Everybody will be cured
The pharmaceutical industry of the world sets sights on a healthy and rich future. In order to combine the former with the latter, transnational corporations invest in science and technology funds comparable to the annual GDP of the central European republics.
Alexander Paskhover
Georgy Viktorov, Head of the Health Committee of the European Business Association (EBA), sits in Bottega restaurant in Kyiv and looks through the websites on his smartphone. They show market quotations of pharmaceutical and biotech companies. The screen shows the growth of stock prices: American Abbott, Swiss Novartis, Israeli Teva ‑ in general, all familiar faces. The market is quite conservative. The sudden appearance of a new entrant at the top of the table is almost impossible...
…unless another loud merger happens. Like, for example, the one that the US Department of Justice approved in early October: the supplier of prescription medicines, CVS Health, purchased the insurance company Aetna for $ 70 billion. And before this, the American concern Johnson & Johnson bought the biotech Swiss company Actelion for $ 30 billion. So a new company was born – R & D NewCo.
These two deals, about the size of one Ukrainian GDP, are part of the global pharmaceutical M & A trend. And although in the past five years it has been declining, mergers and consolidations are still more than a noticeable phenomenon.
In addition, hedge funds are actively buying shares of the largest manufacturers of medicines, considering such investments as the most reliable in an unstable world. Especially after the fall of shares in the technology sector which began in September.
"Pharmaceutical industry has a degree of risk aversion, given the high level of regulation in the industry," Barry Havey, Director of the Accenture Ireland Industrial Development Authority, explains this hedge fund line of conduct.
And here is the result. The giants of the industry Merck and Pfizer went up by 20 % in 2018. And the entire sector, as reported by the business publication The Wall Street Journal, grew by 13 %. Hedge funds have dramatically increased their investments in healthcare stocks and brought them to their highest level in five years. According to Goldman Sachs, shares of medical companies account for about 17 % of their assets ‑ only technology companies have more.
Alla Oliynyk, co-founder, managing and specialized partner in medicine and pharmaceutics of Borsch Ventures, is in the thick of all these events. In Paris, she and her international team are involved in creating a product in sociometry — technologies for testing social network users for potential depression and even suicidal intentions. "Nowadays, IT is entering the pharmaceutical market all over the world," Oliynyk says. "Blockchain, artificial intelligence, Big data are becoming practical product implementations in pharmaceutical companies."
…unless another loud merger happens. Like, for example, the one that the US Department of Justice approved in early October: the supplier of prescription medicines, CVS Health, purchased the insurance company Aetna for $ 70 billion. And before this, the American concern Johnson & Johnson bought the biotech Swiss company Actelion for $ 30 billion. So a new company was born – R & D NewCo.
These two deals, about the size of one Ukrainian GDP, are part of the global pharmaceutical M & A trend. And although in the past five years it has been declining, mergers and consolidations are still more than a noticeable phenomenon.
In addition, hedge funds are actively buying shares of the largest manufacturers of medicines, considering such investments as the most reliable in an unstable world. Especially after the fall of shares in the technology sector which began in September.
"Pharmaceutical industry has a degree of risk aversion, given the high level of regulation in the industry," Barry Havey, Director of the Accenture Ireland Industrial Development Authority, explains this hedge fund line of conduct.
And here is the result. The giants of the industry Merck and Pfizer went up by 20 % in 2018. And the entire sector, as reported by the business publication The Wall Street Journal, grew by 13 %. Hedge funds have dramatically increased their investments in healthcare stocks and brought them to their highest level in five years. According to Goldman Sachs, shares of medical companies account for about 17 % of their assets ‑ only technology companies have more.
Alla Oliynyk, co-founder, managing and specialized partner in medicine and pharmaceutics of Borsch Ventures, is in the thick of all these events. In Paris, she and her international team are involved in creating a product in sociometry — technologies for testing social network users for potential depression and even suicidal intentions. "Nowadays, IT is entering the pharmaceutical market all over the world," Oliynyk says. "Blockchain, artificial intelligence, Big data are becoming practical product implementations in pharmaceutical companies."
She was in Paris
Exactly a year ago, the world's largest accelerator, Station F, was opened in the French capital.
Its goal is to provide a platform and a comfortable place for the most mobile minds of mankind, so that those who use their brains can create the technologies of the future. It mostly refers to biotechnology, genetic engineering and pharmaceutical innovation. France wants to take a leading place in this area. And except for the United States, Switzerland, Japan and the United Kingdom, no one is able to lay claim to this planetary hegemony.
Oliynyk notes, however, that competition has shifted to international platforms in these layers of the scientific atmosphere. The leaders of a global scale are conglomerates of science and business in the form of international corporations. They become much more massive players and investors than individual states. Her first example is from beloved France, of course.
The French giant Sanofi is investing heavily in telemedicine, as well as in modifying the clinical trials of new medicines. Manifold increased computer capacities and new technologies make it possible to process a huge amount of data, the probability of error is reduced and the results become more accurate. "In addition, the blockchain forever removes doubts about the data reliability," Oliynyk emphasizes. "Everything that is written on the blockchain cannot be changed. This is very important for medical information and will greatly affect the industry as a whole." In 2017, Sanofi allocated $ 6.2 billion to R & D. Not every state is capable of such expenses.
Corporations from adjacent areas join the trend. For example, the industry expects the entry of online giant Amazon into the market. Analysts in the international press write that you can expect different scenarios from Amazon. The most likely is the organization of medicine supply chains in both online and offline networks. Truly speaking, this scenario worries more retail and wholesale business than pharmaceutical manufacturers. Amazon, most likely, will not become their competitor. On the contrary, it will become their partner or client.
A completely unexpected example is the global leader in the food market, the Swiss corporation Nestle. It entered into a professional alliance with the South Korean company Samsung, the world leader in the field of microelectronics. The priority of this duet is Digital health. Among other things, we are talking about creating sensors, which can be on the skin of a person and, for example, determine the level of insulin inside the body, for example, when installing an implant. And in devices which are near the person to register and signal his/her health state.
Sensors can be installed in bracelets, watches, mobile devices to determine skin moisture, sweat composition, temperature, pulse, pressure, respiration rate, blood composition, etc. Online information flies to a specialized interpretation centre that can be located anywhere in the world. "The data is taken in Ukraine, sent and analysed in Japan. Then the data return to Germany where a Ukrainian is stuck on a business trip," Oliynyk fantasizes. "That's medicine is targeted at."
Its goal is to provide a platform and a comfortable place for the most mobile minds of mankind, so that those who use their brains can create the technologies of the future. It mostly refers to biotechnology, genetic engineering and pharmaceutical innovation. France wants to take a leading place in this area. And except for the United States, Switzerland, Japan and the United Kingdom, no one is able to lay claim to this planetary hegemony.
Oliynyk notes, however, that competition has shifted to international platforms in these layers of the scientific atmosphere. The leaders of a global scale are conglomerates of science and business in the form of international corporations. They become much more massive players and investors than individual states. Her first example is from beloved France, of course.
The French giant Sanofi is investing heavily in telemedicine, as well as in modifying the clinical trials of new medicines. Manifold increased computer capacities and new technologies make it possible to process a huge amount of data, the probability of error is reduced and the results become more accurate. "In addition, the blockchain forever removes doubts about the data reliability," Oliynyk emphasizes. "Everything that is written on the blockchain cannot be changed. This is very important for medical information and will greatly affect the industry as a whole." In 2017, Sanofi allocated $ 6.2 billion to R & D. Not every state is capable of such expenses.
Corporations from adjacent areas join the trend. For example, the industry expects the entry of online giant Amazon into the market. Analysts in the international press write that you can expect different scenarios from Amazon. The most likely is the organization of medicine supply chains in both online and offline networks. Truly speaking, this scenario worries more retail and wholesale business than pharmaceutical manufacturers. Amazon, most likely, will not become their competitor. On the contrary, it will become their partner or client.
A completely unexpected example is the global leader in the food market, the Swiss corporation Nestle. It entered into a professional alliance with the South Korean company Samsung, the world leader in the field of microelectronics. The priority of this duet is Digital health. Among other things, we are talking about creating sensors, which can be on the skin of a person and, for example, determine the level of insulin inside the body, for example, when installing an implant. And in devices which are near the person to register and signal his/her health state.
Sensors can be installed in bracelets, watches, mobile devices to determine skin moisture, sweat composition, temperature, pulse, pressure, respiration rate, blood composition, etc. Online information flies to a specialized interpretation centre that can be located anywhere in the world. "The data is taken in Ukraine, sent and analysed in Japan. Then the data return to Germany where a Ukrainian is stuck on a business trip," Oliynyk fantasizes. "That's medicine is targeted at."
