Wealth inequality has become a major talking point for those primarily on the Left who are vehemently against capitalism. Often espoused by leftist professors, lawmakers, and think tanks, the increasing disparity in wealth among Americans has been a growing concern. Many have questioned for years whether the Federal Reserve and their fiat currency monetary system is a fundamental fraud in our economy today. Is the Federal Reserve causing wealth inequality, thereby sowing the seeds of Marxism?
Wealth inequality is an issue that both political sides should be willing to tackle because it can cause terrible consequences for a cohesive society. One can easily go off on the issues of personal responsibility and envy politics, but the reality is society must deal with the issue regardless of the morality of the issues – see “Trapped on a Deserted Island with 200 Hungry Savages.” While the Left is correct in their concerns, they are ignoring a major cause of the rampant, growing inequality in America – currency debasement and instead blame capitalism. Let’s take a simple example that demonstrates Fiat Currency Debasement and how it can create wealth inequality mathematically.
In our hypothetical example, let’s take a simple real estate rental property asset (there are more sophisticated financial products on the markets that can do the same) vs. a Common person who merely places their money in a bank. Our starting financial position (rounded numbers for ease of explanation):
Smart investor:
We purchase the property for $100,000.
We place a 10% down payment of $10,000.
At a 3% mortgage rate with taxes and insurance, we must pay $500 per month.
We rent the property for $525 per month for the year.
The Common person:
Places $10,000 in the bank, and we will give them a full 3% annual return on their money.
Results: Our smart investor’s net wealth position after a year is $10,300. The Common person is the same.
Now let’s advance the clock one year (normally this period would be longer to not make the scam so obvious) and assume a 50% currency debasement (or 100% price inflation). Here is what the financial position looks like now:
Smart investor:
Property value is $200,000 – less the original mortgage; the net is $110,000.
We now rent the property for $1050 – this yields a net (assuming no increases in tax and insurance) of 6,600 for the year.
The Common person:
Earns a 3% annual compounded interest return on their money – the investor still has the original $10,000.
Results after the two years: Our Smart investor’s net wealth position is $116,600. The Common person now has $10,609. Then we have to adjust downward (50%) for the net inflation-adjusted amounts of: for the Smart investor $58,300 and for the Common person $5,345.
Voila … wealth inequality. Note that in both the Smart and Common person investors, starting with the same amount of capital, neither added no value other than capital. One may say, but the Smart investor took risks. Partially true, and would deserve a higher return on capital – but to what extent? The risk should already be built into the asset purchase price, rental market value returns, and the borrowing interest rate within a truly free market. And is it much of a risk to know politicians will debase the currency? Then there is the issue of fractional reserve lending – often called financial leverage. In and of itself this is not necessarily bad. But when combined with the Fiat Currency Debasement, it provides the necessary tools to create this wealth inequality. It borrows money at today’s value and repaying tomorrow with deflated money.
Without currency debasement, the Smart investor would have never made the tenfold gains, compared to the Common person. At a greater economic level, those (bottom 50% have nothing) that can not even match the Smart investor’s capital commitment, can not even participate in the economy to gain wealth. Obviously, the amount of capital one has is the degree one can participate. Hence, this currency debasement is a distortion in the economy that favors one group over another. This is not a free market with equal opportunity for all. Under a fixed monetary system, this advantage goes away – the rules of the game do matter.
One can easily see this expanding wealth inequality that started in the 1970s when the U.S. went from a fixed monetary system to a fiat currency system – which now allows one to debase the currency. President Richard Nixon’s actions in 1971 to end dollar convertibility to gold and implement wage/price controls were intended to address the international dilemma of a looming gold run and the domestic problem of inflation. Many attribute the gold run due to the U.S. expansion of its federal budget, driven by the Vietnam war and the war on poverty expenditures in prior years.
How does one calculate the value of money? Has not the Dollar rates been reasonably stable against other major currencies? They have. But this is not the correct measure. For example, the Euro Dollar rate has been oscillating around the same levels for some time now. The issue here is that all central banks are playing the same game, and they are all devaluing mostly at similar rates. In other words, relative to each other, the rates are reasonably stable; most currencies are all falling at near the same rate – giving the appearance of stability. Though there are many issues in the valuation of a currency, here is a very high-level rule of thumb formula:
With this simple formula, one can see that if both GDP and Money Supply rise at the same rate, the Currency Value will remain stable. Adjust one side or the other of this equation, will adjust currency valuations accordingly. But one hears that reports like employment, inflation, government budgets, and interest rate movements can affect currency valuations as well. Yes, this is because these reports are early warning signals that can affect the final outcomes of the GDP and Money Supply components of the formula.
Take a look at the chart below and see this phenomenon in action. The broader measure of Money Supply growth has been around 5% between 2012 to 2019. With GDP rates of between 2 and 3%, this means about a 2% currency debasement rate – which also just so happens to be the Fed inflation target rate. Since Coronavirus, the measurements have gone whacky. GDP rates have dropped to less than -5%, and as you can see below, the Money Supply growth rate is near 30%. This is horrific, though it may be transitory. A single quarter or even a couple quarters is not the average, and the ship can be righted. But if the current situation is not recovered very soon, do the math – we could be conservatively looking at a dramatic currency debasement in excess of 20% within a year.
Listen to the rhetoric of Democrats under Joe Biden. The future could be frightening. Green New Deals, Universal free Health Care, college debt forgiveness, free universities, and a whole host of other Lefty items, would blow out government budgets and increase Money Supply with little GDP growth to show for it. Especially if Democrats hold back GDP growth with endless Coronavirus economic restrictions. Runaway inflation’s ugly head could reemerge after decades of hiding. The sad reality is the Democrat policies would exacerbate wealth inequality, not reduce it. One could assert that “IF” this scenario would occur, be prepared to have a 20 to 50% reduction of your standard of living over the next 2 to 5 years. Then think of the horrors of extending the fertile ground for Marxism to grow.
There is an endpoint to all this. Just ask the Romans. Roman officials found a way to make currency debase. By decreasing the purity of their coinage, they were able to make more “silver” coins with the same face value. With more coins in circulation, the government could spend more. And so, the content of silver dropped over the years. By the time of Marcus Aurelius, the denarius was only about 75% silver. Caracalla tried a different method of debasement. He introduced the “double denarius,” which was worth 2x the denarius in face value. However, it had only the weight of 1.5 denarii. By the time of Gallienus, the coins had barely 5% silver. Each coin was a bronze core with a thin coating of silver.
The shine quickly wore off to reveal the poor quality underneath. Hyperinflation, soaring taxes, and worthless money created a trifecta that dissolved much of Rome’s trade. The economy was paralyzed. By the end of the 3rd century, any trade that was left was mostly local, using inefficient barter methods instead of any meaningful medium of exchange.
The Romans played the game of currency debasement, all the way to the end until their empire collapsed. We have seen this as well with other smaller countries around the world today – Zimbabwe and Venezuela, to name a couple. So the currency debasement trick of many elites and their governments is a well-established method to rob the people for millennia.
Solutions? Massive socialist redistribution schemes? No! This would just make it worse via exploding government budgets. Quite simply – return to a fixed monetary system. This does not necessarily mean currencies need to be gold-backed or even a fixed currency that never expands. It merely means that one can not allow the money supply to grow in far excess of GDP growth – which causes the currency debasement in the first place. It also means government expenditures must stay in line with tax revenues. Balanced budgets are something politicians would obviously hate, as they would no longer be able to scheme to buy votes today at the expense of tomorrow.
