DAY (7/15): PRRN CHALLENGE!

 

Hello! I am Priya, and thank you so much for being here! :)

I recently watched the '100 day challenge' to build a career in finance by The Valuation School, and immediately jumped into it. This is a series where for the next 15 days I:

1) 'Pick' a sector

2) 'Read' relevant news articles, annual reports, sector analysis reports etc 

3) 'Report' what I've read

4) Make 'Notes' and see how they evolve!

To make it more interesting I've decided to pick a sector that has always been intriguing to me - the Pharma sector. I've picked 3 companies for my reference - Eli Lilly, Novo Nordisk, Johnson and Johnson.

A quick disclaimer, none of this should be treated as professional investment advise. Life is all about evolving into the best version of yourself, and I'd like to take you all on this journey of mine. Kindly only read this for gaining some additional insight, and feel free to give me any sort of feedback.

As a writer, I strongly advise you to do your own research as our team cannot assume any liability for your use of this information.

Let's get learning! 

25/03/2025

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! :)

Today I read a beautiful report from Evaluate Pharma, which extensively discussed the pharma sector's trajectory in 2025. This mindmap was something I created based on what I've read:

 

The report basically discusses that the above 3 Therapy Areas are actually the ones where it expects highest amount of investor attention to be diverted.

GLP-1

This is dominated by Eli Lilly and Novo Nordisk, as I have repeatedly discussed in my previous blogs. Amongst the 2 of them, Novo is enroute to launching Cagrisema in 2026 and Eli Lilly is going to launching their oral obesity drug Orforglipron, and Mazditude.

This got me thinking however, why do companies incessantly want to focus on this specific category. Of course the basic reason is an increase in the obesity and diabetes mortalities in recent days, however I came up with some reasons, which were completely based on my readings in the last 1 week or so:

1) GLP-1 isn't just an obesity specific treatment, but targets many different comorbities. For instance, Wegovy was proved to correct both obesity and the chronic kidney failure that often results from it. This makes it a little easier to launch a wide variety of combinations from a single molecule that can cater to the nuanced concerns of patients.

2) This molecule seems to have a little bit of usage everywhere. For example I read in this same report that Novo is researching the use of GLP-1 agonists (semaglutide) for alzheimer's disease. Such a potent formulation is obviously bound to gain the interest of pharma companies.

3) This is a relatively newer discovery hence both leaders have strong patents to defend their discoveries.

Image by Charles Waswa from Pixabay

I would love to know if you can predict any further reasons in the comments below! :)

A closer look at the mindmap, and you'll see that Eli's Mazditude, which is also an injectible weight loss formulation has been made in collaboration with Innovent, which is a Chinese company. 

I found this trend to be extremely interesting and as predicted by the report, there is an increasing trend of many Western companies collaborating with Eastern companies to make their products. 

Why you ask?

1) Early clinical trials are far more convenient and slightly easier to gain approval in these countries.

2) This helps them to gain faster penetration into countries like China/India/Japan etc where there is so much potential for pharma.

Another company seen observing this trend pretty relegiously is Astrazeneca. It has been collaborating with Daiichi Sankyo, a Japanese company, in order to make various Anti drug Conjugates, which are essentially cancer treatments. Its drug, Enhertu is expected to be the fastest growing drug in 2025, made especially for breast and lung cancers!

CREDITS: PIXABAY

CANCER

Speaking of cancers I read today that a large number of pharma companies are shifting their focus away from cancer treatments, perhaps since the conventional immunology based therapies are not really resulting in extremely positive outcomes for them.

Specifically 2 companies have been dominating this sector for a while, Merck (Keytruda) and BMS (Opdivo) with their anti PD-L1 mechanisms, that prevent the binding of 2 cells that hinder the body's fight against cancer.

Interestingly both blockbuster drugs are basically oral capsules that they are now converting to subcutaneous forms, ie, injections, because both drugs are approaching the end of their patent's life. This will apaprently help to extend their life a little while longer.

Keytruda is the biggest deal in this market for sure. However it may be approaching a pitfall against a latest discover in the East, Ivonescimab. This is a tetravalent injection which has upto 49% greater efficiency than Keytruda, with a much stronger PFS (Progression Free survival rate)!

Blood cancer in particular is an area of key interest at Johson and Johnson, With drugs like Darzalex the company is making massive strides in this area.

                                                 

CREDIT: FREEPIK

AUTOIMMUNE CONDITIONS

In terms of autoimmune conditions it is currently dominated by Abbvie (Skyrizi) for skin disorders and Dupixent (Sanofi) for a range of autoimmune conditions and asthma.

Johnson and Johson is actively working in this field too, with a methodology called Anti FcRn. One of the biggest drugs in their pipeline called Nipocalimab is specifically to cater to autoimmune conditions, which is eagerly looked forward to,

Speaking of Abbvie however, I did mention in Blog 1 that the company's financial performance is lowering further down due to the falling exclusivity of its patents. Indeed this report further probes into the number of patents of this company that is approaching an end, especially in arthritis. 

Similarly they say respiratory infections, learning disorder treatments etc are also seeing the decline. With regard to LD treatment, I would say one of the biggest challenges is currently advertising such medicines in a way that does not expose the company to unwarranted litigation.

Recently Eli Lilly sold their Olanzapine portfolio entirely, which is for mental health disorders like schizophrenia. Eli Lilly was otherwise constantly under the scrutiny of regulators, who required each and every side effect of such medicines to be marketed properly.

CREDITS: FREEPIK

THE FINAL TWIST

You'd be amazingly surprised to know that none of the companies I've mentioned in this long drawn article are actually expected to be the best performing company in 2025.

Evaluate Pharma gives that award to 'Roche Holdings', who are expected to make their way to the maximum number of prescriptions this year!

Why you ask? Because Roche doesn't rely on blockbusters! Those that read my article yesterday would remember this was a point we discussed. Pharma companies are increasingly being exposed to compounding/generics/biosimilars threats, and relying on one therapy area or medicine cannot get a company too far. It is the vast breadth of portfolio that Roche owns that gives it a special place.

Apart from this of course, a good macro environment is extremely crucial. Several companies are expected to face the burn from Trump Government's overtly coservative policy against vaccines and drug discoveries.

An insanely popular company like GSK which has several vaccines and HIV drugs in pipeline was specifically mentioned in this report. Thus, although the pharma industry has many discoveries that are up in pipeline, without a proper institution for support, it would be difficult to navigate this space.

SEE YOU ON DAY 8! :)