Within the pharmaceutical industry, there have been a number of drugs that have drawn significant controversy.
As some pharmaceutical companies charged tens of thousands of dollars to a captive market, knowing full well there are no other solutions on the market, U.S. legislators have begun to investigate whether this is a predatory pricing strategy.
This is especially prevalent in the HIV prevention market, where a recent pill called Truvada was being sold for $20,000 per year, leading to a particularly fiery Congressional hearing earlier in 2019.
Amidst this controversy underlies a significant issue and opportunity to pharmaceutical companies, as businesses that can produce a potential HIV treatment can make fortunes in the years to come.
Citigroup analysts think this company could take the HIV prevention market by storm
According to new research released from Citigroup, the market for HIV prevention pills is expected to skyrocket. By 2030, the overall demand will more than double to $5.5 billion annually, thanks in no small part due to President Trump’s announced effort to end HIV transmission altogether by 2030. In turn, this would require a drastic increase in the availability of treatments, which would propel the market even further onward.
“The market under-appreciates the potential for novel PrEP agents that have potential to lower transmission risk [more than] 90%. The President’s ambitious 2030 goal to lower new HIV infections by 90% relies heavily on an anticipated increase in PrEP (Pre-Exposure Prophylaxis) usage,” said Citi analyst Andrew Baum according to Barrons. He went on to add that Truvada, which is produced by Gilead Sciences (NASDAQ: GILD), might dominate the market for now, but in time this is likely to change. “While the availability of generic low-cost versions of Truvada is a critical moment for PrEP therapies, we believe next-generation PrEP solutions have sufficient differentiation to thrive.”
Specifically, Citigroup analysts singled out Merck & Co (NYSE: MRK) as their top pick to dominant the HIV treatment market, which is currently developing a PrEP of their own which could launch sometime 2023.
At the time time, Gilead (NYSE: GLD) is also preparing their own next-generation PrEP drugs which would be superior to Truvada in a number of ways. At the same time, they also have another HIV drug, Descovy, which is awaiting U.S. FDA approval.
However, Descovy won’t be available unto 2025, so Merck might end up acquiring a first-mover advantage in the next-generation of HIV treatment drugs.
While shares for the pharmaceutical giant dipped around 1.6 percent on Friday, not caring much for the news, the company has seen a strong year to date. For the past six months, the stock has been steadily rising, albeit still somewhat underperforming most other major indexes.
Merck Company Profile
Merck makes pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiovascular disease, asthma, cancer, and infections. Within cancer, the firm’s immuno-oncology platform is growing as a major contributor to overall sales.
The company also has a substantial vaccine business, with treatments to prevent hepatitis B and pediatric diseases as well as HPV and shingles. Additionally, Merck sells animal health-related drugs. From a geographical perspective, close to 40% of the company’s sales are generated in the United States. – Warrior Trading News