Do elites understand this scheme? Sure they do. Most common people do not. Unfortunately, the common people do not look far enough into the future and focus on today’s money and whatever they can get immediately from the government. Understanding this phenomenon puts today’s events into perspective. As wealth inequality rises, for sure Marxist envy politics can become very attractive to the common people. If we do not fix this problem, for sure, Marxism will take root.
Furthermore, instead of wallowing in class warfare, it is better for elites to divert the attention away from the real issues and get people fighting over race. Politically it is not a good argument to attack producers – it is part of the American work ethic. Better to talk about “systemic racism.” It’s an easier sell. This explains why so many elites are Leftists … it is a good scam to keep them in their positions of wealth and power.
Remember the legend of Payasam at Ambalappuzha? The king made a deal with the traveling sage that the king thought was a good deal – at least in the short run. It goes something like this – for my payment, give me one grain of rice on the first square of this chessboard, then two grains on the second square, four grains on the third square, eight grains on the fourth square and so on, so that each square contains double the amount of rice of the previous square. The total number of grains of rice needed to fill the chessboard would have been 18 quintillion grains of rice, which would weigh approximately 210 billion tonnes and would be enough rice to cover the entire country of India with a meter high layer of rice. Obviously, the king did not understand the math, and the scheme was not hidden, it was in plain sight.
There is a reason when Thomas Jefferson said, “Big banks are more dangerous than standing armies, and the practice of borrowing and spending money to be paid back by the next generation is stealing from their future.” Many are quick to bash banks. Even the Federal Reserve – citing conspiracy theories of the Illuminati, the Rockerfellers, and various other groups. You have heard it before, “There is no Federal in Federal Reserve.” It is a private agency used by the government. All this may be true. But it is also true that central banks, banks, and financial service companies do provide needed services. The scam is not just this – it is rather a small part – it is not just the institution rather its policies. It is the scam right in front of your face that is the most harmful. It is the ignorance of not understanding the basic math of Fiat Currency Debasement.
Is the Federal Reserve sowing seeds of Marxism? The simple answer is yes, though one may debate whether knowingly or not. The Federal Reserve is like many organizations, they take on a life of their own and grows, perhaps initially thinking they are doing good. Today their policies could be just one of “extend and pretend” and hope the music does not stop on their watch. Or perhaps it is all nefarious – at least at the top level. Either way, the end results are the same. But the Federal Reserve gets its authority from our politicians and ultimately from those who voted for them.
President Trump understands well this monetary system dynamic. After all, he is a real estate magnate. Trump has, in the past, talked about “Sound Money.” Trump has had little to say about sound money since the election. Trump has been focused in his first term on draining the swamp and trade. Perhaps in a second term, this may come into focus. There is a trifecta of economic, moral hazard, Fiat Currency Debasement, trade, and government-corporate corruption. More on these other moral hazard issues in the future.
So just how much moral hazard has Fiat Currency Debasement distorted our economy today? This would be a hard number to come by, but using the wealth inequality chart of this article, and just using the gage of your eyes, project a more linear line in terms of wealth inequality (since the mid-1970s) on an more equal basis. One could say that this moral hazard could be as high as 30% – understanding that the growth of wealth inequality is expanding each year. Median family income in inflation-adjusted dollars has not moved a lot in 50 years. Jut think what an additional 30% would do in building the middle class – adding support for free-market capitalism. And yes, the rich would still be rich – just with a narrower gap. Having a more vibrant middle-class would also help all economic classes to move up.
A caution to both our major political parties – if Fiat Currency Debasement is not handled in an effective way, the dark cloud of social dis-cohesion and Marxism will lift its ugly head. Once you understand well Fiat Currency Debasement, all the events of today start to fall into place.
By a show of hands, I.CON West keynote speaker Christine Cooper, Ph.D., managing director and chief U.S. economist with CoStar Group, polled attendees…
By a show of hands, I.CON West keynote speaker Christine Cooper, Ph.D.,managing director and chief U.S. economist with CoStar Group, polled attendees on their economic outlook – was it bright or bleak? The group responded largely positively, with most indicating they felt the economy was doing better than not.
Four years ago, the World Health Organization declared COVID-19 a global pandemic, seemingly halting life as we knew it. And although those early days of the pandemic seem like a long time ago, we’re still in recovery from two of its major consequences: 1) the $4 trillion in economic stimulus that the U.S. government showered on consumers; and 2) the aggressive monetary policies that have created ripple effects on the industrial markets.
Cooper began with an overview of the economic environment, which she called “the good news.” The nation’s GDP is strong, and the economy gained momentum in the second half of 2023 – we saw economic growth of 4.9% and 3.2% in Q3 and Q4 respectively — much higher than expected. “The reason is consumers,” Cooper said. “When things get tough, we go shopping. This generates sales and economic activity. But how long can it last?”
Consumer sentiment continues to be healthy, and employment is good, although a shortage of workers could impact that moving forward. The U.S. added 275,000 jobs in January, far exceeding expectations. “The Fed raising interest rates hasn’t done what it normally does – slow job growth and the economy,” said Cooper. In addition, the $4 trillion given to keep households afloat during the pandemic has simply padded checking accounts, she said, as consumers couldn’t immediately spend the money because everyone was staying home, and the supply chain was clogged. The money was banked, and there’s still a lot of it to be spent.
Cooper addressed economic risks and the weak points that industrial real estate professionals should be mindful of right now, including mortgage rates that remain at 20-year highs, stalling the housing market, particularly for new home buyers. Mid-pandemic years of 2020-2021 had strong home sales, driven by people moving out of the city or roommates dividing into two properties for more space and protection against the virus. Homeowners who refinanced in the early stages of the pandemic were fortunate and aren’t willing to list their houses for sale quite yet.
“The housing market is a big driver of industrial demand – think furniture, appliances and all the durable goods that go into a home. This equates to warehouse space demand,” said Cooper.
Interest rates on consumer credit are spiking and leading economic indexes are still signaling a recession ahead. Financial markets are indicating the same, with a current probability of 61.5% that we will be in a recession by 2025. However, Cooper said, while all signs point to a recession, economists everywhere say the same thing as the economy seemingly continues to surprise us: “This time is different.”
Consumers are still holding the economy up with solid job and wage gains, yet higher borrowing costs are weighing on business activity and the housing market. Inflation has eased meaningfully but remains a bit too high for comfort. We’ve so far avoided the recession that everyone predicted, and the Federal Reserve appears ready to cut rates this year.
For the industrial markets, the good news is that retailer corporate profits are beginning to bounce back after slowing in 2021 and 2022, with retail sales accelerating.
A slowdown in industrial space absorption was reflected in all the key markets – Atlanta, Chicago, Columbus, Dallas-Fort Worth, Houston, the Inland Empire, Los Angeles, New Jersey and Phoenix – but was worst in the southern California markets, which have since been rebounding.
“Supply responded to strong demand,” Cooper said. “In 2021, 307 million square feet were delivered, followed by 395 million in 2022. In 2023, we saw 534 million square feet delivered – that’s almost 33% higher than the year before.”
