Healthcare
Conference

Jessica Fye:

In 2023 in the biotech group, it’s going to be a really dynamic period, depending on whether you’re talking about the large caps, which may be heading into interesting product launches, or the mid-caps, which could have make-or-break data releases or they’re filing their first NDA for their very first product. I think you’re going to continue to see a lot of dynamism in this sector, a lot of innovation, and it will be another interesting year for the group. In terms of what investors have high conviction in right now, they’re looking for: growing, durable franchises, a clear path to profitability if not already profitable, ideally operating in low-competitive intensity spaces and/or representing the dominant player in their space. 
 

And I think folks are trying to avoid or be careful around companies that have imminent patent expirations without a clear path to profitability or without a highly visible pipeline. M&A is always a topic and a theme. This sector to some extent relies on larger companies kind of rolling up these smaller, sometimes earlier stage assets. 
 

I think you’ve seen a theme of a little more focus on more de-risked assets. I wouldn’t be surprised if that continues. I still think this is a sector that’s most important underpinning is innovation, and we still see that continuing at a very high level and don’t expect that to change in ’23.

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Chris Schott:

We’ve seen the pharmaceutical group meaningfully outperform the market in 2022. Now, specifically looking at 2023, I’m most focused on two new therapeutic areas: and these are obesity and Alzheimer’s. The obesity market, we have new drugs coming to market. So we see patients effectively not getting diabetes, lower rates of heart attack/stroke. So it effectively moves obesity from an aesthetic market to a medical market. We’re forecasting this could be over a $30 billion annual opportunity. 

The other market I mentioned is Alzheimer’s, and this has been by far the largest market of unmet need in the healthcare industry. I’m encouraged this year; I think we’ll see the first two drugs approved that actually can modify and slow down the rate of Alzheimer’s progression. When I think about some of the headwinds that we could face for the sector in 2023 that could offset some of these positive trends that I mentioned, one that comes to mind is, really, the sector’s patent cycle. So we’re still facing a number of very large patent expirations as we look out to the end of the decade. And I think investors are increasingly focused on how the industry will manage through those.

When I think about the Inflation Reduction Act and what it means for the pharmaceutical sector as a whole, we view the impact as pretty manageable. The bill basically caps patient out of pocket at $2,000 for seniors who are in Medicare. The more challenging part for the industry is price negotiation. This will be the first time the U.S. government can negotiate drug pricing. And it’s on a relatively limited number of drugs, but it's something we’ll have to watch closely.

Now going forward looking out to 2023, the outlook’s still pretty positive in our view. We’ve got core products across the sector growing nicely, we’ve got pipelines continuing to advance and really broaden out. And the sector is basically not exposed at all to some of the macro-economic and supply chain volatility that we’re seeing elsewhere in the market.

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