I should be clear that some startups are funded directly by big pharma, and these will usually have agreements that give their benefactor some kind of special treatment like first rights of refusal to buy out the startups. In these cases, there will often be milestone payments (ie, $50 million for First in Man dosing)
Some startups are funded through other means like VC. If big pharma decided they’re interested in these they will just buy them.
The there’s a lot more to the details than this, and more permutations than I can count. But I didn’t want to leave it sounding like the startups come from big pharma. Only that most of their (BP) R&D these days is focused on the D.
All of which, by the way, is why the NIH is so damn important. A huge number of the innovations we get today trace their origins to NIH (or similar) grant funding. That’s where the ideas come from, which then percolate up through the above mechanism.
I’m not a scientist (BS Biology, only worked two years in a lab), but I’ve done BD and been involved in some licensing deals. I have many friends who are real scientists, and spent many years in R&D roles, who now work for larger companies and their only job is to evaluate the licensing and acquisition opportunities. Big Pharma usually gets the “is this a good target” right. What they sometimes get wrong is an evaluation of how mature the asset really is, or what it’s warts are. And to be fair, that’s because the target wants its payday and doesn’t always disclose all its warts. A real-life example from my experience would be a product that’s good, but a manufacturing process that’s unreliable. Then the acquirer finds that fixing the process requires a bunch of work, additional human studies to validate it, and another 18 months before they can launch the product, over what they anticipated.
For those that wondered upthread how to invest in Europe without opening an account overseas and with little bureaucracy I read an article in the German Handelsblatt today presenting the services of OTC Markets, a plattform that offers US investors exactly that. The article is in German and probably paywalled, but OTC Markets, Vice Director Jason Paltrowitz, and American Depositary Receipts (ADRs) may be a starting point for an internet search.
This, evidently, is no investment advice. But they claim that trump is helping their business a lot, thank you very much.
ADR is the way to go. You won’t even realize you’re doing it since it’s just like buying an American stock. If you have a brokerage account already, just type in, say, ASML and buy it. Done. You now own a Dutch semiconductor company.
There are hundreds of foreign companies you can buy from American exchanges. Behind the scenes using ADR is more complicated than owning an American stock, but nothing you’ll ever notice. I never realized this was even happening until recently.
If it’s not listed on an American stock exchange, then I’m not sure how to do it. You can buy global ETF’s on American markets. Those ETFs own lots of foreign companies (and I think those ETFs go buy off the foreign exchange itself). I think some brokerage accounts would allow you to buy single stocks direct off some bigger foreign exchanges.
If recent history learns us something : whatever Djt does has only short term impact in the financial world … (until some day this is no longer true and $hit will fall of the cliff )
I would guess without market manipulation the value of federal bonds falls, the return rises. Would make future debts really expensive, the US might even have to declare bankruptcy in the longish term, Argentinian style. Depends on who sells how many bonds and how fast. China could bankrupt the USA, to great self harm, but they might deem it worth it. Japan and / or Europe together could too, as a measure of last resort. The level of self harm would be incredible, but if they speak out the threat, they will have to follow through if the USA really invades. It woud be stupid beyond measure, but the stupidity would have started with the temper tanTrump in the White House, so fully in caracter. I would give it a probability of around 5%.
The market will know Trump is poking a bear and will react to that in the short term. Assuming things don’t spin out of control (the bear waking up) then the market settles back into where it was.
This kind of illuminates how it takes other very calm and rational people to not freak out when they see the US President poking a bear. It’s amazing the poking alone doesn’t do us all in.
Thinking more on big pharma, your points and more.
First off many of the big pharma stocks are looked at more as value plays than growth. Pfizer for example, is attractive to many based on its being off over 30% from its highs five years ago with a PE of under 15 and a yield of 6.7%. Their track record is long of stable to increasing dividends.
Pipeline issues are the big questions. And yeah, looking at this analysis by Motley Fool it seems like they are mostly buying up promising products to bring them through the clinical trial, approval, marketing phase …
It acquired Seagen, a smaller oncology specialist, for $43 billion, thereby gaining access to a substantial pipeline of investigational cancer therapies.