The top 20 markets for 2023 deliveries measured by square feet are the expected hot spots: Dallas-Fort Worth (71 million square feet) leads the pack by almost double its follower of Chicago (37 million), then Houston (35 million), Phoenix (30 million) and Atlanta (29 million). Measured by share of inventory, emerging markets like Spartanburg, Pennsylvania, topped the list at 15 million square feet, followed by Austin (10 million), Phoenix and Dallas-Fort Worth (7 million), and Columbus (6 million).
“Developers are more focused on big box distribution projects, and 90% of what’s being delivered is 100,000 square feet or more,” Cooper said. Around 400 million square feet of space currently under construction is unleased, in addition to the around 400,000 square feet that remained unleased in 2023. “Putting supply and demand together, industrial vacancy rate is rising and could peak at 6-7% in 2024,” she said.
In conclusion, Cooper said that industrial real estate is rebalancing from its boom-and-bust years. Pandemic-related demands and accelerated e-commerce growth created a surge in 2021 and 2022, and the strong supply response that began in 2022 will continue to unfold through 2024. With rising interest rates putting a damper on demand in 2023, vacancies began to move higher and will continue to rise this year.
“Consumers are spending and will continue to do so, and interest rates are likely to fall this year,” said Cooper. “We can hope for a recovery from the full effects of the pandemic in 2025.”
This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON West 2024. Learn more about JLL at www.us.jll.com or www.jll.ca.
Pharma and biotech’s top R&D spenders in 2023: a $153B total with M&A as a focus
At a time when biotech is still counting its losses as a thaw gradually sets in after the long market winter, pharma has been on a tear. M&A took off…
At a time when biotech is still counting its losses as a thaw gradually sets in after the long market winter, pharma has been on a tear. M&A took off in Q4 as the industry’s biggest R&D spenders either rolled the dice on the back of their blockbuster bonanzas, were forced to address gaping holes in the pipeline in the face of looming patent expirations, or simply had no choice in the face of repeated setbacks.
Bioregnum Opinion Column by John Carroll
For some, it was all of the above.
As a result, Merck flipped into the lead position generally occupied by Roche with an M&A-inflated expense line for research. The companies joined a hunt for new drugs frequently focused on Phase III; premiums are in — heavy preclinical risks are out of favor. The majors followed some well-worn paths into immunology and oncology. And 2024 kicked off with a new round of buyouts and licensing deals.
The sudden end of Covid as a vaccine, drug and diagnostic market left the likes of Pfizer scrambling to convince investors that they had an exciting new plan. (It’s not working so far.) Eli Lilly has become one of the most valuable companies on the planet as obesity drugs go mainstream. Leaders like Takeda kept upping the ante on the R&D budget as the numbers frayed, with all but Pfizer and Bristol Myers Squibb — two of the most deeply off-balance biopharmas — spending more in 2023. Across the board, we saw $153 billion accounted for in R&D budget lines for last year — which would have registered as a record even without the sudden bolus of spending at Merck.
New, promising drugs at biotechs aren’t getting cheaper. And some of the blockbusters pharma has to cover as the patent cliff approaches will demand multiple replacement franchises.
The Big 15 have the money, desire and need to do much, much more in R&D. And all signs indicate that we’ll see more through 2024.
Merck
Roche
J&J
Novartis
AstraZeneca
Pfizer
Eli Lilly
Bristol Myers Squibb
GSK
AbbVie
Sanofi
Gilead
Takeda
Amgen
Novo Nordisk
1. Merck: The BD team is remaking the pipeline, and they are moving fast
The big picture: Merck moved up to the top of the list this year by bundling a mother lode of M&A and drug licensing deals into the R&D expense line. Otherwise, the top slot would have gone to Roche, the traditional top title holder in the R&D 15.
Merck has been parlaying its unchallenged position as number one in the PD-1 game with Keytruda — a drug that earned $25 billion last year but will face a loss of exclusivity as patents start to expire in 2028 — into a host of big deals in 2023. Keytruda, meanwhile, has cruised to 39 approvals, leaving Bristol Myers’ Opdivo in its wake.
Too much commercial success, though, doesn’t translate into unending praise. Analysts had been grumbling for some time that Merck wasn’t doing enough to diversify its pipeline bets. But that’s been changing.
Merck tallied $5.5 billion upfront for its Daiichi Sankyo deal — picking up rights to three ADCs in the move — along with the across-the-slate hikes in costs for clinical programs, bigger payrolls and benefits. There was another charge for the $11.4 billion that went to buying Prometheus and Imago. Prometheus accounted for $10.8 billion of that — one of the biggest deals that followed the $11.5 billion Acceleron buyout in 2021. With $690 million in cash for a group of partners that includes Moderna, Orna and Orion.
Merck kicked off the new year with a $680 million buyout of Harpoon Therapeutics, underscoring its enduring interest in the oncology market. And it’s leaving no popular stone unturned, capturing attention with its expressed interest in GLP-1 combos as the next generation of weight loss drugs takes shape.
Merck CEO Rob Davis also recently made it clear that the pharma giant can afford more $1 billion-to-$15 billion deals, making it a top candidate for more deals in 2024.
Merck’s firepower on the deals side, though, is needed after some deep wrinkles marred the pipeline plan, like the FDA’s back-to-back CRLs for chronic cough drug gefapixant. The data, however, never matched up to Merck’s rhetoric. Failures in Alzheimer’s and depression underscored Merck’s traditional ill fortunes in neuro.
Merck has a few years to plan for its next big thing. They show every sign of remaining focused on the big prize ahead.
2. Roche: 2023 was a tough year. Will 2024 be any better on the R&D side?
The big picture: It’s not easy being Roche. The behemoth has long had a near-omnivorous approach to R&D, buying up and down the pipeline at all stages with a big appetite for oncology ahead of neuro, ophthalmology and immunology. This year, it’s had to contend with the elimination of its Covid revenue, once a big player on the diagnostics side as testing soared during the pandemic. They’ve had to lower investors’ expectations of 2024 sales to an embarrassingly modest level and saw their stock price slide.
It’s surprising they have any growth, given the corresponding knockoff competition building for Lucentis and Esbriet, but you can’t play with market expectations. They’ll kill you every time you’re off.
Roche found some silver linings in the Vabysmo franchise and they’ve been a significant player on the M&A side, scoring the Carmot buyout for $3 billion after bagging Telavant for $7.1 billion back in October, paying a price for something Pfizer all but gave away to Roivant. James Sabry and the BD team, meanwhile, have kept up their globetrotting ways, uncorking a slate of deals for JP Morgan.
Sabry moved to global BD chief at Roche after winning his spurs at Genentech, and he’s been in the game for quite a long time. His résumé includes a stint as a biotech CEO. He’s the doyen of dealmakers and isn’t sitting on the sidelines. Hope grows eternal at Roche, and to keep it growing, Sabry has to stay busy.
“We have in total 12 NMEs that could potentially transition into a Phase III during this year,” CEO Thomas Schinecker told analysts hopefully during their Q4 call.
On this scale, Roche tends to do things on a wholesale basis. So when execs recently unveiled a pipeline review, they mapped 146 programs covering 82 new molecular entities. That can be hard to keep up with. If raw numbers like that were a good indicator of future success, though, Roche wouldn’t have these troubles.
