Going into JPM, it's good to be a pharma CEO

Next week's JPM conference will likely be the most jubilant for Big Pharma in years.

Last year began with uncertainty and anxiety as President-elect Trump prepared to take office, a prelude to months of tariff threats and pledges to slash drug prices. Now, major drugmakers appear to have avoided tariffs and dramatic price cuts by striking deals with the administration that don't seem to materially affect their bottom lines. At the same time, the president has turned from a sharp critic to a vocal supporter of the industry.

Shares of major drug companies ended last year up more than 20%, beating the S&P 500 for the first time since 2020. And shares of biotech firms, whose values often hinge on the likelihood they get acquired by a major drugmaker, surged to four-year highs.

"The year was this wild whiplash from 'Everything's falling apart' to 'Everything's great,'" one analyst said.

M&A

Lilly reportedly in talks to acquire Ventyx

The Wall Street Journal reported yesterday that Eli Lilly is close to acquiring Ventyx Biosciences for more than $1 billion.

The biotech is focused on drugs for inflammatory and autoimmune diseases, and two of its candidates are designed to inhibit a component of the immune system called NLRP3. Ventyx is testing one for recurrent pericarditis, inflammation of the membrane protecting the heart, and the other for Parkinson's disease and cardiometabolic diseases.

Several other companies are developing similar drugs. NodThera is running Phase 2 trials testing an NLRP3 inhibitor in patients with obesity. Meanwhile, Lilly's key competitor Novo Nordisk also has an NLRP3 inhibitor that it says it's studying in cardiovascular disease and "a broad range of liver, kidney and cardiometabolic diseases."

policy

FDA to loosen regulation of AI-enabled devices

The FDA said yesterday it will ease regulation of digital health products, in line with the Trump administration's promises to promote the widespread use of AI.

This policy includes clinical decision support software, such as AI-enabled products that help doctors navigate diagnoses and treatment options. Products that deliver a single recommendation were previously required to be reviewed by the FDA, but now, those products can enter the market without review as long as they fulfill the agency's other criteria for escaping regulation.

The move could also open the the door to the unregulated use of generative AI products for certain medical tasks, such as summarizing a radiologist's findings.

At the Consumer Electronics Show, FDA Commissioner Marty Makary said the agency's regulation needs to move "at Silicon Valley speed."

pharma

China expected to soon surpass U.S. in bio innovation

The biopharma innovation ecosystem in China is set to surpass that of the U.S. in the next five years, according to business development leaders at major drug companies surveyed by T.D. Cowen.

These executives are assessing many more Chinese assets today than a decade ago, and they think the quality of the assets have improved at a similar pace, according to survey results published yesterday.

Not all growth is equal, though. The survey respondents think China has become most competitive in areas like oncology and immunology, but lagging in neuropsychiatry, rare disease, and cell and gene therapies.

Respondents are also concerned about potential U.S. policies that may limit the licensing of Chinese drugs.

politics

Brace for RFK Jr.'s war on antidepressants

After targeting vaccines, health secretary RFK Jr. may be going after antidepressants next, two health policy professors write in a new opinion piece in STAT.

Late last year, Kennedy wrote on X that the CDC is "finally confronting the long-taboo question of whether SSRIs and other psychoactive drugs contribute to mass violence."

Similar to the way he talks about vaccines, his rhetoric on antidepressants will cost lives, the professors write. They cite their own research, which found that mismanaged warnings to doctors and patients about possible negative impacts of antidepressants have driven people away from lifesaving medical care.