In addition to such space programmes, there are also more mundane but no less phantasmagoric ones ‑ a revolution in medicine delivery routes. Until now, the medicine has entered the bloodstream and spread through the bloodstream throughout the body, having both the positive and negative effect. For example, side effects of antibiotics or complications from a chemotherapy procedure. New technologies, over which the advanced brains of mankind are hanging, will allow sending an active substance in a nanomolecular form directly to an organ which needs it, to achieve a health benefit, and from there, without touching anything else on its way, to leave the body. "Global companies are conducting a lot of developments of this type," Oliynyk summarizes her short excursion. "For laggards there is a risk to be forced out of the market. I think this is the prospect of ten years ahead, but no longer."
The Ukrainian woman and her companions ‑ two fellow-countrymen, two Frenchmen and two Asians from China and Malaysia, seven people altogether ‑ participate in the project, as she said, "at the interface of medicine, pharmaceuticals, sociology, marketing and technology, in particular social networks and artificial intelligence".
In other words, the magnificent seven creates mathematical models, studies and learns to understand the behaviour of users in social networks, to measure this behaviour with the reality of the user, to further protect his/her psychological health. This monitoring will be useful to pharmaceutical companies developing antidepressants. The demand for these products is growing from year to year. And the OTC market of sedatives is in the top 3 of the pharmacy consumer basket.
The Ukrainian woman and her companions ‑ two fellow-countrymen, two Frenchmen and two Asians from China and Malaysia, seven people altogether ‑ participate in the project, as she said, "at the interface of medicine, pharmaceuticals, sociology, marketing and technology, in particular social networks and artificial intelligence".
In other words, the magnificent seven creates mathematical models, studies and learns to understand the behaviour of users in social networks, to measure this behaviour with the reality of the user, to further protect his/her psychological health. This monitoring will be useful to pharmaceutical companies developing antidepressants. The demand for these products is growing from year to year. And the OTC market of sedatives is in the top 3 of the pharmacy consumer basket.
Beyond fiction
In 2017, they reached $ 161 billion, which is $ 30 billion more than before. In the next five years, according to the British analytical company Evaluate Group, this annual budget will grow by at least another $ 20 billion. Leaders are already beginning to emerge. The top ten pharmaceutical companies, the most active investors in R & D, include five American, three British, two Swiss corporations and one French corporation. The total budget for research in this top 10 is $ 60.2 billion ‑ more than a third of the entire global industry.
"The American market is the largest one in terms of medicine consumption and very promising in terms of entry into market with new medicines and drugs," Viktorov sums up.
During the interview with NV, he also noticed that the modern pharmaceutical world has been segmented. Not all companies want and can go into expensive development. Sometimes there is a shortage of not only funds but also human resources, which have been forged for decades in such innovative and knowledge-intensive areas. "Pure generic companies of a good level have appeared," Viktorov says. "They said: we do not need to invest in innovation. We will buy good raw materials and decipher the formula of already existing medicines, which are out of the patent protection".
One of these industry giants is the Israeli company TEVA Pharmaceutical Industries. In 2017, it earned a little more than $ 22 billion. It is 20 % more than the entire agrarian export of Ukraine. And all this money was earned exclusively in the production of medicines which patent protection expired.
According to a recent World Preview 2018 report, Outlook to 2024 of the analyst company Evaluate Pharma, the global pharmaceutical industry will gain historic heights. The volume of prescription medicine sales will reach $ 1 trillion by 2021. In 2017, it was at the level of $ 789 billion. By 2024, this is the target year the research of Evaluate Pharma, the volume of sales will reach $ 1.2 trillion. In other words, the average growth rate is $ 70 billion. In many ways, this breakthrough is associated with cheaper treatment due to new developments, including preparations of gene and cell therapy. And also due to the facilitated access to medicines, especially to those that have lost patent protection.
"The American market is the largest one in terms of medicine consumption and very promising in terms of entry into market with new medicines and drugs," Viktorov sums up.
During the interview with NV, he also noticed that the modern pharmaceutical world has been segmented. Not all companies want and can go into expensive development. Sometimes there is a shortage of not only funds but also human resources, which have been forged for decades in such innovative and knowledge-intensive areas. "Pure generic companies of a good level have appeared," Viktorov says. "They said: we do not need to invest in innovation. We will buy good raw materials and decipher the formula of already existing medicines, which are out of the patent protection".
One of these industry giants is the Israeli company TEVA Pharmaceutical Industries. In 2017, it earned a little more than $ 22 billion. It is 20 % more than the entire agrarian export of Ukraine. And all this money was earned exclusively in the production of medicines which patent protection expired.
