Biopharmaceutical Industry Outlook in 2025

By Deena Beasley

SAN FRANCISCO (Reuters) – The biopharmaceutical industry aims for a turnaround in investor returns by 2025, mindful of President-elect Donald Trump’s potential impacts on drug pricing reforms and vaccines.

The sector experienced significant regulatory changes with the Biden Administration’s Inflation Reduction Act of 2022, which allowed Medicare to negotiate prices for high-cost prescription drugs.

> “Nothing kills investment like uncertainty. The IRA led to a lot of uncertainty in the sector,” stated Steve Ubl, head of the industry group PhRMA, at the JP Morgan Healthcare Conference in San Francisco.

PhRMA hopes the new administration will focus on reducing inefficiencies to lower patient costs rather than attacking the industry. The first ten Medicare-negotiated drug prices were released in August, revealing results aligned with existing prices after discounts.

Upcoming announcements include the next 15 drugs for negotiations, due by February 1, which could change after Trump takes office on January 20.

In 2023, the Nasdaq Biotechnology Index fell by 3%, while the S&P 500 increased by 23%. Despite strong performances from obesity drug manufacturers like Novo Nordisk and Eli Lilly, overall growth remained uneven in the sector.

Patent Expirations and Industry Changes

Morgan Stanley estimates that around $175 billion in U.S. biopharma revenue will go off patent by 2025, necessitating new products from either in-house research or acquisitions. However, life sciences mergers and acquisitions significantly slowed last year, totaling about $80 billion.

Rumors of a more deal-friendly chair for the Federal Trade Commission have provided some hope for drugmakers. Recently, Johnson & Johnson announced a $14.6 billion acquisition.

The nomination of Robert F. Kennedy Jr., a vaccine skeptic, to lead Health and Human Services, raises concerns about the pharmaceutical industry. Meanwhile, Biogen CEO Chris Viehbacher expressed a desire to find common ground to promote health.

Voices from Pharma Executives

Pfizer CEO Albert Bourla acknowledged industry uncertainty but remained optimistic, stating, “There are several people… that think the opportunities outweigh the risks.” J&J CEO Joaquin Duato expressed intentions to advocate policies focused on innovation and access within the Trump administration.

Investors are cautiously monitoring government policy changes on drug prices, particularly regarding the IRA. Experts believe significant modifications are unlikely in the first year.

Foley Hoag’s Neitzel noted that while Trump’s recent meeting with pharmaceutical executives sparked some optimism, his firm stance on drug pricing may complicate matters for the pharma sector.