It’s less difficult to follow the culls. That includes a slate of neurology drugs, with several axed from the oncology area. The write-offs include the longtime disappointment crenezumab, which had been partnered with AC Immune in Alzheimer’s. Roche recently handed back crenezumab as well as semorinemab after working with AC Immune for close to an R&D generation. Some analysts gave up long ago.
We’ve also been hearing complaints about a lack of upcoming pivotal clinical data to arouse enthusiasm. But Roche has two big R&D groups at work trying to counter those impressions, with gRED (Genentech) and pRED (the traditional Roche research group) at bat. They now have a straight-up GLP-1/GIP drug in the clinic for obesity, with oral therapies in the works alongside many others. It may be late to the obesity game with the Carmot buyout, but Roche still sees opportunities worth paying for.
Execs are promising to play a better R&D game, prioritizing their best assets and piling on resources. But Roche has always been willing to invest heavily in R&D. Now the company needs to see some clinical cards fall its way. This has not been a patient market.
3. J&J: Under new management, J&J doubles down on the innovative side of R&D. Can they still surprise us?
The big picture: J&J typically has weighed in heavy on R&D, particularly if you add its medtech work to the total. Even after splitting that out, though, it’s still in the top five, hoovering up large numbers of early-stage licensing deals while occasionally nabbing something major in the $1 billion-plus category.
Last year the pharma giant punted its consumer division, following the footsteps of many major industry outfits, and shut down its work in infectious diseases and vaccines. RSV, a highly competitive field now, went out the window with a host of smaller programs and alliances. Its major fields of interest zero in on oncology, immunology, cardio and retinal disorders. And they chipped in close to $2 billion to join the ADC hunt in January with its acquisition of Ambrx.
J&J earned a rep for out-of-the-box thinking in oncology under former oncology R&D chief Peter Lebowitz, striking a deal with China’s Legend that delivered an approved drug — Carvykti — and following up with a $245 million pact to gain worldwide rights to another CAR-T from CBMG, a low-profile Chinese biotech that erupted into mainstream view with its Big Pharma deal.
Now the big questions about J&J focus on its new leadership after Joaquin Duato moved into the CEO’s role in 2022 and John Reed — leaping into his third Big Pharma R&D posting in 10 years, following Roche and Sanofi — takes command of the global R&D side of the company.
They have plenty of motivation to hustle up major new approvals. Stelara — raking in more than $10 billion a year — will see its patent protection erode in the US in 2025, with Europe moving first this year. That will take a few big wins to cover.
But J&J has been making big promises for years. Just a few months ago, it touted 20 drugs in the pipeline that could fuel 5% to 7% growth through 2030. One of the prime candidates is a drug they picked up from Protagonist: JNJ-2113, an IL-23 they believe can bring in blockbuster revenue in immunology. J&J, though, is likely far from done when it comes to new deals. Oncology R&D has been changing rapidly in the wake of the Inflation Reduction Act, with researchers moving up OS as a primary initial focus in Phase III. And it’s going to take a behemoth effort to deliver on these numbers, with likely failures and shortfalls along the way.
Don’t look for J&J to cut R&D anytime soon. They have a big agenda.
4. Novartis: Another streamlining move is wrapping up as Novartis vows to get back to basics in R&D — again
The big picture: Novartis CEO Vas Narasimhan has been crystal clear about the Big Pharma’s M&A strategy. He’s sticking with the industry sweet spot now in favor: picking up late-stage assets below the $5 billion range. A few weeks ago, that led Novartis to MorphoSys, where they have been partnered for years while distancing themselves from rumors of a pricey Cytokinetics play.
And it springs right off another $3 billion acquisition — for Chinook — that went straight to positive Phase III data for the kidney drug atrasentan, which likely wasn’t much of a surprise inside Novartis.
These days, Narasimhan and Novartis are all about focus. They want to make a deeper impact where they emphasize their priorities — cardio, immunology, neuroscience and oncology. And they also want to be leaders where they are centered, slashing oncology while emphasizing at every opportunity that they jumped out front in radioligands, now a hot commodity in R&D.
Lest anyone forget, Novartis was a pioneer in autologous CAR-T and has held on as it slowly works through all the challenges a cutting-edge technology can inspire.
Narasimhan had been five years before the mast as CEO, after being promoted from development chief, and he’s revising a pipeline strategy away from something he describes now as akin to everything everywhere all at once. Downsizing in 2023 was the big focus, dropping programs, reassigning scientists and promising a swifter pace — a never-ending problem in Big Pharma land. Narasimhan has also been pushing “seamlessness,” projecting a new era of cooperation among scientists and sales.
There’s nothing new about streamlining at Novartis, though. Narasimhan had a billion dollars of cuts in mind back in the spring of 2022. And periodically, the company has been well-known for going in and ironing out budgets. Changes have included an exit for development chief John Tsai, now a biotech CEO, who was replaced by Shreeram Aradhye. Fiona Marshall took the helm at NIBR in the fall of 2022, taking the place of Jay Bradner, who left and later wound up running R&D at Amgen.
The recent cleanup at Novartis included the end of the deal for BeiGene’s PD-1, an area that proved enormously frustrating to Novartis. Their TIGIT pact ended last summer. Phase II for GT005, a gene therapy it picked up in the $800 million Gyroscope buyout, didn’t end well. That program got the axe. And their anti-TGFß antibody, picked up in a small deal with Xoma nine years ago, failed after execs once billed it as a high-risk, high-reward play. Other setbacks include Adakveo, which faced global regulatory challenges following the failure of the Phase III confirmatory study. At the beginning of this year, there was a snafu in Phase III for ligelizumab, once billed as a top asset for peanut allergies.
Warning clouds have also formed around their top-selling drug Entresto, as Novartis fights a battle against the IRA and price negotiations.
The CEO, though, has been able to transition while the stock price was headed up, with a few big drugs driving revenue growth as a struggling Sandoz finally got the heave-ho in a spinout. Their franchise drug Kisqali, for example, is now billed as a $4 billion earner at the peak. As a result, their story has played well on Wall Street. Investors want to see the money and the trajectory. R&D follows sales in priority when it comes to the majors.
5. AstraZeneca: Pascal Soriot never takes defeat lying down. And that stubborn attitude has delivered big dividends as another big R&D test takes shape
The big picture: Back in 2018, AstraZeneca reported R&D expenses just under $6 billion. In the past five years, that big line item has grown 85%, and investors have seen the stock price grow 56%.
The R&D leaders at AstraZeneca have changed, but CEO Pascal Soriot has become a longtime fixture at the company. During his stint he took the weakest pipeline in biopharma and turned it into one of the strongest, building a slate of blockbuster oncology franchises while building a research machine based in Cambridge, UK, that consumes about $1 out of every $4 in revenue. He bet the ranch on Enhertu and won, with some analysts bullishly projecting peak sales that will break $10 billion. And he’s kept many of the promises he had to fire out to investors to keep an unwanted Pfizer takeover at bay in the way back when.
So what’s next?
That’s a question that’s vexing quite a few analysts. AstraZeneca is a restless player and the company takes a lot of chances — which means it racks up a lot of setbacks.
