Is the biopharmaceutical bull market a foam or just a need? The east wind slightly overwhelms the west windBack To List

Today, FierceBiotech released the survey results on how readers perceive the current biotechnology bull market. A total of 656 people participated in the poll, of which 52% of the readers believe that the current US biotechnology market is overheated, which is a foam. And 48% of readers believe that the current bull market is the result of technology and rigid demand, and it is the spring of biotechnology. Firstly, it is necessary to clarify the essence of this survey. This is a public opinion survey that all FierceBiotech readers can participate in, including myself, so it may not necessarily represent expert voting. In addition, many readers of this online magazine are biotech investors, so the answers may not necessarily represent their true views because it clearly involves personal interests. However, FierceBiotech has released some representative judgments today, which are still worth learning from.

The main basis of the foam theory is that the low interest rate in the United States is unsustainable, the ceiling of the total amount of the pharmaceutical market is not taken seriously, and the R&D risk is unreasonably ignored. After the 2008 economic crisis, the United States maintained zero interest rates to promote economic recovery, which forced capital into the stock market. Obviously, zero interest rates cannot be maintained forever, and once macroeconomic policies change, capital will quickly exit the biotechnology field. No one doubts this.

Another important factor is that the entire pharmaceutical market has a cap, and even if all diseases are eradicated, society does not have as much money to pay $150000 per person per year for each new drug. Of course, the first to lose market share when a large number of disruptive drugs appear at the same time is me-too drugs with little added value, but the current overall valuation of the biopharmaceutical market is no longer a question of whether chicken rib drugs can be sold at high prices. If current cancer immunotherapy, PCSK9 inhibitors, and Alzheimer's drugs mentioned last Friday are all launched within 5 years, combined with current hepatitis C and other expensive drugs, and sold at the prices expected by investors, the healthcare payment system will face unprecedented pressure. It is almost certain that some drugs will be sold at lower prices, making the current stock market higher than their actual value.

Of course, the more likely outcome is that many currently promising drugs cannot be marketed. As we mentioned last Friday, the investment before the second phase of clinical trials is basically no different from rolling dice, so it is necessary to have moderation in how much you bet. The reason why preclinical data appears to have a certain predictive effect is because the FDA does not allow compounds without preclinical data to enter clinical research, otherwise investors may have to re evaluate the value of preclinical data. On average, 95% of drugs that have just entered the first phase of clinical trials have failed. If a drug like Flexus IDO inhibitor is marketed according to this risk, it will earn 25 billion dollars to break even, which does not include clinical development and opportunity cost.

The main viewpoints of the Gang Needed Theory are that nowadays drugs have stronger targeting and are easier to see therapeutic effects, biopharmaceutical companies, although they have attracted a lot of money, are not much compared to large pharmaceutical companies, a large amount of capital is nowhere to go, large pharmaceutical companies urgently need to acquire targets, and biotechnology companies are more innovative. These views certainly have some truth, but I think the foam theory is more convincing. Of course, there are also a few people who believe that only a few companies can sustain their market value, and most will go bankrupt. Although this may be a bit off topic and mostly nonsense, it is a possible outcome. That is, the whole industry is a foam, but some enterprises will bring huge returns to investors. The problem is that you don’t know which is which。