Experienced healthcare investors know that the Food & Drug Administration (FDA) often looms large. After all, that is the regulatory body that has the final say in whether or not biotechnology and pharmaceutical companies can bring drugs to market.
Not surprisingly, the FDA’s approval process was set back by the coronavirus pandemic when, in 2020, the priority became evaluating various COVID-19 vaccines. While that effort paid off in terms of several vaccines coming to market, the administration isn’t back to pre-pandemic levels regarding approvals.
Should clinical holds, delays, and other regulatory snafus improve, exchange traded funds, including the IQ Healthy Hearts ETF (HART), stand to benefit?
“The efficient functioning of the FDA is paramount for the timely advancement of important medicines through the clinic and onto the market,” according to Cowen research. “We believe that understanding the FDA regulatory framework from IND to approval is important for both generalist investors with healthcare exposure and biopharma sector specialists. In this report, we hope to provide not only a resource for the cadence of regulatory interactions that occur throughout the drug development process but also tackle key activities that can have important implications for approval success and stock movement.”
HART, which tracks the IQ Candriam Healthy Hearts Index, is pertinent to the FDA improving evaluation and approval efficiency because the ETF focuses on healthcare companies, among others, working on therapies and treatments for cardiovascular disease. Acknowledging that heart disease is one the biggest health issues in the world. Translation: If the FDA speeds up the approval process for related pharmaceuticals and treatments, HART stands to benefit.
Predictably, there are moving parts here. That’s often the case with any government agency, but HART member firms seeking approvals from the FDA have ways of navigating the often burdensome regulatory landscape. HART holdings have an advantage in that they’re seeking approvals for treatments of a major healthcare problem, and the more compelling their efforts are, the odds shorten of catching regulators’ attention.
“Thus, while FDA reviews are never without risk and the Agency can at times be unpredictable, we believe that products with compelling efficacy and safety data packages will continue to see approvals and that any perceived overly negative sentiment into a regulatory process could be capitalized on,” concludes Cowen.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.