earning call, 2024/Q2)

"Those have been explained on the slide. Let's turn to the business. We had an excellent start in 2024 with 7% sales growth, in line with our fast-moving portfolio transformation, growth was driven by launches, including new and existing indications for Dupixent and this performance fully underpins our 2024 EPS guidance as CEO." --- (SNY, earning call, 2024/Q1)

"Product Indication Date Developments Subcutaneous nivolumab Multiple Indications June 2024 Announced EMA validation of the extension application to introduce a new route of administration (subcutaneous use) for Opdivo (nivolumab) that includes a new pharmaceutical form (solution for injection) and a new strength (600 mg/vial) across multiple previously approved adult solid tumor indications as monotherapy, monotherapy maintenance following completion of nivolumab plus ipilimumab combination therapy, or in combination with chemotherapy or cabozantinib, based on the results from the Phase 3 CheckMate -67T study." --- (BMY, sec filing, 2024/Q2)

"The FDA has not informed us of any approvability issues for linvoseltamab related to safety, efficacy or the status of our ongoing confirmatory trial. More broadly on our pipeline, we are excited about several upcoming readouts later this year or in 2025 to further inform programs that could support significant long-term growth opportunities which George will discuss in a moment. In closing, our pipeline continues to generate innovative and differentiated opportunities and now has over 35 programs in clinical development spanning several distinct therapeutic areas." --- (REGN, earning call, 2024/Q2)

M&A Activity and Its Implications for the Sector

M&A activity is a critical focus for pharmaceutical companies in 2024, with firms like Merck emphasizing its vital role in growth strategies. Bristol-Myers Squibb and GSK also highlight strategic partnerships and in-licensing as key to enhancing their pipelines, indicating a trend towards consolidation and collaboration in the sector.

"Business development and partnerships remain important for us and we continued to strengthen our balance sheet while maintaining our commitment to returning cash to shareholders. Taken together, these actions are ensuring we are focused on the highest-value activities across the organization, tightening our execution where needed and accelerating our ability to deliver important medicines to patients. On that note, turning to Slide 6." --- (BMY, earning call, 2024/Q2)

"Let me reassure you that M and A remains a top priority for the board, and it will continue to play a vital role, vital importance in Merck's future growth strategy." --- (MRK, event transcript, 2024/04/26)

"We're expanding our global reach with our existing medicines, advancing a diverse range of potentially 1st in class and or best in class therapies in our mid stage pipeline, we're redefining what's possible in research as we harness transformative technologies." --- (AMGN, conference, 2024/06/06)

"And given our recent in licensing of 2 ADCs from Hanso, we will detail our future opportunity across solid tumors. And finally, we'll walk you through the near term catalysts that will help us to achieve our stated growth ambitions." --- (GSK, event transcript, 2024/06/17)

"And so we're looking at that pipeline in all different therapeutic areas. We're looking to augment in areas that we have strength to perhaps accelerate our efforts, but we also to look to augment in areas maybe where we don't have such strength, where we've seen the science evolve externally so that we can play a role in advancing the science and having impact across the world." --- (MRK, conference, 2024/05/15)

Future Outlook for the Pharmaceutical Sector

The future outlook for the pharmaceutical sector appears strong, driven by significant revenues from key players like Pfizer and Johnson & Johnson, ongoing collaborations for innovation at Merck, and the potential of new drug developments to create growth opportunities.

"We believe no other pharmaceutical company can claim such an incredible reach of patients with their products.2nd, for the full year 2023, despite the challenges with the COVID projections, we recorded $58,500,000,000 in revenue and we were the number one pharmaceutical company in terms of revenues from pharmaceutical only products." --- (PFE, event transcript, 2024/04/25)

"At the same time, we will continue to seek opportunities for external collaborations to specifically strengthen our development portfolio across clinical phases as we recently successfully did through collaborations agreements with Hengri Pharmaceuticals, Abisko Therapeutics and Inspirnap." --- (MRK, event transcript, 2024/04/26)