A major initiative aimed at protecting its revenue involves its legal fight against the IRA, which AstraZeneca has so far lost. Its next big ADC with Daiichi Sankyo, Dato-DXd, has sparked a running debate on its potential approval and some analysts have doubted if it can live up to the hype following weak PFS results for the TROP2 ADC. Last summer an early-stage GLP-1 went down in flames, unable to take the heat in a kitchen currently controlled by the commercial chefs at Novo Nordisk and Eli Lilly. Lokelma, picked up in a 2015 buyout, got hit when R&D decided to quash two Phase III studies, denting once-big hopes for blockbuster status. And Soriot has recently been forced to finally give up on one old failure when he finally punted roxadustat’s US rights.
Soriot, though, is a weathered player when it comes to setbacks. Every loss is an opportunity to do better the next time, and no one can be more stubborn. You could see that play out over Covid when its vaccine came in for some undue criticism that blighted its impact in the face of the mRNA stars. That spurred some angry responses as execs dug in. But there was an unexpected upside. The giant didn’t have to readjust as the Covid market went pfffffft.
Their next step: A couple of months ago AstraZeneca touted its new vaccine platform, buying Icosavax for $838 million in cash while contributing an RSV vaccine to the pipeline — a field where GSK has made major headway — and a virus-like particle platform that the company intends to build on.
Volrustomig, a PD-1/CTLA-4 bispecific antibody, has been accelerated into Phase III, with Soriot claiming a leadership spot in bispecifics: “Our portfolio of bispecifics has the potential to replace the first-generation checkpoint inhibitors across a range of cancers.”
And that GLP-1 fail? Last November AstraZeneca paid $185 million to gain a Phase I GLP-1 drug out of China’s Eccogene. And now they’re mapping combo studies with some of their other drugs in a play at creating the next wave of obesity therapies with an edge.
Word in biopharma is that Soriot has been devoting a considerable amount of face time to China, where he committed the company years ago. That’s another one of those market promises that has seen plenty of ups and downs. But Soriot tends to win the big gambles more than he loses, and in this industry, seeing it through can be a major long-term advantage.
6. Pfizer: What the hell happened to the Covid king?
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R&D spending 2023: $10.57 billion
R&D spending 2022: $11.4 billion
Change: -7.3%
Revenue: $58.5 billion (down 42% from $100.3 billion)
The big picture: There was one brief, shining moment — or two — when Pfizer could seemingly do no wrong. It had taken a leading role in breaking through scientific barriers to create a new Covid vaccine in record time, harvested a bumper crop of cash and CEO Albert Bourla was the darling of the world’s favored pharma industry.
That was then.
Now, Bourla and his team are having a tough time convincing Wall Street that the company can do even simple things right. They paid $43 billion to bag Seagen and mount a major new campaign on the cancer front, but its stock has been blighted and the focus turned to cost-cutting as revenue plunged. There was fresh humiliation when Roivant flipped a drug it had grabbed from Pfizer for lunch money and sold it to Roche for $7.1 billion a year later. And Pfizer has lost the narrative in convincing investors it can get back to growth.
That somewhat hapless rep was burnished considerably when Pfizer reported that its first try at an oral GLP-1 obesity drug had flopped. It’s still working to move the dial in the hottest new field in pharma, but so is a long list of rivals. Instead of spurring renewed faith in Pfizer, the obesity play turned into another example of getting it wrong, and the focus at Pfizer shifted squarely to downsizing and cost-cutting in acknowledgment of the new reality that set in.
Bourla, though, is committed to pushing the story that a new period of growth lies ahead. And it’s not proving easy.
At the end of February, Pfizer made its best pitch for oncology, underscoring plans to seize the leadership role in genitourinary and breast cancer while making promises for eight-plus possible blockbusters in the next six years. R&D promises, though, are easy to make and hard to keep. Right now, the clarion call in pharma is “show me the money.”
With Covid and the mRNA revolution forgotten like last season’s hit show, there’s an enormous gap now that will be devilishly hard to bridge. But don’t expect anyone at Pfizer to stop trying anytime soon.
7. Eli Lilly: Built for the long term, Lilly’s day has arrived — and they don’t want to let go
The big picture: Historically, Eli Lilly has been known as a ponderously slow pharma outfit that often slowly cruised its way into Phase III squalls. But that view is so 2017. In 2024, Lilly has rebranded itself as the Big Pharma engine that could, and did, blow out expectations. And if it’s still not quite as nimble as some analysts might like, its ability to deliver in massively expensive late-stage studies for drugs aimed at big populations has made it a darling of quite the investor crowd.
Lilly, for example, was thwarted at getting an accelerated approval for its Alzheimer’s med, but that didn’t really cut expectations, with blockbuster peak sales projections — even as Biogen/Eisai’s Leqembi suffers from dimming prospects as their high hopes are lowered by the reality of limited sales in the face of limited efficacy.
That pales, though, in comparison to the bright rainbow that’s emerged in obesity. Lilly continues to work up manufacturing capacity to meet demand for its new obesity version of tirzepatide, the GLP-1/GIP drug building up the diabetes franchise, where neither of the two leaders has been able to meet a seemingly limitless demand.
Lilly attracted considerable attention for its vow to build out manufacturing capacity ahead of Phase III data for its next-gen oral version, orforglipron, while clearly so unhappy about Novo’s decision to muscle in and snap up Catalent that CEO Dave Ricks is grousing about the antitrust implications of their rival’s move. Lilly, though, has bragging rights to solid pivotal data in a market that is nowhere close to saturation point.
Like a lot of the big spenders on the list, Eli Lilly has been hunting new immunology drugs and plunked down $2.4 billion for Dice last summer. That was part of a full slate of acquisitions, including a pair of small ADC companies. Following yet another hot trend, there was a $1.4 billion deal for Point, which put them into radiopharmaceuticals.
Lilly nabbed two new drug approvals last year as it waited on the 2 big franchises in obesity and Alzheimer’s. That’s a testament to the progress that Dan Skovronsky spurred after the global player made him R&D chief 6 years ago. Eli Lilly execs still may not always be first, in an industry where first can be tremendously important to commercialization. But they’ve been right where it counts big in drug development, and it will take a therapeutic earthquake to alter that perception anytime in the near term.
8. Bristol Myers Squibb: A rough year spurs a cut in R&D spending and some major late-stage R&D deals
The big picture: This is a terrible time to try and explain why your Big Pharma company has structural issues that flattened or eroded sales revenue. Pfizer understands that and Bristol Myers got a bad taste of it as its shares slid 18% in the last year.
In both cases, the CEOs stepped up with a transition plan. The companies did some deals, but the late-stage stuff wasn’t cheap. And in Bristol Myers’ case, a new CEO was able to draw a line between its aging franchises and the new arrivals on the market, which saw some growth. The company line now: Just wait for the big pipeline hits to come and give us some time to weather the decline of these legacy drugs and you’ll love what you see.
Investors may not be cheering, but Bristol Myers’ stock did get some traction out of it in the last few weeks.
It was clear well before 2023 arrived that Bristol Myers understood it was facing some of those dreaded headwinds. That 2% drop in R&D spending highlighted the tight rein on spending for what remains a top 10 player in the pharma R&D world. Major figures in R&D, headed by Rupert Vessey, exited the company — in Vessey’s case, later making the flip to biotech at Flagship. And there was an unusual spat with Dragonfly after the pharma giant walked away from its $650 million investment.
