Our battle against cancer has lasted for almost a century. An arms race is on to develop a cure with pharmaceutical superpowers rising to the challenge of bringing research to treatments. With patents and policies changing, what does the industry have in store?
Cancer attacks in more than 100 ways, with symptoms that start with abnormal cell growth, and end with personality changes and sensory removal.
In 2018, an estimated 1,735,350 new cases of cancer will be diagnosed in the United States and 609,640 people will die from any form of the disease, as stated by the American Cancer Society.
Scientists have been working on better tools for early detection and treatment built upon a rich tradition of discovery science, but saying we are on the brink of creating a catch-all is questionable.
From highlights of the ASCO Cancer Conference in Chicago, data suggested that enough breakthrough results in medicine and technology have been made to substantiate worldwide solutions, but more needs to be done. The conference emphasized over 50 new drugs and treatments, but our current generation’s variety of interventions still require early detection. Further research is needed to confirm long-term results of conventional and alternative medicines, since either could work or fail, and companies are willing to contribute billions in the industry.
The cancer research industry has reached a turning point in the race for a cure due to changes in the perspectives of research companies, institutions, policymakers, hospitals, and patients. This article is the product of the analysis of indicators intended to form a better understanding of the cancer research market and its major players.
Questions of Interest
- What is a cancer treatment product?
- What are the indicators for growth in the market?
- Who are the major players in the cancer research industry and how are they all related?
- Why haven’t we found a cure?
Background Research
Immunotherapies are drugs that harness the body’s defense system to attack specific types of cancer cells. Alongside the different causes, ranging from radiation to chemicals to viruses, each individual has varying degrees of control over exposure to cancer-causing agents. Immunotherapy drugs are the products in development that are theorized by universities, created and tested by pharmaceutical companies or startups, and marketed and distributed to patients. The drugs require oncologists to treat patients by delivering care, managing symptoms, and administering treatment.
The premise for treatments were first conceived in the 19th century, but improvements over the years have been made due to the access to technology and insight, time for experimentation, and number of case studies. Modern treatment is focused on efficient targeting of specific areas of the body, types of mutations, and stages in cancer development.
Despite improved efficiency in medical procedures and advances in modern technology, the cost of a cancer treatment for a patient is significantly above $100,000 per year, as stated by the American Cancer Society.
The increasing growth in cases to be treated and the current technological advances indicate that the market for cancer immunotherapies could reach $178,863 million by 2023.
Immunotherapy products are limited by patents that are held by major corporations, intellectual property rights held by research institutes, and policy approvals that are determined by organizations such as the US Food and Drug Administration. As rights for manufacturing are secured, companies have sole power over pricing as the niche purpose is monopolized, since there would be no generic equivalents and the demand from patients involves life or death decisions.
Ideally, pricing for drugs is determined by companies’ needs to cover costs for lab maintenance, purchases of information rights, and test studies. However, the true balance between sustainable business practice, government subsidization, and patient affordability is more complex.
Industry Overview
According to data from QuintilesIMS Health, among developed markets, oncology accounts for the top pharmaceutical spending class by therapy area and top specialty drug class for pharma-emerging markets.
The expanding pipeline for oncology drugs is due to two factors: an increase in FDA approvals for immunotherapy drugs, and a new wave of patent expirations previously held by major manufacturers. With more drugs available to be produced on the market, an increase in opportunity for competition due to lower entry barriers is occurring.
Regardless of the developing market, immunotherapy drugs still require high inherent variable costs for research, development, and production. This is especially important for smaller companies, which own intellectual property but are unable to raise capital to mass-produce the drugs.
As larger companies are forced to change their business models due to previously stable patent assets, assets owned by smaller companies have become more attractive. Therefore, the main strategy for industry operators is to focus on enhancing market share to benefit from brand-name recognition and develop a niche in emerging markets. These trends have led analysts to conclude that the cancer research industry is now known as the industry with the most merger and acquisition activity.
A notable offsetting force against the continuous competition for market concentration would be the increase in salience of contract manufacturers due to the increase in demand for mergers and acquisitions. Pressure to meet deadlines of policies, patent expiration dates, and patient demands could lead to higher expenses to be paid to facilitators for agreements to be established in a timely manner.
Corporate Overview
The current talk of the town in 2019 is the announcement of the acquisition of Celgene by Bristol-Myers Squibb for $74 billion. The deal is one of the biggest mergers in pharmaceutical industry history and redefines the scale of the cancer research market, as the merger would result in the fourth largest pharmaceutical firm in the United States and the largest oncology firm in the world.
The acquisition puts Bristol-Myers Squibb ahead of lead competitor Merck & Co in the previously announced deals derby. Both companies are challenged to diversify their product portfolios and widen production pipelines as their stock values have been dropping with recent losses in patent protection for their highest selling products.
President Trump outlined a plan in October 2018 for Medicare to set “target prices” for drugs in an attempt to shift pricing power from corporations to government-sponsored institutions. Follow-ups into the debate over free market versus fixed pricing should continue throughout the coming years.
Also in the race is Roche Holding AG, which is currently seeking diversification for growth within the breast cancer niche after losing the battle for lung cancer treatments to Merck & Co in late 2018. Future clinical trial results will determine victories and losses between the competitors in the upcoming year.
The Moral Of The Story
Expect rapid expansions in immunotherapy sectors of pharmaceutical corporations. With ideas circulating with regards to biotechnology, machine learning, and artificial intelligence, the world is close to major breakthroughs in finding a cure. However, the complexity of the industry involving research and distribution have slowed down the overall process. Long-term data and better price negotiations are still required to justify the safety of many drugs, and the costs for treatments remain exorbitant.
Many thanks to Samarth Shyamanur, University of British Columbia Integrated Engineering Student, for providing research support and source material. This article is the product of our collaboration and shared insights.
Additional credits go to the University of British Columbia Sauder School of Business Research Centres for providing Bloomberg terminals, ResearchGate access, and verified source material databases to enhance the scope of the research.
For more in-depth information or queries, feel free to comment below or email me (aaronjyen@gmail.com).
