ALEX BRUMMER: Big pharma bets on biotech as the global drugs industry booms

Those of us who have been through serious illness in the last year could not but be aware of huge advances in medicines. 

Diseases, including cancers, once thought life-threatening are becoming, as my own physician described it, ‘eminently curable’.

The speed of advance was demonstrated in the pandemic when fast-track development of vaccines offered humanity and the global economy a lifeline.

If the cumbersome Covid-19 inquiry ever moves beyond tittle-tattle and WhatsApp messages and takes testimony on the scientific response, Boris Johnson and his government should receive credit for early adoption of vaccines.

It backed AstraZeneca’s Oxford jab and was among the first buyers of the Pfizer and Moderna immunisations.

Pharma deals: In much the same way as big tech is swallowing upstarts in key areas such as AI and games, so the life sciences giants are homing in on biotech

We also should remember the speed at which compounds emerged from UK labs, helping to alleviate symptoms and free up hospital beds.

Now that the pandemic panic is behind the world, leaving a trail of legal cases for the families of those unfortunate enough to experience vaccine side-effects, the global pharmaceutical industry is in overdrive. 

It has been portrayed on the silver screen and streaming channels as the devil incarnate following the oxycontin addiction scandal and the over-pricing of new treatments.

That betrays the whole idea of ethical drugs. But we shouldn’t let it blot out the fast-track development of transforming medications for oncology and to treat prevalent conditions such as osteoporosis.

It used to be that the life science groups largely depended on their own labs and research and development capability to come up with new medicines.

Astra’s success with immunology treatments for cancer was largely home-grown.

The great problem for big pharma comes when the pipeline of new drugs clogs up or they find, as has been the case with GlaxoSmithKline (GSK), they are playing catch-up on big disease groups such as oncology.

GSK’s expertise on vaccines has not been enough to impress investors yet in spite of its brilliant development of the blockbuster shingles jab shingrix and the fast-growing respiratory disease (RSV) inoculation.

The search for new remedies has heightened bids and deals.

Over the holiday break, in the US, Bristol Myers Squibb scooped up Boston innovator Karuna Therapeutics for £11.5billion.

Britain’s Astra deepened its commitment to oncology and China with the purchase of Gracell for just under £1billion.

Earlier in December, Astra splashed a similar amount on Seattle-based Icosavax which is pursuing a vaccine for RSV, a respiratory virus.

Pfizer, after a regulatory pause, has just secured approval for its £33billion takeover of cancer care group Seagen as it plays catch-up with Astra and others.

Amid a global slump in deals, pharma is the exception.

The value of drug company deals climbed by 19 per cent in 2023 in a year when there was a sharp 21 per cent reduction in takeovers, which were at their lowest level in a decade, at £2.04trillion.

In much the same way as big tech is swallowing upstarts in key areas such as AI and games, attracting close attention of competition enforcers, so the life sciences giants are homing in on biotech.

There are big risks. A rough guide in the biotech industry is that the price paid for promising compounds should be in the order of five times potential sales.

That works when the buyer is cash-rich. But if it means taking on a shed-load of debt, as in the case of Bristol Myers, the whole enterprise potentially is at risk.

Drug discovery, as with Novo Nordisk’s obesity medicine, can be transforming. Big pharma is reluctant to see biotech discoveries slip from its grasp. Expect more deals.

Racing card

No sooner has the Chancellor Jeremy Hunt unfurled one tax and spend package than another is on the way.

The most recent public finance data suggested Hunt has £12billion in his back pocket.

The choice of the early date of March 6 for the Budget, a week ahead of the Cheltenham horse-racing festival, is certain to increase betting on an early general election and tax giveaways.

Abolition or easing of inheritance tax, which delivered £5.2billion of revenues in the first eight months of the 2023-24 tax year, is an ante-post favourite.

Speculation is up and running.

This post first appeared on Dailymail.co.uk