New CEO Chris Boerner spotlighted the immediate strategy at hand: M&A. Mirati and KRAS came their way for $5.8 billion. RayzeBio happily landed a premium on top of the premium they had just scored in an IPO, as Bristol Myers followed rivals into radiopharmaceuticals. The $14 billion Karuna buyout put them into a late-stage race on Alzheimer’s, another R&D category that’s been enjoying a renaissance some years after pharma fled the scene.
Boerner’s bottom line in the Q4 review is that the company will steer more into bolt-on plays — rather than big buyouts — and licensing deals like the SystImmune alliance. That sets the stage for a “transition” period that will last until 2028, four long years ahead, when it’s promising “top-tier” results. It will also be looking at lower-priced competition for Opdivo.
Even before 2028, though, BMS will start losing patent protection on Eliquis. They’ve already begun price negotiations with Medicare. And Eliquis earned $12.2 billion in 2022, making it their number-one franchise. That’s left Bristol Myers and Pfizer, both under huge pressure to perform and do more late-stage deals, backing a full-court press in the courts to keep generics at bay.
Bristol Myers has had an active dealmaking arm for years, including in the wake of its big $74 billion buyout of Celgene, which also delivered Vessey to the pharma giant. That was just five years ago after Celgene had fallen on some troubled times. Celgene had been a standout in the licensing field, known for sampling a wide variety of drug plays in the industry pipeline. One of Bristol’s big failures, though, was ceding the high ground in PD-1 to Merck’s Keytruda, which has been buoying its rival for years. Bristol needs major drug franchises to make a difference in this world, and any future setbacks on the leading drugs it’s been buying now will not be welcome by investors.
There is a path forward for Bristol, of course, even as it vows to pay down debt. But it’s fairly narrow, and this field is known for some treacherous results.
9. GSK: After picking up some badly-needed revenue steam, what’s next for R&D?
The big picture: Tony Wood is still shy of his second anniversary as the CSO at GSK, but with an RSV vaccine riding high as a new blockbuster franchise and Shingrix looking every bit the long-distance franchise player GSK needs, he has a reassuring revenue foundation to work with. ViiV’s steady work in HIV — where GSK is a majority owner — also offers a confidence-building revenue stream. And the departure of the consumer unit is well into the rearview mirror now.
Its stock has done well, too, up 28% in the past year.
That’s quite a changed picture from the early days of his predecessor, Hal Barron, who came in with deep oncology experience and a big need to demonstrate a broad-based pipeline reorganization to overcome a well-earned rep for underperformance. Wood’s first moves in R&D were largely defensive, giving up some major alliances — such as a partnership with Adaptimmune — that looked shaky.
GSK has made a lot of early bets, and the risks involved naturally portend that many of its deals won’t survive. You can see that in play right through its recent decision to dump a pair of Vir partnerships in infectious diseases.
In their place, GSK has been inking major new development deals with the likes of China’s Hansoh, for ADCs. Oncology, though, is still only a small performer overall. And it’s been a focus for a while.
GSK spent a billion dollars upfront to bag a mid-stage asthma drug at Aiolos in a rare M&A deal. There was also the $2 billion Bellus buyout last fall, with an eye to creating a new franchise for chronic cough. But there’s been a notable absence of any splashy deals at GSK, with a reorg in research that offers GSK’s latest take on improving efficiency.
We’ll see how that goes.
In the meantime, GSK is doing what it can to stir up some excitement for late-stage drugs like depemokimab (again in asthma), camlipixant (from Bellus) as well as the antibiotic gepotidacin for UTIs/gonorrhea. It’s an uphill fight, though, without much megablockbuster razzmatazz built in. But GSK is a careful player.
After getting stuck with the rep for having one of the worst pipelines in pharma, though, reliable and steady progress with a high-profile launch in RSV will suit just fine. At least for now. It’s likely that investors will keep pressing for something big in Phase III, and that could cost CEO Emma Walmsley a considerable amount of BD money.
10. AbbVie: The slow-motion collapse of Humira keeps them focused on the bottom line while growing R&D spending
The big picture: As Rick Gonzalez finishes his final run as CEO, he’s able to look back on a year that saw AbbVie complete its revamp period as the long-awaited — long, long-awaited — arrival of generic Humira bites into its old cash cow.
The great split at Abbott that created AbbVie set up a scenario where the company would pull out every stop to milk Humira for every conceivable dollar possible, delivering mega-returns while Gonzalez became the poster child of patent reform. The bottom line for AbbVie’s team: What’s repeated waves of congressional criticism with the stock price on the line?
Now AbbVie is able to boost expected revenue on the two big drugs developed on Gonzalez’s watch — Skyrizi and Rinvoq — with two new acquisitions to feed future sales projections. The buyout of Botox created a new, highly reliable franchise for AbbVie’s commercial team to lean on.
AbbVie is skilled at acquiring and building revenue. It had its eyes set on the ADC drug Elahere when it acquired ImmunoGen for $10 billion. Initially approved in 2022 for ovarian cancer, the drug is now being positioned for earlier lines of therapy.
Less than a week after the ImmunoGen deal was announced, AbbVie was back for a late-stage acquisition with the $8.7 billion for Cerevel’s neuro play. The deal will bring in clinical-stage assets for schizophrenia, Parkinson’s and dementia, as CNS moves back into a warmer phase in Wall Street circles. Both buyouts underscore Big Pharma’s considerable appetite for new products, with premiums in play for de-risked drug programs.
Gonzalez’s departure barely caused a murmur on the markets, which is a testament to his success in delivering for shareholders a secure, long-term rebuild. His legacy is a company with a ruthless rep for shepherding drug revenue while building a big interest in curtailing patents for pharma. But looking only at the numbers, he proved the winner at the company as the game was played during his tenure.
11. Sanofi: Paul Hudson is still out to make a great first impression in R&D
The big picture: When Paul Hudson showed up in San Francisco for JP Morgan in January, ready to talk up plans for the road ahead, he noted: “It feels like a lot longer than four years that we’ve been on this journey.”
But Hudson has always been more comfortable sounding like a newly-coined CEO, plotting a turnaround. And in the last few months, he’s played every card in that deck. The announcement late last year that Sanofi is bumping its R&D budget is central to that theme, though the news of its impact on profitability led to a rout of the stock price. And he delights in spotlighting late-stage assets, even though a slate of his early bets failed or have yet to prove themselves.
In what is now standard in pharma, Hudson made what he could out of the news he was spinning out the consumer division. Again, though, investors were less than thrilled by the gambit.
This time around the PR track, Hudson has boasting rights to the recently approved RSV drug Beyfortus, which comes with some big peak sales projections from Jefferies and much, much less from others. We’ll know soon enough if this is a winner or the latest disappointment at Sanofi. And, as always, there’s the Sanofi touchstone: Its megablockbuster Dupixent, which the pharma giant was able to partner on with Regeneron years ago — keeping the franchise fresh and expanding. Dupixent is the cash cow that gives Sanofi the financial strength needed to move ahead.
And that means there’s capacity for more dealmaking.
Not long after the San Francisco appearance, Hudson followed up on his M&A assurances with a $1.7 billion drug buyout, carving out a Phase II drug for a rare disease called alpha-1 antitrypsin deficiency, or AATD. It fits right into the zone for 2024, where pharma can only get positive attention for something within sight of an approval.
