Yelian Garcia Discusses 7 Biotechnology Trends to Watch in 2019

Yelian Garcia
Jun 24 · 4 min read

Biotechnology had a mixed bag year in 2018. Some breakthrough drugs, like the RNA interference treatment Onpattro™ (patisiran), made it to market while Atabecestat (JNJ-54861911), a promising Alzheimer’s therapy, failed to secure approvals. 2018 also saw continued consolidation of the biopharma industry as major pharmaceutical companies went after smaller biotech firms with strong drug pipelines.

In contrast, 2019 is shaking up to be a record-breaking year for biopharma mergers and acquisitions with Bristol-Myers Squibb’s Jan. 3 agreement to pay $74 billion in cash and stock for Celgene Corp. However, besides trends that make it directly into the news, other underlying currents are influencing the biopharma industry. To gain more perspective on these trends, Yelian Garcia, a Derivative Market Strategist, shares his top seven biotechnology trends to watch in 2019.

1. Customer-Centricity of Medicine

Biopharma has gone through several focal transitions over the last hundred years or so. Biopharma started by serving doctors then moved to serve payers (insurance companies). Now, biopharma companies are increasingly focusing directly on consumers as medications and remedies become more personalized. In the past, biopharma companies relied on general assumptions about diseases and drug requirements. Today, there is a rising need for specialized and personalized treatments, especially as the role genes play in pathology become better understood. In 2019, says Yelian Garcia, expect customer-centricity to continue growing as a major trend.

2. Cancer Immunotherapy

Chimeric antigen receptor (CAR) T-cell therapies are reaching their peak performance levels. In 2019, other next-generation cancer immunotherapy treatments like allogenic products will take center stage. A likely indication of this shifting trend is the cancer immunotherapy startup Allogene Therapeutics. The company launched in April of 2018 with $300 million in funding and went on to raise an additional $120 million in September. The company is already in partnership with Pfizer and has multiple allogenic therapies in its pipeline. This shift in cancer immunotherapy will also affect investment and M&A deals going forward.

3. Lifestyle Disease Epidemic

Lifestyle diseases like obesity and Type II diabetes will continue to challenge biopharma companies as medical remedies continue to fail. Although possibly a source of massive potential revenue, breakthrough medications have proven elusive. In 2017, Novartis’ experimental drug LIK066, then in phase IIb of clinical trials, had high hopes of becoming the pill that slew obesity. However, by early 2018, Novartis announced the discontinuation of the drug after larger clinical trials yielded unsatisfactory results. In 2019, expect more lifestyle disease clinical trials as the search for drugs to treat lifestyle diseases continues.

4. Market Consolidation

Mergers and acquisitions (M&A) will continue to dominate the biopharma landscape as more consolidation takes place. Market pessimism and jitters over expiring drug patents will be a major driving force for biopharma M&As in 2019. This trend is evidenced by the uptick in money going into biopharma deals, from $210 billion in 2017 to $265 billion in 2018. To consolidate their efforts, biopharma companies in 2019 are expected to use M&A deals to spin off non-core units and become better aligned with core functions. Examples of this consolidation include Mallinckrodt’s anticipated spin-out of its specialty generic drug business and active pharmaceutical ingredients business and Bayer’s expected exit from the animal health business.

5. Digital Therapeutics

According to the Digital Therapeutics Alliance, “digital therapeutics is distinguished from other digital health categories through their primary function of delivering software-generated therapeutic interventions directly to patients to prevent, manage, or treat a medical disorder or disease.” The trend towards digital therapeutics is expected to accelerate in 2019 as traditional medicine, and digital technologies increasingly join ranks. In 2018, the FDA approved ProAir® Digihaler™ (albuterol sulfate 117 mcg) from Teva Pharmaceutical Industries, a major step in paving the way for other digital therapeutic remedies. Further ramifying this trend, a ResearchandMarkets report predicts that investments in digital therapeutics, which stood at $179.6 billion in 2016, could rise to as much as $536.6 billion by 2025.

6. Cell and Gene Therapy

Regenerative medicine involving cell and gene therapy is also expected to be a major trend in 2019. The sub-industry saw only $1 billion in M&A deals in 2016, yet this number zoomed to $13.5 billion in 2017 and $18.9 billion in just the first three quarters of 2018. According to Informa Pharma Intelligence, which published these findings, this is indicative of a strong trend to watch. Deals that underpin this trend include Novartis’ $8.7 billion acquisition of AveXis and GlaxoSmithKline’s (GSK) acquisition of gene therapy biotech Tesaro. Yelian Garcia notes other deals in the space could include Allogene and CRISPR Therapeutics, both of which are currently high-priority acquisition targets.

7. Shifting Pricing Dynamics

Drug prices have been a major political talking point over the years. Although over the years, prescription drug prices have been left to pharmaceutical companies to set, there is growing sentiment that this could change. As the cost of healthcare, especially in the United States, continues to skyrocket, legislators are starting to question why pharmaceuticals are benefiting so highly at the expense of those in need of drugs. Some controls that have been proposed and that could merit monitoring in 2019 include the government manufacturing generic drugs and establishing price control mechanisms through legislation.

In Summary

The seven trends outlined above, while indicative of the general direction of the biopharma industry, are hardly perfect predictions. They do, however, create a picture of an industry that is evolving to cope with a changing consumer, market, and political landscape. Biopharma investors will do well to take note of all these changes and consider how they will affect future investments in the industry. Making the right bets, advises Yelian Garcia, although to some extent speculative, can be helped by following these developing industry trends and understanding how they will shape the biopharma industry well into the future.

Click here for more information on Yelian Garcia.

Yelian Garcia

Written by

Yelian Garcia is an investor, a MBA/CFA candidate, working on his second career in finance. Yelian Garcia helped start insurance brokerage Legal Expense Canada.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade