Within the present enterprise local weather, tech for pharma is recession-proof

Among the world’s top 20 pharmaceutical companies, ranked according to their 2021 revenue, 19 generate most of their sales from specialty medicines. Overall, 55 percent of pharmaceutical revenues are driven by specialty drugs. This basic fact about how prescription drug companies make money is mostly lost on the general public, but is instructive for understanding how the entire industry works, and why it is relatively recession-proof.

Take Johnson & Johnson. In February of last year, the U.S. Food and Drug Administration authorized its Covid-19 vaccine for emergency use. This vaccine accounted for $2.4 billion in sales in 2021, an outstanding figure in any year. Yet the vaccine was not J&J’s main driver in 2021; its specialty cancer drug Darzalex generated $6 billion in sales. All of J&J’s oncology offerings combined to report more than $14.5 billion in sales. Stelara, which is used to treat the symptoms of two incurable diseases (psoriasis and Crohn’s Disease, which can sometimes cause life-threatening complications), reported $9.1 billion in sales by itself. Overall, Johnson & Johnson reported $93.77 billion in global revenues in 2021, a bump of more than $10 billion compared to 2020. Its pharmaceutical division led the way ($52 billion) but not for the reason many might assume.

Specialty drugs reportedly reached 50 percent of all drug spending in 2020, a figure that has increased significantly over the last decade. Yet these drugs are estimated to be used by only 2 percent of the population each year. The disparity between usage and revenues is only growing. The rising cost of specialty drugs is at the vanguard of this trend, but it is not the only driver.

The role played by pharmaceutical innovation is substantial. In 2020, the Food and Drug Administration approved its second-highest yearly total of new molecular entities ever. The 53 drugs included treatments for lung cancer, ebola, HIV, and a diagnostic agent for patients with Alzheimer’s disease. According to a 2021 study published in the American Journal of Health System-Pharmacy, as the FDA continues to approve many new novel specialty drug therapies, we can expect continued substantial clinical and financial impact. Innovation is a constant in medicine, but its impact is felt most in the specialty drug market.

The result, then, is a pharmaceutical industry incentivized to ensure patients have access to the medicine in which they have invested so much of their own time and money. During an economic recession, that might be easier said than done. Patients’ dollars are limited. Prescription drug manufacturers are mindful of ease-of-access issues. One recently filed a $100 million lawsuit against a pharmacy benefit manager, alleging it was abusing a patient drug financial assistance program. By investing more in patient assistance programs, and in patient access technologies to make sure that no covered patient gets lost in the shuffle, the manufacturers hope to eliminate financial barriers to costly medication.

However, merely getting to the point of receiving therapy requires a long, painful journey for patients, with many opportunities for drop-off along the way. Accessing and affording life-saving and life-improving drugs is a complicated challenge patients are willing to endure, but a challenge nonetheless. One recent survey revealed 84 percent of specialty medicine providers experience some difficulty starting patients on their complex medications. It is estimated that drug companies tallied $76 billion in lost revenue opportunity due to access issues. The specialty drug ecosystem involves a costly, complex and disjointed journey for patients through their providers.

These factors persist independently of the economic climate. Specialty drugs are effectively recession-proof. That’s why the flood of venture capital into PharmaTech should come as no surprise. Entrepreneur Mark Cuban created Cost Plus Drugs to “disrupt the drug industry and to do our best to end ridiculous drug prices.” GoodRx, which operates under a similar mission, went public in 2020 and is reportedly valued around $15.7 billion. Startups that integrate with providers to boost patient adherence, also won venture funding in recent years. In theory, businesses like these can help narrow the gap between patients and the specialty medications they need.

While the cost of generic drugs is falling, the pharmaceutical industry is experiencing billion-dollar windfalls thanks to its innovative specialty drug offerings. Still, medication access remains a major issue. It’s a problem the pharmaceutical technology industry is gearing up to solve.

Photo: Eightshot Studio, Getty Images

Source link

Leave a Reply

Your email address will not be published.