Like others on this list, Sanofi’s R&D rep will ultimately rest on its ability to deliver on the 12 would-be blockbusters the company is betting on. That includes three “products in a pipeline“: amlitelimab, frexalimab and SAR441566 (oral TNFR1si). They’re followed by tolebrutinib, lunsekimig, rilzabrutinib, an anti-TL1A in IBD, an IRAK4 degrader and itepekimab for COPD.
Behind it all, Hudson has also been promising to make Sanofi a leader in AI-assisted pharma operations. Sanofi, though, has been promising a makeover in innovation for well over a decade and has done nothing to prove it’s worked beyond staying on track with the megablockbuster it got from Regeneron. One breakout franchise delivered on Hudson’s watch would change that in a heartbeat.
We’re waiting.
12. Gilead: The CEO gambled on big innovation — and often lost. But the wagers keep coming
The big picture: Daniel O’Day jumped into the CEO job at Gilead five years ago and hit the ground running. He hasn’t stopped, even though some of his biggest bets have run into brick walls.
That was apparent weeks ago with the news that Gilead would ice its work on blood cancer involving magrolimab, the CD47 drug picked up in a $5 billion buyout back in 2020. Their mid-stage work on solid tumors ground to a halt shortly after.
Rehashing and refocusing their deal with Arcus, putting in significantly more money while axing one of the Phase IIIs, didn’t help.
Gilead’s rep was built around HIV, where it has remained dominant, though more than a bit taken for granted. The old regime’s follow-up — after a cloudburst of cash for curing hep C that quickly dried up — was to buy out Kite and take a pioneering position in CAR-T, which hasn’t lived up to the financial hype that attended its arrival, despite the clear scientific innovation it brought to the field.
The stock was hammered hard in January after Trodelvy — acquired in the 2020 Immunomedics buyout, which achieved blockbuster status last year — failed a Phase III in second-line lung cancer.
But when you raise doubts and see your stock sinking, counter with a late-stage buyout. That’s clearly what O’Day had in mind when he plunked down more than $4 billion to buy CymaBay after the biotech unveiled late-stage data on seladelpar. Gilead bought a would-be blockbuster with a PDUFA date. And that’s a sign of some desperation at a company that badly needs a breakout.
13. Takeda: Moving up another notch on the top 15, as profitability wobbles, Takeda execs are still reaching for the golden ring in R&D
The big picture: Takeda has been aggressively taking chances in R&D right from the time CEO Christophe Weber and R&D chief Andy Plump teamed up to remake the aging Japanese pharma company into a global drug player back in 2015. That meant steadily upping the ante in R&D — now up another slot in this year’s rankings — and investing in deals like the Shire buyout, which gave Plump his base in the Cambridge/Boston hub, along with a big stake in rare diseases.
For Takeda, that mission meant a broad effort to develop a major pipeline, from collaborations through Phase III. More recently, it’s been about concentrating their new work around a pair of key deals, particularly the $4 billion acquisition of Nimbus’ TYK2. It likely wasn’t much of a surprise, but their drug — which also has a $2 billion rider for milestones — cleared a Phase IIb hurdle in psoriatic arthritis.
For Takeda, it’s a clear indication of just how popular it is these days for pharma players to zero in on late-stage therapies in search of relatively near-term approvals.
Want more evidence of that?
Takeda bet $400 million in cash and more than a billion dollars in milestones to gain rights to Hutchmed’s fruquintinib and then was rewarded with an approval for treatment-naive cases of colorectal cancer in the fall. And they demonstrated its continued appetite in the rare disease space with the recent $300 million deal for Protagonist’s late-stage drug rusfertide, designed to treat a rare blood disease called polycythemia vera (PV).
The risks it’s taken on have been readily apparent to Takeda’s leaders, with its decision to drop Exkivity after flunking the Phase III NSCLC confirmatory trial, a Phase II fail for its key metachromatic leukodystrophy program, as well as a decision to drop Theravance as a partner after a seven-year alliance. The late-stage setbacks cost Takeda a $770 million write-down. Add in a loss of exclusivity for Vyvanse in 2023 — a $3 billion blockbuster in fiscal 2022 — and you have the outlines of unsteady performance for the pharma player, with Weber promising to do better in the near term.
Takeda is unusual in the Big Pharma world for winding up its fiscal year at the end of March. In order to do an apples-to-apples comparison, they prepared a summary of their R&D expenses and revenue for all of 2023 for Endpoints News.
14. Amgen: Capitalizing on a history of striking high-profile deals, Amgen stays in the spotlight
The big picture: Amgen is a considerable distance from spending on research like the top 10 players in our R&D 15, but it frequently finds ways to box competitively in the biggest heavyweight category. It had done that with KRAS, taking a legit scientific advance that couldn’t quickly move the dial in a major way on the commercial side. That happens a lot in oncology. And now it’s in the spotlight with an obesity drug — branded as MariTide now — with hopes to take on the likes of Eli Lilly and Novo Nordisk.
The chutzpah originates with longtime CEO Bob Bradway, who has parlayed his Wall Street cred as a former banker at Morgan Stanley into major league status with a savvy understanding of the numbers and investors. He skillfully navigated the $28 billion Horizon buyout last year, bagging a lineup of commercial therapies as the company looks for the approaching patent cliff on Enbrel, a reliable blockbuster that has kept the revenue flowing in.
Amgen may not do a lot in M&A or Phase III, but what it does do, it does with style.
To complete the Horizon deal, Bradway had to orchestrate a deal with the FTC to skirt its objections to price bundling, which essentially leaves the pharma company on commercial probation with regular reporting to the federal agency. That took skill and boldness while maintaining the CEO’s rep for delivering on the bottom line. Its stock is up 18% over the past year.
Analysts will be watching carefully to see how Jay Bradner does in the top R&D post after the Harvard prof-and-former-NIBR chief assumes the seat of David Reese, now chief technology officer. Reese seems truly energized in his new role heading up tech, and Bradner is a die-hard research enthusiast who loves nothing better than jumping into conversations about the details of target degeneration.
Amgen is all about message.
15. Novo Nordisk: The longtime diabetes franchise player has a breakout run going in obesity — with vows to stay in front
The big picture: R&D spending as a percentage of sales has edged up a bit in the last few years, but the key driver here is GLP-1, where Novo has capitalized on its first-in-class leadership position in obesity. After decades spent in the shadow of chronic R&D failure, safety issues and a recent swarm of largely ineffective drugs, the obesity field is crushing it. That has swelled sales revenue as semaglutide glowed, so Novo’s research spending has boomed at a fast pace.
Now that the good times are rolling, and Novo already has a well-earned rep as a realistic and committed player in diabetes, which didn’t come cheap or easy, the new player on the R&D 15 is promising to stay out front — no easy task with Eli Lilly gunning for it. Novo has been snapping up new obesity tech at a furious pace, determined to stay out front.
Its one limiting factor here has been manufacturing capacity. Novo can’t satisfy the demand for a drug that is now a staple of public conversation, as the field gets a boost from a wide range of celebrities, including Oprah Winfrey. That’s marketing you could buy, but don’t have to. It’s coming for free.
