Covid-19 is the sole topic in the news today – there is simply no room for anything else. And while that’s hardly unreasonable, it is a pity from a medical point of view. The panic has obscured a threat that could prove far more deadly in the long term: so-called “superbugs”, which are becoming resistant to the antibiotics used to fight them. The problem isn’t confined to bacteria. Viruses and fungi are also becoming impervious to treatment; hence the talk of anti-microbial resistance (AMR).
When Alexander Fleming discovered antibiotics in 1928 he predicted that their use would “change the whole of medicine”. He was right. Before antibiotics, a simple cut could cause blood poisoning and kill you, even if you were young and hardy. Childbirth was an extremely perilous procedure as it made women vulnerable to an array of opportunistic infections. And sexually transmitted diseases such as syphilis would disfigure and kill you.
Before antibiotics the remedies were hardly more pleasant than the diseases (or they simply didn’t work). For syphilis, mercury compounds were routinely prescribed until the early 20th century. An infected cut could often lead to amputation. Cholera, typhoid, pneumonia all had an unpleasantly high instance of mortality. Tuberculosis? Hope for the best.
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Victims of their own success
Antibiotics changed all that. Suddenly, we had an answer to these deadly ailments. But the wonder drugs have become the victims of their own success. They were so good at fighting infection that they began to be used for pretty much anything. Sore throat? Antibiotics. Chest infection? Antibiotics. Earache? Antibiotics. Many patients, on feeling better, stopped taking them before they’d finished the prescribed course. But by stopping early, they ensured that the pills didn’t kill all the bacteria. The survivors have evolved to develop an immunity. And that immunity is spreading. Now, we are facing superbugs that our best weapons just can’t touch.
Agricultural practice has been a key part of the problem. As livestock farming has increased, so has the use of antibiotics. In many countries the use of antibiotics in livestock exceeds that in humans, reports the NHS. While they are essential to treat infections, many are used in healthy animals to prevent disease and to promote growth. This problem is likely to worsen as emerging economies turn to more intensive farming methods to satisfy a growing demand for meat. Using antibiotics in this way reinforces our overexposure to them and their tendency to develop resistance. Drug-resistant strains can be passed on from animals when we eat meat.
A frightening future
It’s difficult to overstate just how devastating the consequences of growing AMR could be. More than 2.8 million antibiotic-resistant infections occur in the US each year, says the US Centres for Disease Control and Prevention (CDC). More than 35,000 people die as a result. Globally, according to a review on anti-microbial resistance carried out in 2016 by the UK government, 700,000 people die as a result of drug resistance. Without action, says the UN’s Interagency Coordinating Group on Antimicrobial Resistance, AMR could kill ten million people every year by 2050. Not quite Spanish flu numbers (50 million died then), but more than enough to make you take notice.
And it’s not just a medical emergency. It’s an economic one too. Anti-microbial resistance could knock between 1.1% and 3.8% off annual global GDP, says the World Bank, with low-income countries hit the hardest. Drug-resistant bacteria “have the potential to cause economic damage similar to – and likely worse than – that inflicted by the 2008 financial crisis”. Tackling drug-resistant infections is now “one of the highest-yield investments countries can make”.
A belated joint effort...
Combatting AMR will need a similar approach to tackling coronavirus. It can’t be done by individual countries in isolation; it needs a global effort, says the World Bank. It suggests that countries concentrate on reducing the use of antibiotics in agriculture and providing clean water and effective sanitation. “Delivering universal access to water, sanitation and hygiene in healthcare facilities offers a powerful option for low-cost, high-yield action against AMR.”
Companies are being encouraged to reduce overselling of antibiotics by, for example, decoupling antibiotic sales from staff bonuses. Health practitioners are being urged to reduce the number of antibiotic prescriptions. Since 2014, the UK has cut antibiotic use by more than 7%. And sales of antibiotics for use in food-producing animals have fallen by 40%, says the Department of Health and Social Care.
Yet the number of drug-resistant infections keeps rising. There was a 35% jump between 2013 and 2017. Change “is not happening at the scale needed” to temper the threat significantly, says the Access to Medicine Foundation, an independent non-profit organisation funded by the UK and Dutch governments and the Bill & Melinda Gates Foundation.
