Takeover speculation! What is going on at Pfizer, Sanofi, and NetraMark

Drug research is a billion-dollar business

Pfizer's latest setback shows that it makes perfect sense for large pharmaceutical companies to proceed as they do in the development of new drugs. The multinationals usually adopt a multi-pronged approach and pursue many projects in parallel. In some cases, they only have a stake in projects in order to keep decision-making processes efficient and their cost share as low as possible. Nevertheless, the costs for research and development are enormous. Even if companies like Pfizer or Sanofi are tight-lipped about the details of their costs, there are still some indications. In 2024, Sanofi invested a whopping EUR 7.4 billion in research and development.

To ensure that these investments are targeted effectively, AI is being increasingly used: at Sanofi, for example, artificial intelligence is used for data collection and analysis, as well as for quality control. "This helps us to collect and evaluate anonymized information faster and more reliably," explains Jessica Werchan, study manager at Sanofi's Clinical Study Unit, on the Company's website. Such technology-based approaches help to improve the quality of the studies and to use resources efficiently.

NetraMark is tackling the costs and risks in pharmaceutical research

The Canadian company NetraMark, which specializes in optimizing clinical trials – particularly in Phases 2 and 3, where failure rates are high – goes one step further. The Company's proprietary AI technology analyzes small, high-dimensional data sets to identify subpopulations relevant to success. The goal is to adapt inclusion and exclusion criteria for future study phases in a targeted manner to significantly increase the probability of success. What sounds like trickery is a procedure that the US Food and Drug Administration recommends as useful. After data sets have been optimized using NetraMark's technology, subjects more likely to respond to the active ingredient or show a lower response to placebos can be selected.

NetraMark focuses on diseases of the central nervous system and cancer, but in principle, the technology can be used in all types of clinical studies. According to NetraMark, a particular highlight is its proprietary "Attractor AI", which can work with particularly small data sets. In contrast to gimmicks with ChatGPT, where results are often difficult to verify, NetraMark focuses on traceability. This allows researchers to systematically improve the study design: The better the design, the lower the risk – and the lower the cost per study.

Pfizer's fear of the next setback – Will NetraMark become an acquisition candidate?

The Company is currently testing its technology in collaboration with a major pharmaceutical company and the US National Institute of Health. As NetraMark CEO George Achilleos explained at the International Investment Forum a few weeks ago, the business model is designed to deliver high margins: *"Our gross margins are well over 90%.* Virtually every dollar of revenue goes directly toward covering our operating costs," Achilleos said at the time.

Although NetraMark's technology is still in the testing phase, the business model is considered extremely interesting within the biotech sector. How to make studies more efficient and cost-effective is a regular topic at industry conferences. Large pharmaceutical companies may seek to secure the technology. Pfizer is likely to be keen to avoid repeating a failure like Danuglipron. Other pharmaceutical companies, such as Sanofi, are currently realigning themselves and want to increase their involvement in the biopharmaceutical sector. In order to make strategic investments, Sanofi wants to sell its majority stake in the consumer healthcare brand Opella. Given the sums involved in the budgets of pharmaceutical multinationals, NetraMark's market capitalization of just under EUR 70 million seems manageable.

NetraMark is addressing acute challenges in the pharmaceutical industry

NetraMark's shares have been among the high-flyers in recent months, rising by more than 480% in the past six months. If the Canadian tech company makes a breakthrough, there is still potential: with the billions that pharmaceutical companies spend on research and development every year, even small savings can quickly add up to significant amounts. In addition, pharmaceutical companies can focus on new projects more quickly if studies with little prospect of success are terminated earlier than before. The pharmaceutical industry is transforming and is on the hunt for tomorrow's cash cows – NetraMark is keeping pace with this trend.