Pharma Breaks Bread With Trump And RFK Jr But Will They Butt Heads?
Donald Trump’s second term as US president does not begin until 20 January but pharma executives spent much of last year wondering what impact the new administration would have on the sector. It will certainly not be a case of business as usual given that Trump has proposed Robert F. Kennedy Jr as his health and human services secretary.
If RFK Jr is confirmed, the department that oversees the US Food and Drug Administration will be headed by a long-time critic of the agency, the pharma industry in general and vaccines in particular. Drugmakers have been pretty diplomatic when questioned about the incoming administration, saying that they are used to working with governments on both sides of the political divide in the US, but they will now likely be dealing with someone who has repeatedly made widely debunked claims about healthcare, such as a link between autism and vaccines.
The various parties have already sat around the table. Earlier this month, the president-elect dined with RFK Jr, Pfizer CEO Albert Bourla, Eli Lilly CEO David Ricks and the head of the Pharmaceutical Research and Manufacturers of America, Stephen Ubl at his Mar-a-Lago estate and comments since then from the pharma side have been pretty positive. For example, Bourla said Trump could be an ally when it comes to targeting pharmacy benefit managers, the middlemen who work with pharma to negotiate drug prices through rebates and formulary placement in the US.
The year is ending in relative calm but expect fireworks at the end of January and not just from the Trump inauguration parties.
The Price (And Innovation) Is Right In China For Dealmaking
China has become more cutting edge in terms of R&D innovation rather than being a fast follower over the past few years and 2024 saw a record number of licensing deals with foreign pharma firms who are impressed with the science - and the attractive financial terms - that the country can offer.
From oncology to obesity, big pharma players are paying a lot of attention to China as they look to stock pipelines ahead of patent expiries on some very big earners in the coming years. Roche has been among the most active players, signing oncology deals with Regor Therapeutics Group and Medilink while AstraZeneca has been busy in the cancer space, signing pacts with Allorion and Nona Biosciences.
Merck & Co also headed to China in 2024 to advance its oncology pipeline and signed bispecific antibody deals with Curon and LaNova. Most recently, and more intriguingly, the US giant has made its first big move in obesity, licensing a preclinical, small molecule GLP-1 receptor agonist from Hong Kong-listed Hansoh Pharma for $112m upfront.
That Merck chose a relatively inexpensive licensing deal with a Chinese company rather than spending billions of dollars to buy a US-based weight loss specialist highlights the cost-effectiveness of doing business in China and more pacts are likely to come in the coming years. However, the recent detention and investigation of AstraZeneca’s international president Leon Wang shows that foreign companies need to tread carefully in China.
Finally Getting To Grips With Obesity Supply And Demand
The surging demand for GLP-1 weight loss drugs continued in 2024 and this year the class leaders Novo Nordisk and Eli Lilly have made considerable strides in resolving the supply issues that have plagued the companies. However, the expansion of manufacturing capacity to meet demand has cost them billions of dollars.
Novo Holding’s $16.5bn acquisition of US contract development and manufacturing organization Catalent was finally completed last week, after several months of discussions over potential antitrust issues. Novo is getting control of three of Catalent’s fill-and-finish facilities in Italy, Belgium and the US to help ramp up production of its semaglutide-based drugs (Ozempic for diabetes and Wegovy for obesity) in addition to plant investments in North Carolina and Chartres (France), plus a $6bn expansion of its Kalundborg site.
In May, Lilly announced plans to build a $5.3bn manufacturing plant in Lebanon, IN, some 30 miles from its corporate headquarters in Indianapolis, to ramp up production of its dual GLP-1/GIP agonist tirzepatide – marketed as Mounjaro for diabetes and Zepbound for obesity. It later committed another $4.5bn to create the Lilly Medicine Foundry, a new center for advanced manufacturing and drug development.
The year has seen a number of companies touting their next-generation obesity candidates but Novo and Lilly are way out in front. Indeed, the US firm has edged ahead of late, with Zepbound outperforming Wegovy on weight loss in the head-to-head SURMOUNT-5 trial, while Novo’s hopes for CagriSema (cagrilintide/semaglutide) have taken a hit on underwhelming data from the Phase III REDEFINE 1 trial.
Inflammatory Space Heats Up In 2024
Oncology is still the therapeutic area that grabs most of the headlines and dealmaking discussions. However, there was a lot of interest in immunology and anti-inflammatory medicines in 2024 as companies look to find the next ‘pipeline in a product’ following the likes of Sanofi’s Dupixent (dupilumab) and AbbVie’s Skyrizi (risankizumab) which racked up more approvals this year.
Those two drugs are posting huge sales, as is AbbVie’s Humira (adalimumab), which still had third-quarter 2024 revenues of $2.23bn despite biosimilar competition. Being able to target multiple indications is an attractive option and two of them, atopic dermatitis and hidradenitis suppurativa (HS), became even hotter areas in 2024.
Lilly’s IL-13 inhibitor Ebglyss (lebrikizumab) was approved by the US Food and Drug Administration in September, a couple of months after the agency gave the thumbs-up to Arcutis Biotherapeutics’ Zoryve (roflumilast) for mild to moderate atopic dermatitis. Earlier this month, Galderma’s Nemluvio (nemolizumab), approved in August for prurigo nodularis, became the first IL-31 inhibitor approved by the FDA for atopic dermatitis.
In HS, Novartis’ Cosentyx (secukinumab) has enjoyed a strong launch this year in the seventh approved indication for the blockbuster. UCB’s Bimzelx (bimekizumab) also got approved for the debilitating, inflammatory skin disorder, while Moonlake’s sonelokimab has also moved into late-stage trials.
No Big Buys As Pharma Sticks With Bolt-Ons
Just a week before the end of the year, the largest life sciences M&A deal in 2024 so far has been Novo Holdings’ acquisition of Catalent but when it comes to a biopharma buying another biopharma, the biggest was Vertex’s $4.9bn buyout of Alpine Immune in April. The number and size of dealmaking was well down on 2023 (when Pfizer’s $43bn purchase of Seagen was the standout) and the days of the mega-merger or multi-billion dollar buys look numbered.
Of the big players, Novartis has embraced the bolt-on philosophy with most gusto in 2024. Among the 20 or so transactions the Swiss major has inked are a number of small acquisitions, such as SanReno Therapeutics and Calypso Biotech, followed by some bigger deals, notably Mariana Oncology and Kate Therapeutics.
Biggest of all was a payout of $2.92bn for MorphoSys and its Phase III myelofibrosis candidate pelabresib. However Novartis took an $800m write-down on that deal after development setbacks for the candidate and revealed on 19 December that it will shut down two MorphoSys sites in Germany and the US, with the loss of around 330 jobs.
Some observers believe a more business-friendly approach at the US Federal Trade Commission under the incoming Trump administration should be conducive to increased dealmaking next year compared with 2024. Novartis will remain active not least because, as CEO Vas Narasimhan recently said, “We do a large number of deals, some of them will work, some of them will not. For a company of our size, we have to take those bets.”
