Vaccine Race, Regulatory Risk, Robust M&A Will Impact Drugmakers in 2021

In the year ahead, the three main “developments to watch” in the branded pharmaceuticals sector will include COVID-19 vaccine scale-up and distribution, continued legislative and regulatory pushback against high drug prices, and robust levels of merger and acquisition activity, according to a new report from Moody’s Investors Service.

Regarding vaccines, Moody’s noted that Moderna Inc. as well as Pfizer Inc. and its partner BioNTech will continue to ramp up production of their COVID-19 vaccines and distribute them widely throughout 2021.

“The launch of successful vaccines creates the opportunity to improve relations with key stakeholders including patients, physicians, hospitals and health authorities,” report author and Moody’s Senior Vice President Michael Levesque tells AIS Health. “It also has the potential to improve the reputation of the companies making vaccines and potentially the industry as a whole.”

Drugmakers’ Image Could Improve

He continues, “The launch of successful vaccines creates the opportunity to improve relations with key stakeholders including patients, physicians, hospitals and health authorities. It also has the potential to improve the reputation of the companies making vaccines and potentially the industry as a whole.”

The proliferation of vaccines will also have other positive effects for the pharmaceutical industry, according to the report. Moody’s suggested that as the pandemic retreats, “we anticipate that in-person marketing to physician offices will steadily increase, and clinical trial activity — which has faced modest delays — will resume toward normal protocols.”

However, the vaccine race isn’t without drawbacks. Merck & Co., Inc. recently said it would discontinue two vaccine-development programs after Phase I clinical trials revealed that they produced an underwhelming immune response to the novel coronavirus, representing a major setback for the manufacturer. The Moody’s report also advised that “there remains execution risk in the scale-up [of successful vaccines] given the size of the undertaking.”

Levesque tells AIS Health that the risk cited in the report “involves many factors including reliance on suppliers, efficiency of manufacturing sites, employee relations and regulatory compliance.” Pfizer and BioNTech increased their 2021 vaccine production target from 1.2 billion to 2 billion doses and entered into a second contract in which the U.S. government will purchase 100 million doses for $1.95 billion, the report added.

Meanwhile, “legislative and regulatory risks focused on lowering drug prices will remain elevated” for pharmaceutical firms now that Democrats have gained control of the White House and Congress, the report predicted.

As for the recently finalized rule that effectively eliminated rebates in Medicare Part D — which PBMs have already challenged in court — Levesque says it’s also not particularly good for the pharmaceutical industry. “Rebates have long been used as a tool to drive market share through formulary negotiations,” he says. “Some products have market shares that benefit as a result of successful rebate strategies. Hence within any category there would likely be winners and losers if the rebate system is eliminated.”

The report also pointed out that Democrats’ slim congressional majorities will make it difficult to pass more sweeping proposals, such as allowing Medicare to directly negotiate drug prices. Either way, pharmaceutical firms’ 2021 earnings aren’t likely to be affected by any reforms that are passed this year, considering the timeline needed to implement any such changes, the report added.

Finally, the report predicted that the “brisk pace” of pharmaceutical sector M&A seen in late 2020 will continue in 2021, highlighting the most likely acquirers as Merck, Amgen Inc., Johnson & Johnson and Bristol-Myers Squibb. The most likely takeout targets are “smaller drug companies with compelling late-stage pipelines or drugs recently approved,” Moody’s said, adding that key focus areas include oncology, gene therapy and rare diseases.

Leslie Small

Leslie has been reporting and editing in various journalism roles for nearly a decade. Most recently, she was the senior editor of FierceHealthPayer, an e-newsletter covering the health insurance industry. A graduate of Penn State University, she previously served in editing roles at newspapers in Pennsylvania, Virginia and Colorado.

Related Posts

https://www.mmitnetwork.com/wp-content/uploads/2021/11/WordPress-Featured-Image-radar-on-specialty-pharmacy-Another-Immunotherapy-Indication-Will-Be-Withdrawn.jpg
November 18

FDA Grants Interchangeable Status to Humira Biosimilar, but Certain Factors May Hamper Its, Other Adalimumabs’ Uptake

Read More
https://www.mmitnetwork.com/wp-content/uploads/2021/11/WordPress-Featured-Image-radar-on-drug-benefits-OptumRx-Spotlights-Two-Drugs-That-Treat-Rare-Liver-Diseases.jpg
November 18

Oncologists Show Interest in Prescribing New CML STAMP Inhibitor Scemblix

Read More
https://www.mmitnetwork.com/wp-content/uploads/2021/10/WordPress-Featured-Image-RADAR-on-Drug-Benefits-Eli-Lilly-Pounces-on-Flailing-Aduhelm-With-Competing-Drug.jpg
November 18

Eli Lilly Pounces on Flailing Aduhelm With Competing Drug

Read More

GAIN THERAPEUTIC AREA-SPECIFIC INTEL TO DRIVE ACCESS FOR YOUR BRAND

Sign up for publications to get unmatched business intelligence delivered to your inbox.

subscribe today