18th Apr 2016 10:06
LONDON (Alliance News) - Biotechnology stocks are feeling the weight of the upcoming US Presidential Election in November, the SV Life Sciences Managers LLP, the investment manager of London-listed International Biotechnology Trust PLC.
"Rising healthcare costs including the cost of prescription drugs have become a key area of debate for US politicians, patients and the media, and a source of worry for investors," SV said in its review of the six months to February 29, the first half of International Biotechnology Trust's financial year.
In that period, the trust's net asset value per share dropped by 17.7% to 481.7 pence and its shares lost 23% of their value, falling to 425.0p, as the NASDAQ Biotechnology Index lost 18%.
Alan Clifton, the chairman of the trust, said the political response to "unconscionable price hikes" for some drugs had much to do with the decrease.
When Turing Pharmaceuticals acquired Daraprim, a drug used to treat toxoplasmosis, in September 2015 and subsequently multiplied its price to USD750 per tablet from USD13.50, an increase of more than 5000%, outcry followed.
Most strikingly, Hillary Clinton, along with Bernie Sanders one of two remaining Democratic candidates for the presidency, tweeted "Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on."
"It is important to note, that in the tweet and in subsequent discussions, the target was not innovative medicines but specifically the act of taking old, off-patent drugs and ramping up the price," SV said.
In order for new political legislation to truly affect drug pricing, SV said, it is "probable" that both the House of Representatives and the Senate would need to have a Democratic majority. Together, the two chambers form Congress.
"This is believed to be unlikely in the short to medium-term. What is more likely is continuing pricing pressure resulting from stronger negotiation power by payers, enhanced by the ongoing payer sector consolidation. This is particularly prevalent in pockets of the pharmaceutical market, for example, diabetes and respiratory diseases," SV said.
"Both these areas have an abundance of undifferentiated 'me-too' drugs i.e. drugs that do not show material benefits in either safety or efficacy. This is not a new phenomenon, but we expect this to intensify," SV said.
Shares in International Biotechnology Trust were down 1.2% at 447.72p on Monday morning.
By Samuel Agini; [email protected]; @samuelagini
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