Pharma Industry Outlook in 2019: What Should be on Your Radar

By Patricia Van Arnum - DCAT Editorial Director

January 9, 2019

As the industry enters a new year, what will be key issues shaping the pharmaceutical industry in 2019? Coming off a record-setting year for new molecular entities approved by the FDA in 2018, will the industry be able to meet a new innovation bar in 2019? DCAT Value Chain Insights looks at the top issues that should be on your radar in 2019.

A look ahead into 2019

One of the key items to look for in 2019 is how the pharmaceutical industry will fare with new product approvals. In 2018, the US Food and Drug Administration’s (FDA) Center for Drug Evaluation and Research (CDER) approved a record-high 59 new molecular entities (NMEs), surpassing the previous record of 53 NME approvals in 1996 and the 46 NMEs approved in 2017. The 59 NME approvals in 2018 was nearly double the 10-year (2009–2017) average of 33 NME approvals by FDA’s CDER. The record-number of NME approvals continues an upward trajectory for NME approvals (with the exception of 2016 when 22 NMEs were approved) over the last several years. FDA’s CDER approved 41 NMEs in 2014, 45 NMEs in 2015, 46 NMEs in 2017, and the 59 NMEs thus far in 2018.

In addition, continuing a recent trend, orphan drugs accounted for a large percentage of NME approvals. More than half (58%), or 34, of the NME approvals in 2018 were for orphan drugs, defined as drugs that treat 200,000 or fewer people in the US. In 2017, 39%, or 18 of the 46 NMEs approved by the FDA’s CDER were orphan drugs, which continued a recent trend of approximately 40% of NME approvals being orphan drugs. In 2016, 9 of the 22 NMEs approved by the FDA were orphan drugs. Of these 22 NME approvals, two were diagnostic agents, so 9, or 45%, of the new drugs approved in 2016 were orphan drugs. In 2015, 47%, or 21 of the 45 NMEs approved by the FDA’s CDER were orphan drugs, and in 2014, 41%, or 17 of the 41 NMEs approved were orphan drugs.

The key question for the pharmaceutical industry in 2019 is whether the innovation train will continue to roll.

Despite the optimism for product innovation based on NME approvals in 2018, other issues may have a dampening effect, notably financing into the biopharmaceutical industry. “Biopharma has had a rocky few months, and many expect life to get tougher as we head into 2019,” said Amy Brown, author of a recent report by Vantage, the editorial arm of Evaluate Ltd, in highlighting key predictions for the pharmaceutical industry in 2019. “The sector will need to deliver on its innovation promises next year if it wants to rise above wider economic and financial concerns.”

In the US, a total of $4.0 billion was invested into biotechnology-related industries in the third quarter of 2018 (the latest available data as of press time), which represented a 1% decrease from the second quarter of 2018 while deals remained constant quarter on quarter with 120 deals each in the third and second quarters of 2018, according to the Healthcare MoneyTree report by PwC and CB Insights. The biotechnology subsector raised $2.160 billion in the third quarter of 2018, a 7% increase from the second quarter of 2018. Out of the 59 deals, closed in the third quarter, six were mega-round deals, which contributed $1.176 billion of the dollars invested in the third quarter. The drug-development subsector raised $884 million in the third quarter of 2018, a 31% decrease from the second-quarter of 2018. Out of the 31 deals closed, none were mega-round deals. For the other subsectors in biotechnology-related industries, the medial device & equipment industry raised $750 million in 45 deals in the third quarter of 2018, a decrease of 4% from the second quarter of 2018, in terms of dollars invested, according to the PwC/CB Insights’ Healthcare MoneyTree report. The drug-discovery subsector raised $517 million in 16 deals in the third quarter of 2018, and the disease-diagnosis subsector raised $325 million in five deals.

The Vantage report also made several other noteworthy predictions relating to product developments for 2019. AbbVie’s Humira (adalimumab), an anti-inflammatory drug for treating arthritis, plaque psoriasis, ankylosing spondylitis, Crohn's disease, and ulcerative colitis, will continue to be the world’s biggest-selling drug in 2019, with sales of just under $21 billion. For new product launches in 2019, Alexion Pharmaceuticals’ Ultomiris (ravulizumab) for treating adult patients with paroxysmal nocturnal hemoglobinuria, a rare and life-threatening blood disease, which was approved by the FDA in December 2018, has potentially the largest upside for a new drug approval with a net present value of $10.9 billion. The Vantage report also predicts that AstraZeneca will net the most new sales in 2019, increasing by $2.3 billion over the previous year’s total.

Macroeconomic changes will also be an important consideration for 2019. A recent analysis by PwC for its 2019 global outlook noted a slowdown in global economic growth following a mini-boom between the end of 2016 and early 2018. In the US, the PwC report projects that the boost from fiscal stimulus is likely to fade, higher interest rates may dampen consumer spending and a strong dollar could continue to drag on net exports for growth to moderate from an estimated 2.8% in 2018 to around 2.3% in 2019. On the plus side, the US will record its longest-ever business cycle expansion in July 2019, when the period of growth that began in mid-2009 surpasses the length of the expansion that ran from 1991 until 2001, but this could come to an end in 2020 or 2021, according to the PwC analysis.

In the Eurozone, the PwC report projects that uncertainty relating to global trade tensions and Brexit will take a toll while the European Central Bank is likely to offer less support to growth as its quantitative easing policy ends. Growth in China is also expected to slow relative to 2018 due to potential impact of US tariffs and the need for the government to control debt. The report also noted that other emerging market currencies could come under periodic pressure from a strong US dollar, but this effect is likely to lessen later in 2019 due to the US economy slowing.

The PwC report also says that trade wars will continue in 2019, which will impact overall economic performance but also create uncertainty for policy makers in terms of considering the impact of potential tariffs on growth and inflation and for businesses, which will seek to mitigate the impact on their supply chains and customers. The main focus of tensions is likely to remain US-China trade although the report points out other scenarios are possible.