According to a recent World Preview 2018 report, Outlook to 2024 of the analyst company Evaluate Pharma, the global pharmaceutical industry will gain historic heights. The volume of prescription medicine sales will reach $ 1 trillion by 2021. In 2017, it was at the level of $ 789 billion. By 2024, this is the target year the research of Evaluate Pharma, the volume of sales will reach $ 1.2 trillion. In other words, the average growth rate is $ 70 billion. In many ways, this breakthrough is associated with cheaper treatment due to new developments, including preparations of gene and cell therapy. And also due to the facilitated access to medicines, especially to those that have lost patent protection.
The authors of the study, Anis Malik, a managing analyst at Evaluate Ltd, and Lisa Urquhart, editor of EP Vantage, predict that the original medicines will have strong competition from generics. The industry will face a so-called patent cliff when there will be a lot of high quality and cheap products on the free market, which can be manufactured by everyone, since a patent protection period of many medicines will end.
For example, during the forecast period, an autoimmune medicine like Humira — number one among the best-selling medicines in the world — will lose its exclusivity. This joint product of the American AbbVie and the Japanese giant Eisai benefited companions $ 18.9 billion last year. This year, revenue is expected to exceed $ 20 billion. In addition, the medicine will retain its high position in the top 5 at least in the next six-seven years. Therefore, many managers and lawyers of the pharmaceutical companies of the world are sitting with a stopwatch, tracking the day and the hour when the medicine loses its patent protection. Then you can still have time to bite off an extra billion.
However, by 2024 the leaders of the pharmaceutical market will be not generic pharmaceutical companies but those who invest in science as much as possible. Researchers at Evaluate Pharma already know who it is. Novartis will be the world champion with $ 53.2 billion in terms of sales of prescription medicines.
Three medicines of the Swiss company will be at the top 50 best-selling medicines (Cosentyx, Entresto and Jakafi). The second and third places will be shared by Pfizer and Roche. Medicines used in the treatment of cancer, haemophilia and immunotherapy will be the main growth drivers.
At the same time, in the top 100 best-selling medicines, half of the sales will be provided by biotech medicines. The company Roche will remain the undisputed leader in this segment, which is quite legal, because today this Swiss corporation is the world leader in R & D investments.
However, the lines between innovators and generics are blurred. Soon they will become completely invisible. Viktorov claims: the so-called big pharma decided it is time to diversify the business. Now, almost each of the world's top 30 pharmaceutical companies has restructured its business. "It still has scientific laboratories, medicines that are under patent protection," the expert said. "At the same time, big pharma expands the production of generic products."
This means that even small companies, so-called small pharma, will have to face strong competition from the multinational Gullivers of the industry. Everything has changed. It is unlikely that "kids" will survive alone. That means that the processes of mergers and acquisitions in this market will unfold with a new force. No risk, no gain. But those who take risks will also take validol of its own production, which is a beam of comfort.
For example, during the forecast period, an autoimmune medicine like Humira — number one among the best-selling medicines in the world — will lose its exclusivity. This joint product of the American AbbVie and the Japanese giant Eisai benefited companions $ 18.9 billion last year. This year, revenue is expected to exceed $ 20 billion. In addition, the medicine will retain its high position in the top 5 at least in the next six-seven years. Therefore, many managers and lawyers of the pharmaceutical companies of the world are sitting with a stopwatch, tracking the day and the hour when the medicine loses its patent protection. Then you can still have time to bite off an extra billion.
However, by 2024 the leaders of the pharmaceutical market will be not generic pharmaceutical companies but those who invest in science as much as possible. Researchers at Evaluate Pharma already know who it is. Novartis will be the world champion with $ 53.2 billion in terms of sales of prescription medicines.
Three medicines of the Swiss company will be at the top 50 best-selling medicines (Cosentyx, Entresto and Jakafi). The second and third places will be shared by Pfizer and Roche. Medicines used in the treatment of cancer, haemophilia and immunotherapy will be the main growth drivers.
At the same time, in the top 100 best-selling medicines, half of the sales will be provided by biotech medicines. The company Roche will remain the undisputed leader in this segment, which is quite legal, because today this Swiss corporation is the world leader in R & D investments.
However, the lines between innovators and generics are blurred. Soon they will become completely invisible. Viktorov claims: the so-called big pharma decided it is time to diversify the business. Now, almost each of the world's top 30 pharmaceutical companies has restructured its business. "It still has scientific laboratories, medicines that are under patent protection," the expert said. "At the same time, big pharma expands the production of generic products."
This means that even small companies, so-called small pharma, will have to face strong competition from the multinational Gullivers of the industry. Everything has changed. It is unlikely that "kids" will survive alone. That means that the processes of mergers and acquisitions in this market will unfold with a new force. No risk, no gain. But those who take risks will also take validol of its own production, which is a beam of comfort.