Volume 5 – January 2020
Welcome to the January edition of the U.S. Healthcare Market Review, Results Healthcare’s monthly review of U.S. and macroeconomic trends, M&A and valuations in the healthcare sector.
Global markets will continue to remain sensitive to geopolitical uncertainty as 2020 kicks off, despite its strong start.
Highlights from the U.S. Healthcare Market Review:
- The end of 2019 marked a significant close for U.S. markets, with the longest U.S. equity bull market run ever recorded in U.S. history. Similarly, U.S.-Chinese trade tensions eased after a preliminary “phase one” deal was announced in mid-December, with global markets reacting positively to the news. Various macroeconomic factors point to a strong start for 2020, including a significant easing in the U.S. Dollar compared to most major currencies, a steepening of the U.S. yield curve, and particularly strong consumer spending data, with eCommerce sales growing by nearly 19% from 2018, a record-high for the year.
- The biopharmaceutical sector enjoyed the strongest performance in Q4 2019 compared to other healthcare sub-sectors due to a culmination of factors. M&A activity, for example, rose considerably from previous quarters, with two major deals in the sector taking place in December alone, the acquisition of ArQule (NasdaqGM:ARQL) by Merck (NYSE:MRK) for $2.6bn, and Audentes Therapeutics (NasdaqGM:BOLD) by Astellas (TSE:4503) for $3bn. High FDA drug approval rates, with a total of 48 first-of-their-kind therapies approved in 2019, the second-highest number of new molecular entities cleared in the past two decades, and promising drug trial results, such as Janssen’s Phase 1 interventional clinical trial for Cusatuzumab to treat Acute Myeloid Leukemia, also contributed to sector performance.
- Gene therapy, an experimental technique that uses and edits genes to treat or prevent disease, has been garnering particular attention due to the acceptance of CRISPR gene-editing technology for clinical trials. This comes after much debate over ethical concerns and years of laboratory work. Similarly, Roche (SWX:ROG) has completed its $4.8bn acquisition of Spark Therapeutics, a pioneer in the gene-editing space.
- The U.S. House has adopted Speaker Nancy Pelosi’s legislation permitting the federal government to negotiate prices of the most expensive prescription medication for the commercial insurance market and Medicare. Concerns over prescription drug prices and the overall cost of healthcare in the United States continue to be a heated topic of discussion as the 2020 presidential election approaches. As of January 2nd, over 330 prescription drugs, developed by large pharmaceutical companies including AbbVie (NYSE:ABBV), Roche (SWX:ROG), and Novartis (SWX:NOVN), experienced notable price hikes.
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