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Chris Schott: As I think about major themes for 2025, M&A really is one of the areas we're going to be paying attention to. We've got balance sheets across the sector in a much better place than they've been. We're seeing the biotech sector, continue to produce innovative medicines that quite honestly can be maximized in the hands of a larger partner or being acquired.

Chris Schott: Another factor driving M&A is really the sector's 2028 and 2029 patent cliff. So we think that that's going to be a motivating factor for the sector.

Chris Schott: When I think about research and development, obesity remains very much top of mind. This is the largest category the industry has ever seen. We're estimating sales approaching $150b by the end of the decade and peak sales that are closer to $200b. We're also expecting data for the first oral GLP one, and something that really unlock the capacity constraints that have impacted the market.

Chris Schott: We continue to see innovation is really a guiding principle for the sector. We've got all these new tools being employed to develop better differentiated drugs. We really don't see that slowing in any meaningful way over the next few years. I think everyone agrees having better, more effective medicines is in every individual, every country, every organization's best interest. 

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Jess Fye: One major theme we're watching in biotech for 2025 is new drug launches. Innovation is the biggest one for this group every year. I think there's going to be a lot to watch in biotech.

Jess Fye: What we hear from investors on what could attract the most strategic interest in 2025, the hot therapeutic areas are I&I, which is inflammation and immunology, oncology and then cardio renal metabolic.

Jess Fye: They can have decent sized patient population ends as well as pretty healthy pricing. I think the reason folks are attracted to those areas is because the combination of those two can lead to large markets.

Jess Fye: In terms of M&A in biotech in 2024, we saw fewer deals and much lower dollar volume of deals. Thinking about 2025, about half of investors expect that to increase. if I step back, the theme for us is selectivity. We still see innovation running strong in the group. We're expecting solid performance on clinical data readouts as well as drug launches. The reason we think you should be selective is because there is this uncertainty and volatility that's been introduced, and that's going to affect how some of these stocks perform.

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From groceries and clothing to haircuts and housing, what we spend on and, more importantly, how much we spend says a lot about the overall economy. All this data is tracked by a tool called the Consumer Price Index. So, how is this index calculated and what can it tell us?

 

This is the Consumer Price Index: Unpacked.

 

The Consumer Price Index, or the CPI, tracks changes in the prices of goods and services over time. It dates back to World War One. Prices were increasing rapidly and wages needed to be adjusted. So, in 1921, the U.S. government began publishing the index across major cities every year. A century later, the CPI is the most widely cited barometer of living costs around the world.

 

It includes thousands of everyday items across various spending categories, and each item is weighted according to its relative importance. For instance, housing is a key component of the CPI as it typically accounts for a large chunk of the average consumer's expenditure.

 

By monitoring changes in the index, governments can work out if the cost of living is rising or falling. This makes it a useful gauge of inflation and deflation. Most countries update their CPI every month. Every so often, the basket is updated according to consumer buying patterns. In early 2023, the U.S. increased the weight of household furnishings in its CPI to reflect that people were spending more time at home during the pandemic.

 

The overall CPI figure is often referred to as the Headline CPI. However, economists and policymakers tend to look at Core CPI which excludes food and energy data. This is because the costs that feed into these components, like oil prices, can be quite volatile from month to month.

 

While the CPI is the most comprehensive source of consumer prices, it's not perfect and doesn't allow for variables. For instance, while it shows aggregate spending, it doesn't reflect the personal experiences of individuals and households. It's also based on the spending patterns of urban consumers and doesn't take into account the buying habits of those living in suburban or rural areas.

 

This data helps investors make better-informed decisions.

 

What's more, the index doesn't consider the effects of substitution or the fact that when an item becomes more expensive, people tend to seek out more affordable alternatives.

 

Despite these limitations, the CPI remains a handy tool for governments, businesses, and society at large. In the U.S., the Federal Reserve uses the CPI to calibrate monetary policy and set interest rates while other government agencies use it to calculate benefit payments and income tax brackets. Employers also often look to the CPI when adjusting wages in line with the cost of living.

 

In 2008, the Financial Crisis called into question the industry’s social license to operate: How can the financial system works for everyone and not just shareholders? In 2015, 196 countries signed the Paris Agreement to reduce carbon emissions.

 

All in all, the CPI is an important metric that informs many major decisions and tells us a lot about the health of a country's economy.