The World Health Organization reports the presence of 35 million HIV-infected people in the world. This is expected to prove beneficial for the biotechnology industry.
Most multiple sclerosis drugs are very costly at about $55,000 per year. The FDA’s April 2015 approval of a generic version of Copaxone is expected to lower the overall price of the therapy.
The success of drugs still in the pipeline will be a key determinant of the future profitability of biotechnology companies such as Amgen, Gilead Sciences, Biogen, and Celgene.
US prescription drug spending increased year-over-year by 13% to $374 billion in 2014. New biotechnology drugs for complex diseases accounted for 31% of prescription drug spending.
After 2012, the biotechnology industry (IBB) had a period of solid growth, mainly driven by novel scientific inventions and aggressive commercial distribution.
The biotechnology industry will witness 12 blockbuster drugs worth $67 billion in annual revenues lose their patents by 2020. This is the so-called patent cliff.
A drug approval process is required in order for a new drug to enter the market. Companies with new drugs in later stages of the approval process are more likely to earn a positive cash flow in the next few years.
The aging Baby Boomer population in the United States is one of the social factors driving the US healthcare industry. By 2030, Americans over 55 will be 31% of the population.
Compared to pure-play pharmaceutical companies, the biotechnology industry is more sensitive to economic factors such as changes in GDP, interest rates, and exchange rates.
A pharmacy benefit manager plays a major role in the distribution model, mainly to reduce the cost of drugs.
The type of business model a biotechnology company selects depends on technical capability, availability of resources, and competition in the industry.
The two main classifications for drugs are chemical compound drugs and biologics. Medicinal drugs are broadly classified as prescription drugs and over-the-counter drugs.
Biotechnology is simply ‘technology based on biology.’ The biotechnology industry includes food technology, genetic research, healthcare, and environmental technology.
ETFs are designed for investors who do not have the capacity to hold many stocks, but who are interested in diversified investment within a sector or industry.
The forward EV/EBIDTA multiple for Merck is nearly 12x, which is much lower than the industry average of ~15x. This is due to the revenue reduction following the expiration of a patent.
Merck faces risks from other governments. In Japan, the pharmaceutical industry is subject to government-mandated biennial price reductions of pharmaceutical products and vaccines.
Merck’s long-term credit rating assigned by Standard & Poor’s is AA with a stable outlook. Its Moody’s Investors Services rating is A1 with a stable outlook.
With declining sales, the R&D expenses for Merck & Co. are also declining. The company’s R&D expenses were $7.2 billion in 2014, $7.5 billion in 2013, and $8.2 billion in 2012.
Merck’s 2014 sales in the US totaled $17.1 billion, a decline of 6% compared with its 2013 revenues. Total international sales represented 60% of Merck’s total sales in 2014, compared with 59% in 2013.
Merck & Co. recorded direct product sales of over $1 billion for each of its ten pharmaceutical products in the last year.