Citi Global Wealth UNSToPPABLe TreNDS | | 79 Investments FiGUre 2. reSeArCH DriveS HeALTHCAre iNNovATioN Developing biologics is now a major focus for biopharmaceutical companies. Around 60% TOTAL GLOBAL PHARMACEUTICAL R&D SPENDING of all drugs in development in 2022 may be 300 biologics, up from 20% two decades ago, according to Danaher Corporation. While just 250 500 such products have been approved by US regulators to date, there are some 20,000 in 200 the pipeline.2 n $b 150 From an investment perspective, we find the potential growth compelling. Evaluate Pharma, 100 an industry intelligence provider, forecasts that new biological drugs – excluding COVID- 50 related therapies – will represent $541 billion in sales by 2026, an annualized growth rate of 0 10% from current levels. Risks faced include '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 clinical development failures, delays and stiff regulatory hurdles. Source: Statista and Citi Global Insights, as of 28 Oct 2022. All forecasts are expressions of opinion, are subject to change without notice, and are not intended to be a guarantee of future events. Life science tools Chart shows global spending on research and development since 2014, with forecast data from 2022 until 2028. We see healthcare as well placed to meet the arthritis, osteoporosis and diabetes. Some of Developing cutting-edge treatments such as challenge. The sector has a strong record of the most novel treatments for these conditions biologics is intensely demanding. So much innovation, driven by increasing spending on are biologics. so that biopharmaceutical companies often research and development, a trend that seems outsource parts of the long and intricate likely to continue – FIGURE 2. While we see Biologics are complex drugs made from parts of process. They do so to take advantage of growth potential for healthcare broadly, there or complete living cells from humans, animals or specialist skills at certain stages and to seek are certain areas of particular focus for us. microorganisms. This “bioproduction” process manufacturing efficiencies. This trend is on differs from traditional “small molecule” drug the rise. development, where drugs are synthesized via Some 86.9% of qualified bioprocessing Biologics and bioproduction chemical processes without living cells. Biologics respondents in the 19th annual industry have proven superior to many small molecule survey conducted by BioPlan Associates, a With advancing years comes greater incidence drugs in addressing many difficult-to-treat biotechnology market and information provider, of many illnesses. These include various forms illnesses. And they may hold the key to treating indicated they planned to outsource at least of cancer, Alzheimer’s disease, rheumatoid or curing diseases that are today untreatable. 2 Source: Danaher Analyst Day – Cytiva HQs, as of Sep 2022