... has barely begun
There is a long way to go. Hardly any new antibiotics have been developed for 30 years. Those that have emerged have tended to be variations on existing types. It’s a time-consuming, expensive exercise and the rewards on offer, for now at least, are simply not big enough compared with other sub-sectors of medicine. Just four companies account for over 50% of global antibiotic production: GlaxoSmithKline (GSK), Novartis, Teva and Mylan. Unfortunately, Novartis quit research and development in 2018 and it now just produces generics through its Sandoz arm. AstraZeneca sold its antibiotics business to Pfizer, while Bristol-Myers Squibb and Eli Lilly have given up developing them too. Among the majors, GSK, Pfizer, and Johnson & Johnson remain to carry out research. The field is increasingly being left to small companies. But it is an extremely risky business.
Drug development can take ten to 15 years and cost up to $1bn. Then, when your drug is brought to market, another problem arises. Medical practitioners have had it drummed into them – for good reason – not to prescribe antibiotics. And if they do, they should use older medicines first in case organisms quickly become resistant to new strains, rendering them useless.
The situation is grim. Antibiotic start-ups are going “belly up”, says Andrew Jacobs in The New York Times. “Pharmaceutical behemoths... have abandoned the sector” and many of the companies that do remain are “teetering toward insolvency.” Bankruptcies among companies carrying out research are commonplace.
It’s crunch time
“We have reached a tipping point,” says the Access to Medicine Foundation. “The low profitability of antibiotics is leaving the world precariously reliant on just a handful of pharmaceutical companies to develop and manufacture them.” So the British government said last year that it will begin trialling a new way of paying for antibiotics.
“The way drugs companies are currently paid depends on the volumes they sell,” says the Department of Health. This gives companies “an incentive to sell as many antibiotics as possible” even as the government is urging health practitioners to reduce antibiotic use. “Low returns on investment in development means industry does not innovate enough.” So the idea now is to move away from an emphasis on volume and instead compensate firms producing new antibiotics with regular payments based on the drugs’ value to the healthcare system. The hope is that this “subscription model” will give firms an incentive to invest in drugs that will treat high-priority resistant infections. The model will be trialled by NHS England and the National Institute for Health and Care Excellence. But the UK cannot act alone: “This project… will only address global market failure if other countries do the same”, said former health minister Nicola Blackwood.
Glimmers of hope
There are some rays of light, however. Earlier this year, the Massachusetts Institute of Technology said it has used artificial intelligence to discover a powerful new antibiotic that “kills some of the most dangerous drug-resistant bacteria in the world”, says The Guardian. Researchers developed a computer model that can identify chemical features that give molecules the ability to kill bacteria.
It analysed around 6,000 compounds and picked out one molecule “predicted to have strong antibacterial activity” that had “a chemical structure different from any existing antibiotics”. It worked against all but one strain of bacteria the researchers tested it against. They then used the model to screen 100 million other molecules and came up with a further 23 possibilities. Roy Kishony, a professor of biology and computer science at the Israel Institute of Technology, described it as “a paradigm shift in antibiotic discovery and indeed in drug discovery more generally”.
Another possibility is the use of bacteriophages. These are viruses that attack bacteria, but cause no harm to humans. And because each phage is only effective against a particular genus of bacteria, they do not cause any damage to the body’s normal beneficial bacterial flora. Several Western firms are actively developing phages, although none are listed.
Is there anything to buy?
That brings us to potential plays on the theme. Antibiotics are hard to invest in; we have seen that profits are hard to come by and research and development is expensive. Pure plays are small and very risky. Starting with the safer, big names working in the field, the giants doing the most to tackle AMR are GSK (LSE: GSK), Pfizer (NYSE: PFE), and Johnson & Johnson (NYSE: JNJ). Consider also the US-Israeli group Teva Pharmaceutical Industries (NYSE: TEVA) and Germany’s Fresenius Kabi, part of the larger healthcare group Fresenius SE (Frankfurt: FRE). Another to research is Entasis Therapeutics (Nasdaq: ETTX).
A smaller option is Germany’s Evotec (Frankfurt: EVT). It operates in fields beyond antibiotics, but is currently concentrating on fighting resistance in a type of bacteria known as gram-negative, in co-operation with Dutch non-profit Lygature. Evotec reported a “strong performance” in the first quarter of 2020, with no material impact from the Covid-19 pandemic, and is expecting full year Ebitda of between €100m and €120m (down from €123.1m in 2019.)
A pure-play worth exploring is Summit Therapeutics (Nasdaq: SMMT), which develops so-called “new-mechanism antibiotics” for bacteria that have been listed as urgent or serious threats by the CDC and the World Health Organisation. It is currently developing drugs to combat, among other things, C. difficile infection and gonorrhoea. It made a profit in 2018, but its most recent results, for the six months to the end of July 2019, have seen it post a loss of £5.2m. It is sitting on cash of around £20m.
Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.
Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.
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