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March 27th, 2023 | 09:26 CEST

Cost pressure in the healthcare system - how you benefit: Bayer, BioNxt, BioNTech

  • Biotechnology
  • Pharma
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What do you think of the German healthcare system? While doctors regularly grumble about bureaucracy and patients about long waiting times or other inconsistencies, a new divide is opening up between pharmaceutical companies. Research-based pharmaceutical companies favour long patent protection, while generics manufacturers want more lax rules. We explain the system and highlight opportunities for investors.

time to read: 3 minutes | Author: Nico Popp
ISIN: BAYER AG NA O.N. | DE000BAY0017 , Bionxt Solutions Inc. | CA0909741062 , BIONTECH SE SPON. ADRS 1 | US09075V1026

Table of contents:

    Bayer and BioNTech: Margin only with innovation

    It is not unusual for it to take more than ten years for a new drug to benefit patients. That is how much time is taken up by research and the approval process. In addition, according to Bayer, costs of around USD 2 billion are incurred for each new drug. In recent years, there have been repeated plans to relax intellectual property protection. In Europe, a proposed law would allow manufacturers of generics and biosimilars to produce a drug even though intellectual property protection is still in place. In the wake of supply bottlenecks for many generic drugs, such as cough syrup for children or medicines for the chronically ill, the discussion has picked up steam again. The aim of the legislators is now to create incentives for generics, where margins are traditionally small, to be produced more within the EU again and, at the same time to open up the opportunity for innovation in the generics market.

    In practice, the added benefit will now determine whether patent-protected drugs can also be expensive. Research-based pharmaceutical companies such as Bayer or BioNTech are expected to deliver added value to justify high prices. Creating this added value could be difficult, especially for traditional pharmaceutical companies that develop certain active ingredients step by step. Consider, for example, new generations of antihistamines for allergies - whether allergy sufferers can really tell a significant difference between the individual preparations is questionable.

    Biotechs have the edge

    In contrast, biotech companies that use modern processes such as mRNA are better positioned. No one will deny the usefulness of BioNTech's COVID vaccine. The same applies to therapeutic vaccines against cancer, which the Mainz-based company has in the pipeline in various variants. In order to assess regulatory risks in the healthcare sector, investors should distinguish between evolutionaries and revolutionaries in research-based pharmaceutical companies. Compared to traditional pharmaceutical companies, such as Bayer, biotechs, such as BioNTech, are likely to have the edge in the race for healthcare budgets.

    BioNxt as a cost reducer

    The German-Canadian company BioNxt occupies an exciting niche in the healthcare market. The Company offers three business segments. The area of psychedelics is more experimental and is primarily finding favour in North America. The diagnostics business, on the other hand, is considered promising in this country as well. BioNxt has products on offer for diagnosing diseases in the oral cavity quickly and at a low cost. This is a particularly important market in the US, where drugs for opioid abuse are increasingly triggering inflammatory diseases in the oral cavity. BioNxt announced an agreement with a partner last October to advance its diagnostics toward market maturity.

    BioNxt's third and most exciting business area is in innovative drug delivery systems. The generics market, in particular, is characterized by a fierce price war. BioNxt provides a remedy here by administering proven active ingredients to patients in such a way that they become more effective and possibly even require lower doses. In recent months, BioNxt has been advancing its active ingredient patches. These carry the Parkinson's drug rotigotine and are scheduled to be studied in a clinical trial in the coming weeks. In March, BioNxt also acquired tablet manufacturing technology, saying, "This coating system could significantly improve oral drug delivery in tablets and capsules through more precise drug release and predictable dosing. The potential applications for this innovative platform technology are extensive. We look forward to exploring product development opportunities ranging from dietary supplements and over-the-counter medications to prescription drugs and psychedelic substances," commented BioNxt CEO Hugh Rogers.

    BioNxt is well positioned with its three businesses, some of which could be synergistic and promise advantages in healthcare systems characterized by cost pressures. The Company recently announced a capital measure, before which the share price jumped significantly. In the meantime, the innovative smallcap also looks promising in the long term for chart-technical reasons. While classic pharmaceutical companies, which tend to advance their products in an evolutionary manner, could have difficulties achieving margins in the future, BioNxt focuses on innovations that promise efficiency increases. Given the current discussion about costs in the healthcare system, this strikes a chord.

    Innovations continue to pay off. Source: BioNTech SE

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
    For this reason, there is also a concrete conflict of interest.
    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author

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