Biosimilars: A threat to pharma cash cows?

Biosimilars are generic copies of biotech drugs that, once passed through a rigorous regulatory process, provide the same efficacy as their original counterparts while offering considerable cost savings. Whereas generic drugs, which are copies of small molecule medications, have existed for decades, biosimilars are far more recent. There are several reasons why commercially available biosimilars have taken so long to become available, including:

  1. The capital and knowledge required by companies to manufacture them;
  2. The reluctance of government agencies like the US Food & Drug Administration (FDA) to yield to market entrants in favor of prudent caution;
  3. Doctors’ resistance to the idea of switching their patients from proven biotech drugs that, while expensive, do save lives.

However, the environment has changed meaningfully in the recent past. Well-capitalised, well-known biotech firms are investing more in the requisite equipment and people to make biosimilars, the FDA has become increasingly accepting as the industry rises to meet its high standards, and doctors have grown to trust their effectiveness. Given this progress in the US, which has the largest market opportunity for the medications, coupled with the existing widespread acceptance in Europe, the long-term prospects associated with a growing biosimilar market have never been more inviting.

Dave Borah – The Boston Company Asset Management, a BNY Mellon company

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Biosimilars are generic copies of biotech drugs that, once passed through a rigorous regulatory process, provide the same efficacy as their original counterparts while offering considerable cost savings. Whereas generic drugs, which are copies of small molecule medications, have existed for decades, biosimilars are far more recent. There are several reasons why commercially available biosimilars have taken so long to … read more

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Are rising energy spreads a portent of default doom?

On 22 January, ratings agency Moody added 175 energy and companies to its downgrade watch-list, citing the slowdown in China and a collapse in commodity prices.

Fears over credit risk in the energy sector is reflected in the sharp spike in option adjusted spreads in US high yield energy bonds since the third quarter of 2015.

We believe the relatively high and increasing energy spreads reflect the increasingly stressed cash position of US energy companies, particularly non-conventional and higher priced energy producers. Given the “lower for longer” view of crude oil prices, we believe this pressure on higher priced energy producers will continue for the foreseeable future. The difficult question is to what extent this increase in spreads and eventual defaults rates will contaminate other sectors of the US economy.

Jason Lejonvarn – Mellon Capital, a BNY Mellon company

On 22 January, ratings agency Moody added 175 energy and companies to its downgrade watch-list, citing the slowdown in China and a collapse in commodity prices. Fears over credit risk in the energy sector is reflected in the sharp spike in option adjusted spreads in US high yield energy bonds since the third quarter of 2015. We believe the relatively … read more

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How China’s year of the red fire monkey could impact markets in 2016

China’s influence on the global economy and financial markets has continued to be widespread in recent months. Its currency devaluation and stock market tumble last summer were cited as key reasons for the postponement of a US interest-rate increase in September; global energy and commodity producers have been enfeebled by its slowdown; and the country’s progress towards freer capital markets was exemplified by the inclusion of the renminbi in the International Monetary Fund’s basket of reserve currencies.

February sees the start of the Chinese year of the Red Fire Monkey – thought to herald great risks to business and the economy. During this New Year, China’s influence is likely to continue to be felt far beyond its shores, not least in terms of its approach to managing its currency. To Chinese industry, an elevated exchange rate, exacerbated until now by the setting of the renminbi against the (soaring) US dollar, has been highly challenging. For those who trade with the country, the prospect China will weaken its currency – a move for which Beijing’s decision to measure the renminbi against a conglomeration of other currencies appears to pave the way – is unsettling, given the negative implications it would have for the competitiveness of other nations.

Nick Clay – Newton, a BNY Mellon company

China’s influence on the global economy and financial markets has continued to be widespread in recent months. Its currency devaluation and stock market tumble last summer were cited as key reasons for the postponement of a US interest-rate increase in September; global energy and commodity producers have been enfeebled by its slowdown; and the country’s progress towards freer capital markets … read more

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How ‘things’ will transform the tech sector

The Internet of Things (IoT) is becoming an increasingly prevalent trend in our everyday lives as it cuts across a wide range of products, industries and services. Devices from cell phones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of are capturing, storing and analysing data via the cloud and/or PC. As a result, users are able to reach real-time conclusions anywhere in the world, benefiting from enhanced utility, improved safety and higher economic benefits from better managing their assets. Given how pervasive, reliable and inexpensive many of these devices are, IoT is spreading across the global economy and becoming a large and significant new growth catalyst for the technology industry.

Rob Zeuthen – The Boston Company Asset Management, a BNY Mellon company

The Internet of Things (IoT) is becoming an increasingly prevalent trend in our everyday lives as it cuts across a wide range of products, industries and services. Devices from cell phones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of are capturing, storing and analysing data via the cloud and/or PC. As a … read more

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