I'm watching the democratic primary debate, and a big topic of conversation seems to be upending "big pharma" and the current healthcare industry.
With Biden supporting hard caps on pharmaceutical prices, Sanders & Warren supporting Medicare for all, and Kamala Harris supporting something in between, I'm concerned about the future of the industry. Since 2000, 60%-70% of spending on the research and development of new drugs worldwide has been in the United States, what might the future hold 10 years down the line, as our politics continue to skew further and further to the left?
I want to work in life sciences growth equity or venture capital after my time in a healthcare investment banking group, am I making a mistake by choosing to specialize in an industry that's days are numbered?
Or am I tweeking, and won't have a difficult time transitioning to a different vertical?
The Pharma Guy Would love to see your take on this
If prices become capped in the US, more of the pricing shift will move towards the other G7 pharma markets but the US will still remain a key market. Even if you can't get $100K for the average drug like you currently can, you will still be able to get like $60-70K - a bit more than what you do in Europe. In the next 10 years you will also have more countries coming into play as large healthcare markets as their economies grow; some ASEAN nations, LatAm and a handful of African countries may be able to pick up some of the slack.
From a company perspective, a decrease in US prices won't be disastrous for all. Most people assume that all Big Pharma companies make the majority of their revenue from the US but this isn't true. Many US companies do (Pfizer, Merck etc) but a lot of European ones (Novartis and AZ etc) have a fairly 1/3 split across EU, US and RoW. A cut in US prices will mean that companies will shift more towards the EU company revenue split which is still good for business.
Additionally, whether you have a predominantly private or public payer market in the US, cell and gene therapies will change everything. The ability to give a 1-shot curative solution to patients means prices will be high. Perhaps with the old system you could have got $2 million a pop in the US but hit only X patients due to high copays. Public systems will still bend to the pressure of demand and perhaps agree on $1 million but give it to 2x patients. The revenue will still be high.
I don't think this change will be catastrophic for the industry in the long-run.
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