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Aegerion Pharmaceuticals, Inc. (AEGR) Message Board

  • hankmanoo hankmanoo Oct 11, 2013 9:27 AM Flag

    Hybridan on PLI regarding orphan drugs. Part I

    From Hybridan
    The financial outlook for the pharmaceutical and biotechnology industry is certainly looking a lot healthier than at any time since the beginning of the financial crisis of 2008. As the graph on the left shows, the major indices in the sector have bounced back sharply over the past year.

    The industry profitability, on aggregate, has certainly improved thanks largely to cost-cutting. Equity funding on the other side of the Atlantic has become a lot easier; the industry has raised nearly $2.5bn from 35 IPOs so far this year, compared with $800m from 14 IPOs in the whole of 2012, and the highest since 2007. Risk is coming back too; four companies listed this year are in the pre-clinical/Phase I stage, compared with none in 2008-2011, and two of them are valued at in excess of a $850m market cap. The M&A and licensing trend is on the upward trajectory also.

    While the US optimism is bound to spread to Europe and the rest of the globe, it is too early to say if this optimism is justified. The structural issues exposed by the financial crisis – affordability and efficiency– have only just begun to be addressed. There will be winners and losers as these issues are resolved. So while the current tide will lift all boats, in the long term, selectivity will be important.

    The move to outcome-based health care is a big change in economic incentives, and it seems only natural that there will be some shifts to where drug development companies focus their innovative efforts. One area that is a net winner because of the move to evidence and outcomes is orphan diseases. In recent years, these indications have become increasingly popular, and even big pharma companies — the creators of the blockbuster model — have rushed in. With buyers demanding more evidence of the value products deliver, orphan diseases with relatively few existing treatments offer investors the opportunity to invest in orphan drug companies which should provide an above average return on

 
AEGR
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