Vertex Pharmaceuticals: The Monopolistic Take on the Cystic Fibrosis Market
- Charlyne Luu
- Nov 26, 2024
- 7 min read
Updated: Mar 16
Vertex Pharmaceuticals has pioneered treatments for cystic fibrosis, a genetic disease once deemed untreatable. Founded in 1989, Vertex capitalized on developing medicines that target the underlying causes of CF, leading to a monopoly in the CF treatment market worth billions of dollars. Through extensive research and development, Vertex is continuously expanding its medicinal portfolio, and this innovative R&D strategy has propelled its growth, positioning it as a leader in specialized medical markets.
Pioneering in Cystic Fibrosis
Medicine is consistently ever-changing, and R&D pipelines of many pharmaceutical companies have made it their mission to tackle health’s deadliest challenges, albeit many medical conditions still lack a cure.
In 1938, cystic fibrosis (CF) was characterized as a deadly disease that claimed the lives of children. For decades, it was an untreatable mystery, with little research devoted to understanding its cause or finding a cure, consequently preventing many from living over the age of 30. But the tide began to turn in the early 2000s when a breakthrough came from Vertex Pharmaceuticals.
Vertex was founded in 1989, and its mission is to deep dive into serious diseases to ultimately find cures for them. In modern times, the company holds a market cap of $127.23B (November 6th, 2024). It successfully became a powerhouse in medicine by investing in scientific innovation to pioneer transformative medicines that zone into specialty markets. This investment strategy created its monopolistic empire over the CF market, and Vertex became the first to define, challenge and cure the disease.
“Vertex believes in the promise and potential of science to have a transformative impact for people living with serious diseases.” – Vertex
The company dedicated over 20 years of its resources to its monopoly to spearhead R&D for CF to develop the first medicine that targets its underlying cause, and it continues to investigate additional potential therapies for all individuals whose lives suffer at the hands of CF or other diseases.
Understanding Cystic Fibrosis
From a scientific standpoint, CF modifies the function of our human anatomy. It poses a serious threat to life expectancy, and most children diagnosed with the disease and left untreated are unable to live past their 30s– that is, until Vertex’s transformative medicine became CF’s most important innovative milestone.
Currently, over 92,000 individuals, the large majority of the CF global population, are diagnosed with the disease across the U.S., Canada, Australia and Europe. Moreover, approximately 13,000 people with CF reside in Latin America and the Middle East.
At the core, CF is a genetic disease caused by the inheritance of two mutated cystic fibrosis transmembrane conductance regulator (CFTR) genes, where each mutated gene is inherited from each parent. This genetic defect engenders at least one F508del mutation, a protein processing mutation, which causes the removal of an amino acid from the CFTR protein. As a result, the CFTR protein does not hold its correct shape, so the cell disposes of it. In some cases, individuals are simply unable to produce the CFTR protein.
The absence of the protein prompts poor salt and water flow in/out of the cells in the body’s organs, which infamously impacts the lungs, liver, pancreas, sinuses, sweat glands, gastrointestinal tract and reproductive tract. CF’s deadliest response is the progressive damage it causes to the lungs by causing a buildup of abnormally thick and sticky mucus that leads to chronic lung infections and inflammation. Furthermore, CF can provoke malabsorption caused by other complications: pancreatic disease, diabetes, liver disease, osteoporosis, depression and anxiety.
Monopolizing the Cystic Fibrosis Market
Vertex’s monopoly-inducing R&D strategy is to invest in cell and genetic therapies to develop a cutting-edge portfolio of technologies. They actively leverage emerging therapeutic modalities that could transform the lives of patients waiting for cures.
Recalling its origins, Vertex is the pharmaceutical company that cured CF.
“We have spent more than 20 years doing what was once thought impossible – discovering, researching and developing medicines to treat the underlying cause of CF.” – Vertex
The company began targeting CF by questioning the proof of concept that a small molecule could aid a damaged protein. They began designing, synthesizing and testing tens of thousands of compounds, from which they selected the most promising medicines to move forward to clinical trials. Until now, ten investigational CF medicine candidates have advanced to that stage. Vertex’s first advancements came about in 2006, and within seven years, four medicines became available to CF patients who were eligible to consume the treatments. Vertex’s ultimate goal is to cure CF for all patients, no matter their genetic composition. Beyond medicine, the company also investigates mRNA and gene editing technology as a salvation to CF.
Officially, the corporation has trademarked seven approved medicines (6 of which are dedicated to treating CF):
CASGEVY – treating Sickle Cell Disease | |
TRIKAFTA – treating CF patients ages 2 and up | |
KAFTRIO – treating CF patients ages 2 and up | |
SYMDEKO – treating CF patients ages 6 and up | |
SYMKEVI – treating CF patients ages 6 and up | |
ORKAMBI – treating CF patients older than 1 | |
KALYDECO – treating CF patients older than 1 |
Vertex’s treatments are suitable for 90% of the CF demographic. The medicines are actively treating over 68,000 individuals, which is over 2/3 of the population suffering from CF, who are eligible to receive its CFTR modulator therapy. Vertex has dispersed its medicines in over 60 countries, and the company also proactively donates medicines to patients from lower-income countries where it is significantly challenging to access therapies, contributing to its social responsibility. Vertex promotes medicine donations because it believes its experienced support is the fastest, safest and most reliable way to help the underserved suffering from CF. As of 2024, Vertex's CF medicines support Egypt, El Salvador, Honduras, Ivory Coast, Kenya, Lebanon, Nepal, Sri Lanka, Tanzania, Tunisia, Uganda and Ukraine.
