Pharma had a year full of firsts

Soumyabrata Roy | Nurphoto | Getty Images

Drugmakers are closing out a year when they achieved several historic firsts that will shape the pharmaceutical industry in 2024 and beyond. 

The weight loss drug market transformed into the pharmaceutical industry’s newest gold rush this year, as demand for costly but highly effective treatments from Novo Nordisk and Eli Lilly surged. Patients and investors also saw that the benefits of the medicines could extend beyond their original purposes.

The Alzheimer’s disease space also got plenty of attention, with the approval and launch of the first-ever treatment proven to slow the progression of the memory-robbing condition.

What’s more, the world’s first vaccines against respiratory syncytial virus rolled out in several markets this fall, and U.S. regulators last week approved the first-ever gene-editing therapy, which will be used to treat sickle cell disease. 

Covid vaccines and treatments were the biggest losers of this year, as demand plummeted to new lows while cases and public concern about the virus dwindled from their pandemic peaks. For the first time, those products became an enormous burden on the industry, prompting Wall Street to turn its focus to the breakthroughs in weight loss drugs and other treatments.

A new, controversial policy also rocked the pharmaceutical industry this year: Medicare drug price negotiations, which aim to rein in prescription drug costs in the U.S. To drugmakers, the policy is a new headache that could eat into revenue and profits. 

Weight loss drugs soared in popularity

For years, the weight loss market was stagnant with products that were ineffective or carried unpleasant side effects. Newer obesity and diabetes drugs such as Wegovy and Ozempic from Novo Nordisk and Mounjaro from Eli Lilly changed that, raking in billions for the drugmakers and catapulting them to the center stage of the pharmaceutical industry.

Shares of Eli Lilly are up about 58% this year, making it the largest U.S. pharmaceutical company based on its market cap of more than half a trillion dollars. Novo Nordisk’s stock is up about 47% for the year, and the drugmaker briefly became Europe’s most valuable company in September. 

Now, some analysts believe weight loss and diabetes drugs could grow into a $100 billion market by 2030. 

The popularity of those treatments has even prompted some analysts to speculate that the drugs could reshape other industries, though it’s still unclear what long-term effect they will have on food producers and restaurants, among other businesses. 

George Frey | Bloomberg | Getty Images

Other drugmakers, including Pfizer and Amgen, are scrambling to capitalize on the weight loss drug industry gold rush. Many companies released early trial results on their experimental obesity drugs this year, and expect to publish more data in 2024. 

But the weight loss drug market also faced several hurdles this year — and the issues aren’t expected to go away in 2024.

High demand pushed Wegovy, Ozempic and Mounjaro into supply shortages. Some analysts expect improvements in 2024 as Eli Lilly and Novo Nordisk increase production capacity, but the issue could take years to fully resolve. 

Also, many U.S. insurers and employers don’t cover weight loss drugs due to fears that the treatments, which cost $1,000 or more per month, will strain their budgets. Medicare is prohibited by law from covering weight loss treatments, but lawmakers have introduced a bill aiming to change that.

Leqembi was the Alzheimer’s drug breakthrough 

The first drug found to slow the progression of Alzheimer’s disease won approval by the Food and Drug Administration this year, marking a historic moment for the 6 million older Americans who have the hard-to-treat condition. The drug, sold under the name Leqembi, is from the Japanese drugmaker Eisai and its partner Biogen. 

Medicare started covering the treatment, under some conditions, as soon as it was approved, which was a crucial step for accessibility. Eisai has priced Leqembi at $26,500 per year before insurance.

Leqembi is not a cure. But the medication slowed cognitive decline from early Alzheimer’s disease by 27% over 18 months in a clinical trial. 

The drug, which targets a brain protein associated with Alzheimer’s disease, is administered twice monthly at specialized treatment centers through intravenous infusion. An injectable, more convenient form of the therapy could be on the horizon. 

Jay Reinstein, right, who suffers from Alzheimer’s, sits with his father, Max Reinstein, prior to receiving a PET scan that will determine whether he is eligible to take Leqembi, at MedStar Georgetown University Hospital in Washington, D.C., June 20, 2023.

Michael Robinson Chávez | The Washington Post | Getty Images

Eisai and Biogen said the rollout of Leqembi had a slow start this year, partly because providers needed to establish more treatment centers after the approval. 

