The role of biopharmaceuticals and drug revenues

March 18, 2019

Biotechnological tools have become increasingly important in drug research and development with a growing proportion of global drug revenues now derived from bio pharmaceuticals.

Published by Harvest ETFs

Biotechnology drugs differ from pharmaceutical drugs in that they use micro-organisms, such as those found in bacteria, or biological substances, like enzymes, to do the work.

Biotechnological tools have become increasingly important in drug research and development with about 1/3rd of global drug revenues now derived from biopharmaceuticals.  

Common uses for biologic drugs are in cancer treatments, metabolic disorders, inflammation & immune disorders and disorders of the musculoskeletal system. According to one recent study, the share of global drugs in preclinical testing that rely on biotechnology is more than 25%. This is helping the pharmaceutical industry develop new products, new processes and services.

A report by market research firm Global Market Insights finds that the global biotechnology market was worth more than US $330 billion in 2015 and is expected more than double by 2024 with a compound growth rate of 9.9 percent.

There is a growing demand for things like DNA sequencing and recombinant technology. The latter process joins DNA molecules from two different species and inserts it into a host organism to create new DNA. Other growth areas include tissue engineering and treatments of chronic diseases.

North America holds the dominant position in terms of medical biotech revenue, sitting at US $137.4 billion annually. This is due to increased R&D spending by industry leaders, many of whom are based in the U.S. They are spending more as the healthcare industry seeks cheaper and more effective ways to deliver care.

Regeneron is a leading global company in this field. Its area of expertise includes helping patients with eye diseases, allergic and inflammatory diseases, cancer, heart and metabolic diseases and infectious diseases and rare diseases. The New York-based company had 2018 revenues of US $6.7 billion. It was founded more than 30 years ago by physician-scientists. It has applied for 9,351 patents and has been issued with 4,945 patents issued over the last 10 years. It expects to spend as much as $2 billion on R&D in 2019.

Sanofi S.A., a French pharmaceutical company based in Paris owns over 20% of Regeneron and collaborates with them on several treatments.

Both companies are part of the Harvest Healthcare Leaders Income ETF (TSX:HHL, HHL.U). As of Feb. 28, 2019, the ETF held 20 stocks with an average market capitalization of $160 billion. The fund has 24.0% of its holdings in biotechnology companies, a steadily growing area of investment opportunity. – AM

For more on Harvest Portfolios Group ETFs click here.

 

The views and/or opinions expressed in the blog are of a general nature and are for informational purposes only. Blog contents should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Investors should consult their investment advisor before making any investment decision. 

You may also like…

Disclaimer

You will usually pay brokerage fees to your dealer if you purchase or sell units of the Fund(s) on the TSX. If the units are purchased or sold on the TSX, investors may pay more than the current net asset value when buying units of the Fund(s) and may receive less than the current net asset value when selling them. There are ongoing fees and expenses associated with owning units of an investment fund. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. An investment fund must prepare disclosure documents that contain key information about the fund. You can find more detailed information about the fund in these documents.

Certain statements in the Harvest Blog are forward looking Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or  “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS.

FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe to be reasonable assumptions, the portfolio manager cannot assure that actual results will be consistent with these FLS.

Unless required by applicable law, Harvest Portfolios Group Inc. does not undertake, and specifically disclaim, any intention or obligation to update or revise any FLS, whether as a result of new information, future events or otherwise.

Subscribe to our newsletter and stay informed

Join Us & Stay Informed!

* indicates required

Your Preferences   (Please select all the ways you would like to hear from)


You are a *


Confirm *