DAY (10/15): PRRN CHALLENGE!
Hello! I am Priya, and thank you so much for being here! :)
30/03/2025
Quick disclaimer: There are a lot of medical and pharmaceutical terms mentioned below. Kindly note that this blog is simply to reinforce my learning and spread knowledge. I do not have a pharmaceutical background, so kindly make some provision for scientific inaccuracies, which may be possible! :)
Welcome to Day 10! :)
Today I mostly spent my time finishing up J&J's earnings call report and also reading some really interesting news articles on pharma, that I've been itching to share with you!
THE ANALYST QUESTIONS
In continuation with yesterday, one of the analysts posed the question of whether J&J's startegy with their IBS (Irritable Bowel Syndome) drug, Tremfya, will be similar to Abbvie's strategy with their drug, Humira.
To understand this question let's probe a little deeper into Humira's story. So Humira was a drug who's patent expired very recently, and the minute that happened the market became infested with atleast 9 closely substitutable biosimilars, threatening to take its place.
Even pharmacies only sold these biosimilars, and this led to a volume erosion of the drug. However, here Abbvie's strategy was slightly unique.
Around the same time as this, Abbvie launched a drug called Skyrizi into the market which catered to a nice variety of autoimmune conditions. What eventually happened was that the volume that was held by Humira shifted towards Skyrizi, and on a net basis, the company continued to grow.
From the answer provided in the concall, it appears J&J is following a similar strategy. For those that couldn't read yesterday's article, Tremfya is a drug that caters to a large variety of autoimmune disorders including IBS. Previously the throne of this segment was held by their own drug Stellara, which has approached the end of its patency.
Now, by making a drug that is more effective, and more capable to cure a variety of diseases it appears the company would like to shift the market share originally owned by Stellara towards itself.
I think some major insights we can draw from this is obviously that a pharma company cannot keep blockbusters as their sole area of focus, something I have repeatedly mentioned in pretty much all my blogs.
Secondly, it is also important to maintain strategic relationships with pharmacy benefit mergers. Otherwise as we saw above, they may have a tendancy to move towards generics in the market.
Indeed J&J had planned this transition well. Over the last few years, they consistently invested more into IPR&D (In Process R&D), research trials of newer drugs and exited unprofitable markets from medtech - so as to pave the way for this smooth transition to take place, from Stellara to Tremfya.
I would say Novo too is following the same trend with Cagrisema, as their patent on semaglutide is seemingly approaching an end by 2026 (outside the US). This is why they seem to be projecting Cagrisema as a BETTER alternative to Wegovy, which is similar to what J&J did.
ANY WAY OUT?
Now a logical person can infer that this trend seems relentless and exhausting. To master countless clinical trials and manufacture a drug, only to cannibalize its own sales with a new drug in a decade or so seems quite tiring.
This is why a large number of companies are slowly moving towards innovation in gene therapies.
I'd like to bring here the contrasting insights I came across while reading a news article so you can see both the sectors in one go.
So the news article discusses how largely venture capital funding seems to move away from gene therapy research and towards biopharma. The most common reason is simply the failure of big pharma companies in the gene therapy space. Pfizer, for instance, discontinued several pipelines in development after failing late stage clinical trials.
However, companies that do manage to be successful here have established foolproof monopolies here. For example Novartis has developed a gene therapy for Spinal Muscular Atrophy in infants, and close to 95% of that market use their therapy.
There is also a wide variety of diseases that could perhaps only be cured with gene therapy, and hence this is a massive yet untapped segment of the pharma market. As a result, there is a widespread regulatory support such companies are able to gather, hence it would make it slightly quicker to launch their other drugs as well.
Here however it's important to note that gene therapy is a personalized treatment for each patient. So each time it is supplied, the costs are massive. Investors are seeking companies that can optimize these costs of production/research whilst still maintaining strong efficacy levels.
On a larger basis it is useful to take my previous discussion as a comparison. If all pharma companies eventually need to research and develop substitutes to their own drugs, wouldn't it be better for them to invest wholeheartedly into an arena where it would be nearly impossible to break their positioning?
THE SECOND QUESTION
The second question was regarding what the medtech sector will look like in 2025 and how J&J plans to position themselves in it.
SURGICAL EQUIPMENT
So here J&J says that medtech is closely related to the trends of medical procedures, which includes surgeries, operations all that stuff. There is some seasonality here too.
For example, orthopedics surgeries. In 2024, there was a sudden increase in surgeries, driven by a slightly better economic environment. You see, orthopedic surgeries like knee replacements or hip replacements are largely seen to be elective, so when the economy slows there is a downward trend in this sector, but when it upticks there is a giant demand for medical equipment to sustain it.
To accomodate the seasonality J&J restructured the infrastructure of their medtech segment, and also planned exits from their weak performing markets.
ELECTROPHYSIOLOGY
In electrophysiology (think of their heart valves or catheters) J&J's reach outside US is still very limited and hence there is massive growth potential. The rising population of people aged above 60 and the wide variety of conditions accomodated by their medtech sector can further pave way for a growing demand.
However within the US the company has faced some neurovascular events being reported, after the use of their electrophysiological equipment, due to which they have temporarily suspended the sale of such equipments here. This is concerning because it is detrimental to their reputation among patients and doctors.
PFA
With regard to catheters in particular, J&J is gaining quite some impetus with their Pulse Fielded Ablation (PFA) technology, which as you read in my previous blog, is slowly being influenced by competitive pressures worldwide.
To avoid this the company has now started exploring newer technologies here, like the STSF, which is based on smart touch. I think this goes to show how critical it is to diversify, but 'diversification' doesn't simply mean making more products.
It could simply mean reviewing current technologies, unexplored geographies, or even enhacing the ease of usage in a drug (increasing number of companies are researching the conversion of oral medicine into sub-q forms).
AND THEN ONTO SOME LATEST NEWS UPDATES
Lipoprotein A is a protein in the body that generally increases the risk of myriad cardiovascular diseases. This is one area where majority companies are researching too, and it seems most common among those with African dissent.
It will be interesting for EL to tap into this market and fulfill a big medical gap. The only concern, potentially, could be that a lot of people do not actually know they possess this protein until it gets too late.
Hence a big part of marketing this drug would be to spread awareness about it, and enhance diagnostic facilities for it. Also, this is still an early stage trial, and hence a bigger sample testing size could make its efficacy more reliable.
THAT'S ALL FOR TODAY! THANK YOU FOR MAKING IT TO DAY 10, AND I WILL SEE YOU TOMORROW! :)
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