With uncharacteristic bravado, Novo doubled down by striking a deal to acquire the global CDMO giant Catalent for $16.5 billion, and Lilly has been fuming about the antitrust aspects as CEO Dave Ricks complains that worldwide manufacturing capacity has either been maxed out or is not easily converted from its existing uses.
Novo’s commitment to growing R&D has international implications that far exceed the limits of its home country of Denmark, extending to hubs in Oxford, Seattle and Beijing. Most recently, Novo has committed to boosting its Boston-area research hub. And it’s likely to remain a key player in its dominant fields — unless some other tech can topple the megablockbuster that is remaking this company.
Novo may be at the end of this list in terms of R&D spending, but it has overachieved with its success for semaglutide. It has the capacity to do more and should continue to climb for several years to come as it makes a case for continued growth.
Postscript: Regeneron, with $4.44 billion in research spending — up 23% over $3.6 billion in 2022 — deserves an honorable mention in the competitive 16th spot. This year, Regeneron expects R&D spending to top up at or close to $5 billion. The company’s value has swollen on the success of its high-profile founders, Len Schleifer and George Yancopoulos, who continue to build the company — hitting a market cap in excess of $100 billion with the stock up 29% over the past year. Regeneron will likely find its way into the top 15 at some point, and we’ll be watching for it.
Chronic stress and inflammation linked to societal and environmental impacts in new study
From anxiety about the state of the world to ongoing waves of Covid-19, the stresses we face can seem relentless and even overwhelming. Worse, these stressors…
From anxiety about the state of the world to ongoing waves of Covid-19, the stresses we face can seem relentless and even overwhelming. Worse, these stressors can cause chronic inflammation in our bodies. Chronic inflammation is linked to serious conditions such as cardiovascular disease and cancer – and may also affect our thinking and behavior.
Credit: Image: Vodovotz et al/Frontiers
From anxiety about the state of the world to ongoing waves of Covid-19, the stresses we face can seem relentless and even overwhelming. Worse, these stressors can cause chronic inflammation in our bodies. Chronic inflammation is linked to serious conditions such as cardiovascular disease and cancer – and may also affect our thinking and behavior.
A new hypothesis published in Frontiers in Science suggests the negative impacts may extend far further.
“We propose that stress, inflammation, and consequently impaired cognition in individuals can scale up to communities and populations,” explained lead author Prof Yoram Vodovotz of the University of Pittsburgh, USA.
“This could affect the decision-making and behavior of entire societies, impair our cognitive ability to address complex issues like climate change, social unrest, and infectious disease – and ultimately lead to a self-sustaining cycle of societal dysfunction and environmental degradation,” he added.
Bodily inflammation ‘mapped’ in the brain
One central premise to the hypothesis is an association between chronic inflammation and cognitive dysfunction.
“The cause of this well-known phenomenon is not currently known,” said Vodovotz. “We propose a mechanism, which we call the ‘central inflammation map’.”
The authors’ novel idea is that the brain creates its own copy of bodily inflammation. Normally, this inflammation map allows the brain to manage the inflammatory response and promote healing.
When inflammation is high or chronic, however, the response goes awry and can damage healthy tissues and organs. The authors suggest the inflammation map could similarly harm the brain and impair cognition, emotion, and behavior.
Accelerated spread of stress and inflammation online
A second premise is the spread of chronic inflammation from individuals to populations.
“While inflammation is not contagious per se, it could still spread via the transmission of stress among people,” explained Vodovotz.
The authors further suggest that stress is being transmitted faster than ever before, through social media and other digital communications.
“People are constantly bombarded with high levels of distressing information, be it the news, negative online comments, or a feeling of inadequacy when viewing social media feeds,” said Vodovotz. “We hypothesize that this new dimension of human experience, from which it is difficult to escape, is driving stress, chronic inflammation, and cognitive impairment across global societies.”
Inflammation as a driver of social and planetary disruption
These ideas shift our view of inflammation as a biological process restricted to an individual. Instead, the authors see it as a multiscale process linking molecular, cellular, and physiological interactions in each of us to altered decision-making and behavior in populations – and ultimately to large-scale societal and environmental impacts.
“Stress-impaired judgment could explain the chaotic and counter-intuitive responses of large parts of the global population to stressful events such as climate change and the Covid-19 pandemic,” explained Vodovotz.
“An inability to address these and other stressors may propagate a self-fulfilling sense of pervasive danger, causing further stress, inflammation, and impaired cognition in a runaway, positive feedback loop,” he added.
The fact that current levels of global stress have not led to widespread societal disorder could indicate an equally strong stabilizing effect from “controllers” such as trust in laws, science, and multinational organizations like the United Nations.
“However, societal norms and institutions are increasingly being questioned, at times rightly so as relics of a foregone era,” said Prof Paul Verschure of Radboud University, the Netherlands, and a co-author of the article. “The challenge today is how we can ward off a new adversarial era of instability due to global stress caused by a multi-scale combination of geopolitical fragmentation, conflicts, and ecological collapse amplified by existential angst, cognitive overload, and runaway disinformation.”
Reducing social media exposure as part of the solution
The authors developed a mathematical model to test their ideas and explore ways to reduce stress and build resilience.
“Preliminary results highlight the need for interventions at multiple levels and scales,” commented co-author Prof Julia Arciero of Indiana University, USA.
“While anti-inflammatory drugs are sometimes used to treat medical conditions associated with inflammation, we do not believe these are the whole answer for individuals,” said Dr David Katz, co-author and a specialist in preventive and lifestyle medicine based in the US. “Lifestyle changes such as healthy nutrition, exercise, and reducing exposure to stressful online content could also be important.”
“The dawning new era of precision and personalized therapeutics could also offer enormous potential,” he added.
At the societal level, the authors suggest creating calm public spaces and providing education on the norms and institutions that keep our societies stable and functioning.
“While our ‘inflammation map’ hypothesis and corresponding mathematical model are a start, a coordinated and interdisciplinary research effort is needed to define interventions that would improve the lives of individuals and the resilience of communities to stress. We hope our article stimulates scientists around the world to take up this challenge,” Vodovotz concluded.
The article is part of the Frontiers in Science multimedia article hub ‘A multiscale map of inflammatory stress’. The hub features a video, an explainer, a version of the article written for kids, and an editorial, viewpoints, and policy outlook from other eminent experts: Prof David Almeida (Penn State University, USA), Prof Pietro Ghezzi (University of Urbino Carlo Bo, Italy), and Dr Ioannis P Androulakis (Rutgers, The State University of New Jersey, USA).
Journal
Frontiers in Science
DOI
10.3389/1239462
Method of Research
Computational simulation/modeling
Subject of Research
Not applicable
Article Title
A multiscale inflammatory map: linking individual stress to societal dysfunction
Article Publication Date
12-Mar-2024
COI Statement
YV is a cofounder of, and stakeholder in, Immunetrics, Inc. and a consultant to Anuna AI. PFMJV is the founder of, and stakeholder in, Eodyne Systems s.l. and Sapiens5 Holding BV. DLK was employed by Tangelo – Intend, Inc. Neither these companies nor the funders mentioned above were involved in the study design, data collection, analysis, interpretation of data, the writing of this article, or the decision to submit it for publication. The companies mentioned above also did not provide funding for the study. The remaining author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest. The authors YV and PV declared that they are editorial board members of Frontiers, at the time of submission. This had no impact on the peer review process and the final decision.
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