The Must-Watch Health Care Trends of 2013

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Transcript:

Chris Hill: When you look at the health care industry, what are a couple of trends investors should be watching for in 2013?

David Williamson: I think the hepatitis C race was a big story in 2012. Gilead bought Pharmasset for $11 billion; that was at the end of 2011, but we've really seen the drug that they bought, 7977, really play out.

Bristol-Myers bought Inhibitex for about $2.5 billion; that blew up in their face because the drug was deemed unsafe, and they had to discontinue it.

We will see the results of that race play out, clinically at least. Maybe not in the market between Gilead, Abbott Labs, and then there are some other competitors out there, but I think the real new race that people are going to focus on is diabetes. It's a huge, growing market worth tens of billions of dollars annually.

Novo Nordisk is a company that is really well-positioned there. They're almost a diabetes pure play, even as a big pharma.

Eli Lilly, which we mentioned before, is having a small gap as far as the way the patent cliff is falling and the way their pipeline is going to ramp up. They actually have the most broad diabetes drug platform in development, so if that is successful they'll be an increasingly large player.

Bristol-Myers and AstraZeneca are also moving in. This is really where the big pharmas have refocused their energy, because it's just such a large market. A lot of the low-hanging fruit's been plucked, so it's a large and growing problem. It's easier for them to address it and be excited about it. I think that's a story we're going to see.

I think it might not be a 2013 story so much, but going forward, investors need to keep in mind the expense of these end-of-life drugs. We talked about Dendreon's Provenge; a lot of these cancer drugs, $93,000 for just a couple months of progression-free survival -- there wasn't even an overall survival benefit there.

If we're looking to ratchet down health care costs, and that's one of the things the Affordable Care Act does, this is really an area it's going to target. I have this stat right here that I think our viewers should see. It's 10% of patients account for 60% of health care spending, with 30% occurring in the last year of life, 40% of which is in the last 30 days.

Chris: That's a lot.

David: We need to radically rethink end-of-life care. It's almost an industry that's preying on people trying to just eke out a little more. I understand that it's a really difficult period for people, and it's only tough answers, but I think just assuming getting a couple months extended survival means you're now going to have a very profitable drug, might not actually be the case, going forward over the next five or 10 years.

Chris: Finally, Ravens/Giants, how are you feeling?

David: Not feeling great.

Chris: [laughs]

David: Both teams need a win pretty badly. I think the Giants need it more, because they're actually on the outside, looking in. The Ravens are already in the playoffs.

Chris: Tim Hanson has dubbed it "The panic bull."

David: It is. I think that's a pretty fair assessment. All the Ravens need to do is beat Cincinnati the next week to win the division, so I think possibly the desperation of the Giants -- plus, the Giants are better on the road...

Chris: I just don't like the Giants ...


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  • Report this Comment On January 04, 2013, at 11:21 AM, lebronz wrote:

    Notice the recent move on dndn Dave?

    My educated guess is short covering, not buying and we can't verify short interest until Jan 23.

    Look for an EU CHMP opinion on Provenge by Jan 21 ;-)

    Leb

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