Market Capitalization and Dominance
Vertex Pharmaceuticals, listed as VRTX on the stock exchange, sits at a net worth of $127.23B (November 6th, 2024). Its market cap has grown +33.75% since its last fiscal year-end, and this growth achievement can be attributed to the company’s extensive resource re-investment in its R&D over the years.
Vertex’s R&D operating expenses are equivalent to above 70% of its resources, and this figure goes well above the industry average. In 2023, its GAAP investment dollar figure was $3.69B.
Vertex’s commitment to continuously expand its R&D is what makes it a groundbreaker in the medical market, and this strategy has led to its admirable growth since its IPO. In 1991, VRTX went public with its shares outstanding price closing at $4.625, and as of November 6th, 2024, its shares outstanding closed at $493.64 per share, with 257.53M of its stock equity being traded on the market. Over the last 52 weeks, VRTX’s stock price increased by +31.31%, and its beta was 0.39, making the VRTX stock price volatility below the market average. These figures demonstrate the company’s impact and how it will further capitalize beyond the CF market alone.
Over the past 5 years, Vertex has experienced extremely steady revenue growth, and according to analyst forecasts, its revenue is expected to grow from $10.96B to $11.95B in the following year. In fact, Vertex experienced a revenue surge of +49.08% in 2020, without medical ties to the COVID-19 pandemic, which shows that the company’s merits derive solely from its extensive innovation within specialty medicine developments. Its CF treatment sales exceeded performance expectations and generated $2.69B, and beyond CF, Vertex’s gene-editing treatment for beta-thalassemia and sickle cell disease, in partnership with CRISPR Therapeutics, represented $187.0M of its revenue. Vertex dedicates its resources solely to specialty markets, and this strategy is the foundation of its market dominance.
Medicine’s Future over at Vertex
Vertex’s monopolistic takeover of the CF market has not ended, and it is committed to expanding its medicinal range to target those who are presently ineligible for its existing therapies.
Despite its CFTR modulator therapy helping treat many CF patients, Vertex is investigating other small molecule medicines– Vanzacaftor, tezacaftor and Deutivacaftor– that aim to serve CF’s underlying cause for patients whose cells cannot normally process and move the CFTR protein. These medicines are designed to increase mature protein levels at the cell's surface. Concerning Deutivacaftor, its purpose is to keep CFTR proteins at the surface of cells open longer to increase the flow of water and salt across the cell membrane, clearing mucus from the body’s airways.
In addition, the development of VX-522, a CFTR mRNA that has the potential of being directly delivered to the lung by lipid nanoparticles, has entered phase 1 of clinical trial testing. This treatment will initiate change for CF patients who are unable to produce CFTR proteins. This medicine expands Vertex’s CF therapeutic portfolio toward genetic therapies, and it is supported by important pharmaceutical partners such as CRISPR, Moderna and Arbor.
Beyond its advancements in CF therapies, Vertex allocates its R&D to other specialty markets to pursue its chances at dominating these specialty markets as well:
APOL1 – Mediated Kidney Disease | Inaxaplin (VX-147) in phase 3 of its clinical testing |
Autosomal Dominant Polycystic Kidney Disease | VX-407 to treat patients with a subset of PKD1 genetic variants to restore the function of their PC1 protein |
Duchenne Muscular Dystrophy | CRISPR/Cas9 gene-editing technology to help restore the near-full-length dystrophin protein |
IgA Nephropathy (IgAN) | Povetacicept (ALPN-303) is being investigated to address the underlying cause of the disease |
Myotonic Dystrophy Type 1 | Oligonucleotide approach for VX-670, which uses an intracellular Endosomal Escape Vehicle to target the underlying cause of the illness |
Type 1 Diabetes | VX-880 is being evaluated for patients who suffer from impaired hypoglycemic awareness and severe hypoglycemia |
Type 1 Diabetes | VX-264 sits at phase 2 of clinical trialling to become a treatment that encapsulates cells in a protective device to be surgically implanted in the body |
The latest important breakthrough that Vertex is revolutionizing is its non-opioid chronic pain treatment: VX-548, a phase 3 portfolio of small molecule medicines that will aid acute and neuropathic pain, including lumbosacral radiculopathy. The market for this pain is deemed a “high unmet need multibillion-dollar condition”, and it has the potential to generate a new monopoly for Vertex once FDA-approved, scheduled for January 2025.
Conclusion
“At our core, we’re a company focused on transforming serious diseases through innovation and great science. We’ve assembled the teams, tools, and technologies to deliver on our R&D strategy and to deliver for patients” – CEO & President, Reshma Kewalramani MD
Vertex Pharmaceuticals’ ability to innovate cures in specialty markets forges its domination of unique medical markets while simultaneously rescuing many lives. The company is accredited to increasing individuals’ life expectancy and giving them hope for a future they once thought was unimaginable. It begins with cystic fibrosis, but its R&D strategy paves the way for a monopoly in many other underacknowledged conditions.
Perhaps zoning in on R&D for a singular disease is the exceptional alternative to advance cures for the disease and allow for the capitalization of its medicine. The niche could lead to pharmaceutical companies pioneering whilst being advantageous to those in dire need of cures to treat their life-threatening diseases.
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