Kamala Harris and Donald Trump
The presidential elections in the United States have once again brought the biotechnology sector into focus. A fundamental pillar of the national economy and an area of innovation with the capacity to redefine the future in areas such as health, agriculture, and the environment. The biotechnology industry, driven by advances in genetics, next-generation therapies, and agricultural biotechnology, is at a turning point as the outcome of these elections has the potential to decisively influence the regulatory framework, research incentives, and the way the country leads global advancement in biotechnology.
An empire weathering storms.
The United States has not only solidified its position as the epicenter of biotechnology innovation but also experienced explosive growth in recent years. Cutting-edge research, strategic investment, and a favorable regulatory environment have enabled the country to position itself as the undisputed global leader in the search for solutions to the most pressing challenges: from curing diseases to planet sustainability. However, this reign is now at a crossroads.
In the last six years, the Biotech sector in the United States has undergone a remarkable transformation. Revenues reached USD 200 billion in 2023, and the number of companies grew exponentially, surpassing the mark of 7,000 companies. This boom is largely attributed to the investment in R&D carried out by the private sector, where the United States leads globally with spending exceeding USD 100 billion.
Unlike other sectors, innovation is the true cornerstone of the industry: since 2018, the FDA has approved more than 170 drugs, many of which are based on next-generation technologies like gene therapy. This involves genetic modification to combat diseases that previously had no effective remedy in sight.
But the crown jewel, leadership in biotechnology, is now awaiting a new king. The elections in the United States will define the future of the sector. The question is: will the innovative momentum be maintained, or will new regulations hinder its development?
The Threat of the IRA and Political Uncertainty
The recent implementation of the Inflation Reduction Act (IRA) has sparked a debate in the sector. While the law aims to reduce drug costs for patients, the new regulations could have a profoundly negative impact on innovation. The IRA allows Medicare to negotiate prices for certain drugs, which could discourage investment in R&D as it does not allow for effectively rewarding achieved innovations for diseases that previously had no solutions.
Political uncertainty adds to the threat of the IRA. A Democratic government that deepens such regulations, which limit pricing freedom and free competition, could lead companies to take drastic measures, such as restructuring more or even seeking new horizons.
What does the political chess move mean for Argentina?
Regardless of who wins the elections in the United States, Argentina finds itself at an unprecedented historic moment. While the United States risks its future leadership in innovation, Argentina is opening up to the world with a solid proposal in the biotechnology sector.
Our country has trained professionals, equipped facilities, and an international reputation for the quality of its clinical data. With a political and economic direction focused on opening up and deregulating, Argentina presents itself as an attractive partner for the pharmaceutical industry, with the capacity to optimize its processes.
The uncertainty in the United States, exacerbated by the dispute with China for technological leadership, could prompt companies to seek new horizons. In this context, Argentina has the opportunity to consolidate itself as a key player in the global biotechnology sector.
Where is the kingdom headed?
In this context of uncertainty, investment trends offer clues about the future of the sector. In the current market, investors, especially in the public domain, favor late-stage biotechnology products that are further along in development and have minimized risks. There is a search for investment security, betting on products that have already demonstrated their effectiveness and have a clearer path to commercialization.
However, this trend is not static. Historically, investment in biotechnology has oscillated between products and discovery platforms in repeating cycles. In times of risk aversion, like the present, there is a greater preference for incremental products with lower risk, while in periods of greater risk appetite, innovative platforms take center stage.
For a robust and sustainable innovation ecosystem, it is essential to invest across a broad spectrum of assets, from discovery platforms to late-stage products. This diversification will allow the biotechnology kingdom to maintain its strength and thrive in the future, regardless of who sits on the throne. The new king taking the White House will undoubtedly hold the destiny of the Crown Jewel of America.
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