More recently, Pfizer licensed PF-08634404 (“PF’4404”), a highly promising cancer medicine in development, from China-based 3SBio. It recently announced that it’s accelerating the development of PF’4404 and has begun multiple studies, including late-stage clinical trials, with additional studies planned. Next year, Pfizer could report solid clinical progress in oncology across PF’4404 and other candidates.
Plus promising GLP1 products to get developed that it acquired.
The yield seems like a safe haven return for someone planning a longterm hold with its price already beaten down. Growth as those products come on line is the bonus round over the next five years.
Then there is the even bigger potential for growth longer term - these companies have the pockets deep enough to partner with powerful AI to help come up with new targets faster. And to then develop them with their human powered resources.
The other problem predicted by the very good sleeping bear analogy is that one thing we know for sure about trump. He’ll keep doing something until he gets burned doing it. The idea of quitting while ahead isn’t in his brain anywhere.
So each time he pokes the bear and doesn’t provoke a mauling only encourages him that the bear can be poked more and more vigorously with ever more, not less, safety.
Absolutely agree they’re value plays. With all the consolidation in pharma, you have a handful of $150 billion companies, with revenues of $67 billion, it takes a lot to move the needle. Something as big as the GLPs.
The next big move is into radiopharma. Watch that space. Some really exciting development have the potential to open up whole new areas for oncology, and what was a sleepy little space largely ignored by the big players is rapidly being swallowed up.
The same thing happens in the technology industry; for some startups, the hope is that they are acquired by one of the big players (Microsoft, Meta, Alphabet, Apple, etc.)
Oh for most. That became the career of my best friend from med school now retired - started out in academia, moved to big pharma, and finished up as the guy to bring these biotech companies across the line with the clinical studies in place to get bought. In his era the purchase happening when it looked like approval was already imminent if not having happened. I am gathering the buys are now more frequently happening earlier in the pipeline.
The small biotechs can potentially get enough private equity patient enough to see them through to there - but then they want their return. They don’t want to build the manufacturing and distribution out themselves.
It certainly is a value rather than growth stock. I bought a small chunk back in the covid days, and as you say it is down over 5 years. I’ll probably keep it for the dividend, though.
Well it is to return to the question that brought up the sector:
Now “healthcare” is more than pharma. You also have for example the huge entities of United/Optum, CVS, so on, owning insurance companies, pharma benefits, pharmacies, provider groups, and hospital systems, in various combinations to various degrees. Not sure how they get categorized. Other than evil …
That’s a good point. It does scale. You can see it from Term 1 to Term 2.
Not sure how much further that bear analogy is supposed to go (is the bear us?). In general though, and related to finance, you can strongly oppose Trump and still do it calmly. Markets turn on fear and unpredictability.
Total foreign reserves of governments and central banks is about $18.5 Trillion, broken down about as follows:
$7.4T USD
$4.4T Gold (priced to market)
$2.4T Euro
$4.3T Other currencies
This underestimates the dollar’s significance (and, though much less so, the euro’s) since by definition the USA holds zero foreign reserves as USD.
Let’s compare with a time when most of the world was on the gold standard – 1913. Total monetary gold in the world then was about $13.3B (in 1913 dollar). Total world GDP was about $240B (in 1913 dollars).
I DO NOT think the world will revert to a pure gold standard, but the comparison with 1913 suggests that gold may play an important monetary role if faith in paper money is impaired.
Yeah, healthcare has definitely become much broader than just pharma. With companies like United/Optum or CVS, everything is so vertically integrated now insurance, PBMs, pharmacies, providers, even hospitals. It’s hard to put them in one clean box.“Life sciences” feels like a catch-all label people (especially HR) use when they don’t want to get into the messy details. It sounds nicer and more neutral than what’s really going on.
In reality, it’s more like healthcare + finance + tech all blended together.
