Bridging the gap between academic research and real-world solutions

Target Saturation in BioPharma: Lessons from the Markets

In BioPharma the R&D pipeline often mirrors the dynamics of financial markets.
It is fractal and in certain targets you will see what appears to be crowded positioning, meaning there are many individuals/institutions/companies going after the same target.
In the financial markets this might be when someone would begin to be sceptical and start to reconsider their position, for if something becomes “consensus” that’s usually when we can expect a reversion to the mean, at least temporarily.

This image says more than a 1000 words.
Targets like EGFR, PD-1/PD-L1, GLP-1R, and CD19 each have 180–200+ drug candidates associated with them.
Most also already have approved therapies, suggesting not only validated science but also a rush of “fast-followers” trying to capture market share in well understood areas.

In finance, crowded trades are risky not because they’re wrong, but because a majority of participants are already involved, hence the EV is most likely limited.
If sentiment turns or something better emerges, these positions can unwind painfully.
Similarly, in BioPharma, when too many companies chase the same validated target, it might lead to:

• Low differentiation

• Reduced pricing power

• Higher risk of clinical or commercial failure if the bar is already set high

Consider EGFR or PD-1 inhibitors: blockbuster markets, but highly saturated.
Unless a new therapy offers clear superiority, it's difficult to stand out.
GLP-1R agonists, now booming in metabolic/Obesitas and diabetes, are already seeing pricing pressures even as demand grows.

For large pharma, this "comfort zone" can make sense.
With scale, they can play the margin game.
But for small biotechs, jumping into a crowded field without something truly novel or something with superior efficacy/safety does not seem like the best use of their RD $.

The opposite strategy, pursuing first-in-class or less crowded targets is riskier, but the reward potential is higher.
However, as we’ve seen with TIGIT or CD47, novel targets come with their own pitfalls: unexpected toxicities, clinical failures, or lack of clear efficacy.

Just like the COT report helps traders track market consensus, a simple analysis of target saturation in drug pipelines can act as a proxy for "BioPharma consensus."
High consensus might lead to lower EV (Expected value).

So, what’s the takeaway?
If you’re looking for alpha, don’t go down the same path as everyone else, unless your candidate appears to be BIC, it might be more edge looking elsewhere.
In BioPharma, as in markets, it might be useful to consider adopting a barbell strategy.
Having some FIC/more innovative candidates which might have to revolutionize treatment for certain diseases with more well validated targets.

Hope you enjoyed reading and hope you have a great day.

——————

Author: Kristoffer Danielsson
Founder & CEO
Jarlen Capital
Email: Kristoffer@jarlencapital.com