Cancer treatments aim to kill harmful cells while sparing healthy tissue—but have done so with mixed results. Now, thanks to advances in chemistry and biology, the emergence of a new class of "smart chemotherapy" drugs promises a long-overdue upgrade to traditional methods of treating cancer, which remains the second-leading cause of death globally. This innovation could create a $140 billion global market over the next 15 years, up from roughly $5 billion in 2022.
Known as antibody drug conjugate, or ADC, drugs, this new breed of chemotherapy more selectively delivers cancer-killing chemicals to tumor cells while minimizing damage to healthy cells. The result: safer, more effective chemotherapy that can be used earlier in treatment and more easily in combination with other cancer medicines, eliminating the need to choose between one approach and another.
“The ultimate goal would be to replace traditional chemotherapy, which would culminate in a considerable drop in cancer mortality,” says Mark Purcell, head of Morgan Stanley’s European Pharmaceutical team. “We believe the future of ADCs is now and that smart chemotherapy could become one of the biggest growth areas in biopharmaceuticals, with revenue reaching $55 billion in the U.S. over the next 15 years.”
ADC drugs are comprised of antibodies with chemotherapy molecules attached and home in on cancer cells and destroy them like "biological missiles,” says Purcell. Traditional chemotherapy offers a more scattershot approach that may kill off healthy cells at the same time.
After 10 to 20 years of fine tuning this super-targeted approach, the development of smart chemotherapy is now picking up pace: At least 1,400 clinical trials for ADC drugs are in progress, and 87 new ADC drugs have entered development in the past two years alone.
A series of clinical breakthroughs in ADC medicines over the next nine months could deliver major advances in the treatment of lung cancer and bladder cancer, as well as proof-of-concept data for colorectal cancer. Analysts estimate colorectal, lung and breast cancers, with potential markets of up to $36 billion, $29 billion and $18 billion, respectively, offer the most significant prospects for ADC drugs.
Currently, breast cancer dominates the ADC drug market for solid tumors, accounting for $4.1 billion out of $4.7 billion in revenue last year. In less than 12 months, ADC drugs have already become the standard of care in two types of breast cancer that haven't responded to initial treatment, as well as a subset of metastatic bladder cancer.
Opportunities in Innovation
Large biopharma companies are already investing heavily in smart chemotherapy, as a flurry of business development deals—including licensing and collaboration agreements and an outright merger between a big pharma player and a biotech firm specializing in antibody-based cancer therapies—in recent months shows.
As the smart chemotherapy market grows rapidly, it is also becoming more globalized: 46 of the new ADC medicines entering clinical trials over the past two years originate from companies in Asia, while 32 were in the U.S. and 9 in Europe, underscoring the breadth of interest in the field.
In addition to biopharma companies, analysts see a strong revenue opportunity for the unsung heroes of the ADC revolution—the contract development and manufacturing organizations, or CDMOs, that support the pharmaceutical industry and manufacture more than 60% of commercial-stage ADCs.
The transition to ADC drugs could offer between $10 billion and $11 billion in CDMO potential revenue, while the addition of final packaging services, known as fill and finish, could contribute $4 billion to $5 billion more toward the total potential market value.
"We think we are on the cusp of a rich period of clinical data over the coming months,” says Purcell. “These data should support more advances in smart chemotherapy, and at the same are likely to bring more investor attention to the opportunity for smart chemotherapy.”
For deeper analysis and insights about antibody drug conjugate drug therapies, ask your Morgan Stanley representative of Financial Advisor for “Out-Smarting Cancer” (April 11, 2023).