"New drugs in development having novel mechanisms of actions for this condition are further expected to bring more growth opportunities for this market in the near future." --- (LLY, press release, 2024/07/25)

"So what's the outlook like in Europe and what should we know? Jennifer: So, first thing to know is that we are the number one pharmaceutical company in Europe and we have been now for the past couple of years." --- (JNJ, conference, 2024/06/12)

"Of course, we are also working to develop future breakthroughs where we have opportunities to bring the most important new therapies to patients in need." --- (PFE, earning call, 2024/Q2)

Global Market Dynamics Affecting Pharmaceutical Growth

Global market dynamics affecting pharmaceutical growth include AstraZeneca's agile supply chains enhancing patient access, GSK's product demand driven by international launches, Abbott's focus on biosimilars and medical devices, Novartis' partnerships for treatment accessibility, and a projected $314.4 billion cancer immunotherapy market by 2032.

"And in rare diseases, we're leveraging our leadership position our regions, supported by our intelligent, sustainable supply chains, we're putting our medicines into the hands of patients faster than ever before, leaving us poised to deliver many more years of industry leading growth.And as we've grown our company, we've remained agile, harnessing the power of science and innovation and our global reach to make a positive impact on people, society and the planet." --- (AZN, event transcript, 2024/05/21)

"Zejula’s performance was driven by increased patient demand and higher volumes due to the new tablet formulation, with further growth from new International launches." --- (GSK, earning call, 2024/01/05)

"autoimmune disease and GLP1 medications. Biosimilars represent the highest growth segment in the branded generic pharmaceutical market, and we look forward to continuing to build one of the most complete portfolios in the industry.I’ll wrap up with medical devices, where sales grew 12%, in diabetes care, Freestyle Libre sales were $1.6 billion in the quarter and grew 20%." --- (ABT, earning call, 2024/Q2)

"We are committed to partnering with leading pharmaceutical companies to advance treatment accessibility for patients worldwide." --- (NVS, press release, 2024/08/28)

"With the global cancer immunotherapy market projected by analysts at Custom Market Insights to reach US$314.4 billion by 2032, growing at a 7.2% CAGR, the biotech sector continues to make significant developments in cancer treatment and diagnostics, with recent updates coming from Oncolytics Biotech Inc. (NASDAQ:ONCY) (TSX:ONC), Celcuity Inc. (NASDAQ:CELC), Olema Pharmaceuticals, Inc. (NASDAQ:OLMA), Bio-Rad Laboratories, Inc. (NYSE:BIO), and AstraZeneca PLC (NASDAQ:AZN)." --- (AZN, press release, 2024/05/03)

Emerging Markets and Their Role in Pharma Expansion

Emerging markets are pivotal for pharmaceutical expansion, with companies like JNJ and GSK optimistic about growth opportunities. JNJ highlights innovative products from China gaining global approval, while GSK emphasizes strategic focus on these markets. Pfizer also sees potential in international launches, underscoring the sector's commitment to emerging regions.

"So markets that are growing more than 5%. So I'm very optimistic about our ability to continue to drive best in class growth in pharma, which is one of my priorities, even in the context of the entry of the biosimilars of Stelara." --- (JNJ, conference, 2024/05/29)

"And then if you look at ex U.S., we've got good growth in Europe, which is heavily volume-driven and emerging markets, we're still in the launch phase with a lot of these smaller markets." --- (GSK, earning call, 2024/Q1)

"We see additional opportunities for expanding share in both acute and prevention usage, as well as growth opportunities in international markets where we are making progress with our launches." --- (PFE, earning call, 2024/02/06)

"CAR VICTI coming from the Legend collaboration, I think, which is now becoming kind of a milestone for the whole pharma industry in terms of bringing a innovative product out of China and having it be approved now I think in 70 markets around the world and really a flagship program for addressing multiple myeloma in multiple territories." --- (JNJ, conference, 2024/06/12)

"And then ultimately, once we've moved through those cohorts, we'll get to emerging markets as we've covered on previous calls." --- (GSK, earning call, 2024/Q2)