Eisai reported $2 million in third-quarter sales of Leqembi. Some analysts had projected $12 million in revenue from the drug. 

About 800 people had received Leqembi as of Biogen’s third-quarter earnings report in November. That makes Biogen’s target of 10,000 patients by the end of March 2024 look increasingly difficult to hit.

But Biogen CEO Chris Viehbacher noted during the earnings call that “this was always going to be a gradual launch.”

Covid products sank, while RSV shots gained steam 

The once-booming market for Covid products saw a steep drop in demand this year as the world emerged from the pandemic and began to rely less on protective vaccines and treatments, including a new round of shots that rolled out this fall. 

Covid vaccine makers saw their sales and shares plunge. 

Pfizer’s stock is down about 45% this year and is trading below where it was at the start of the pandemic. The company announced a sweeping cost-cutting plan before it swung to a loss in the third quarter, largely due to inventory write-offs for unused Covid products.

Shares of Moderna have fallen about 50% this year. Falling revenue is pressuring Moderna’s bottom line, and the company posted a loss for two consecutive quarters. 

Pharmacist Aaron Sun administers Pfizer’s new Covid vaccine to Jimmy Smagula at a CVS Pharmacy in Eagle Rock, California, Sept. 14, 2023.

Irfan Khan | Los Angeles Times | Getty Images

Both companies hope that other products, including vaccines against RSV, can help turn things around.

Pfizer and GlaxoSmithKline made history this year after they launched the world’s first RSV vaccines, which won FDA approval for older adults. Pfizer’s RSV shot for expectant mothers, which passes on protection to their fetuses, also won approval this year. 

The rollout of those shots appears to be off to a fast start: GSK in November said its shot pulled in about $860 million in its first few months on the market and “has lots of headroom to grow.” 

Pfizer in November said its RSV shot raked in $375 million, which was considerably less than GSK, but the company still called it “very fast uptake” that will continue in 2024. 

Meanwhile, Moderna expects the FDA to decide whether to approve its RSV shot for older adults in 2024. 

Medicare drug negotiations garnered controversy

For the first time in history, Medicare is starting to negotiate the prices of prescription drugs with manufacturers as part of President Joe Biden’s Inflation Reduction Act. 

That controversial process aims to make costly medications more affordable for older Americans, but the pharmaceutical industry views the process as a threat to its revenue growth, profits and drug innovation.

The Biden administration in August unveiled the first 10 drugs that will be subject to price talks, which include blood thinners from Bristol-Myers Squibb and Johnson & Johnson, and diabetes drugs from Merck and AstraZeneca. The agreed-upon prices for those drugs are scheduled to go into effect in 2026. 

First 10 drugs subject to price negotiations

• Eliquis, made by Bristol-Myers Squibb, is used to prevent blood clotting to reduce the risk of stroke.
• Jardiance, made by Boehringer Ingelheim, is used to lower blood sugar for people with Type 2 diabetes. 
• Xarelto, made by Johnson & Johnson, is used to prevent blood clotting, to reduce the risk of stroke.
• Januvia, made by Merck, is used to lower blood sugar for people with Type 2 diabetes.
• Farxiga, made by AstraZeneca, is used to treat Type 2 diabetes.
• Entresto, made by Novartis, is used to treat certain types of heart failure.
• Enbrel, made by Amgen, is used to treat rheumatoid arthritis. 
• Imbruvica, made by AbbVie, is used to treat different types of blood cancers. 
• Stelara, made by Janssen, is used to treat Crohn’s disease.
• Novo Nordisk’s Fiasp and NovoLog are insulins; multiple variations will be considered as one drug for the purposes of negotiation.

In October, all companies that make the drugs on the list signed agreements to join the negotiations. But more than a third of the companies have sued the federal government to halt the negotiations, and most of those cases are still playing out in federal courts across the U.S. 

Notably, a federal judge in September denied a preliminary injunction sought by the Chamber of Commerce, one of the nation’s largest lobbying groups, which aimed to block the price talks.

The negotiation process officially begins in 2024. Medicare will make an initial drug price offer to manufacturers in February, and the companies have a month to accept or make a counteroffer. The negotiations will end in August, with agreed-upon prices published Sept. 1.

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