US Pharma and Biotech Summit 2024: The View from Investors

Soft Landing, Hard Problems
Financial Times US Pharma and Biotech Summit 2024

After the post-Covid crash, investors are seeing promising trends in the pharma and biotech industry in 2024.

The following speakers presented a panel discussing the industry from an investors perspective at the Financial Times’ US Pharma and Biotech Summit 2024 in New York City: Harmeet Dhillon, head of public policy at GSK; Amit Sinha, chief investment officer at Goldman Sachs; Darius Lakdawalla, quintiles chair in pharmaceutical development at the University of Southern California; and Johanna Grossman, head of healthcare and US life sciences at the US Stock Exchange. Oliver Barnes, a US pharmaceutical and biotech correspondent for the Financial Times moderated the event.

The conversation focused on both the current state of the industry and where each of the speakers felt it might go in the coming year.

Grossman began by discussing how the pharma and biotech industries are performing fairling consistently with the US Stock Market. There have been strong IPOs and an increase in mergers and acquisitions.

“Looking at the buyers,” she said, “they're looking for those late stage and data driven stories. They’re looking for those companies that have a value inflection point in the near term. These companies seem more attractive, mostly because they tend to be a little bit more quote unquote, de risked, as an investment.”

Sinha shared a similarly positive outlook on the industry, saying that there are several areas he and other investors are excited about.

“Our point of view is that innovation in this space has never been better than it is right now,” he said. “You can look at cancer, inflammation, some of the things that are happening with cell therapy, and diseases like lupus. It's really remarkable. From a fundamental science perspective, we would argue it's never been better if you put on the mindset of an investor where we focus on private investing and so are a certain period for IPOs going public.”

All of the panelists agreed that there is a lot of uncertainty around the Inflation Reduction Act. Dhillon referred to it as a “market shaping act” and that it will take a decade to see how significant its impact is.

He explained, “If you if you dig a little bit deeper and think about new formulations and new indications, it definitely changes how we think about where we allocate money internally, and whether we pursue a new patient new formulation for a product that could be meaningful to a patient, but not necessarily is driven by financial incentives.”

Lakdawalla also discussed how the IRA might impact pricing trends and drug launches.

“It'll take probably five or 10 years to play out on the negotiation side,” he said, “which is really more price setting than it is negotiation. There is a lot of question about what CMS is going to do to set prices. And they've been pretty vague about how they're going to do that in order to preserve flexibility and discretion. In fact, I think it's clear that the guidance that they issued for this year's price saying they're not going to hold themselves to in future years. So even if you look at if you look at what happens in the fall, you're not going to get a lot of insight into what's going to happen in the following years. So that's part of the uncertainty. Then there's also a market level uncertainty, which is because of the inflation boundaries that, in some ways, probably pose the most pivotal risk for the industry. The question is, how is that going to be handled? So now there's asymmetric risk when you set your launch prices. If you set your launch price too low, there's not really a way out.”