Responsible Investing

Antimicrobial resistance: Overcoming challenges

December 2020

2020 is the Investor Year of Action on Antimicrobial Resistance
(AMR) – a collaboration between the Farm Animal Investment Risk & Return Initiative (FAIRR), the Access to Medicine Foundation, the United Nations Principles for Responsible Investment (PRI), and the UK Government to galvanise investor efforts to address AMR.

BMO GAM is participating as an Investor Partner because we believe that AMR is a serious threat to global public health that investors need to take action against.

Recap – What is AMR?

AMR (antimicrobial resistance) is a natural phenomenon in which microorganisms develop resistance to antimicrobial agents. However, it is being accelerated by poor stewardship of antibiotics in healthcare and farming: antimicrobial-resistant microbes can spread between people and animals, and from person to person. As a result, a growing number of common bacterial infections – including urinary tract infections, gonorrhoea, tuberculosis and pneumonia – are becoming more difficult to treat.

If antibiotics continue to lose their effectiveness, caesarean
sections and chemotherapy, as well as other commonplace medical interventions, could become extremely high risk, severely undermining modern medicine.

AMR and COVID-19

AMR has been overshadowed by COVID-19. But the uncomfortable truth is that AMR is also an ongoing pandemic, albeit a slow-motion one.

In our last Viewpoint about AMR, we explained why our engagement on this global problem needs to be cross-sectoral, encompassing food producers and purchasers, as well as pharmaceutical companies pursuing antimicrobial research and development (R&D). This approach is underpinned by the World Health Organisation’s “One Health” philosophy: stakeholders in human, animal, food and environmental health need to collectively take action.

We believe that global action on AMR is needed now, not least because – to use Dame Sally’s analogy – COVID-19 is heating the lobster’s water. As we highlighted in our Viewpoint about COVID-19 and the pharmaceutical industry, the pandemic is driving inappropriate antibiotic use. According to a study of COVID-19 cases, mostly in Asia, 70% of patients had received antimicrobial treatment despite 10% on average having bacterial or fungal coinfections.

Our engagement on AMR

AMR can seem like a formidable opponent, but there are chinks in its armour. Via our engagement and research, we have identified a wide variety of initiatives – some outlined in the case studies in this Viewpoint – aimed at overcoming the myriad underlying challenges.

In 2019 and 2020 (to date) we have engaged 47 companies on AMR, leveraging the research of FAIRR and the Access to Medicine Foundation – organisations which are evaluating how food companies and pharmaceutical companies are addressing AMR, respectively.

  • 11 Pharmaceutical companies
  • 11 Food producers
  • 8 Animal health companies
  • 17 Restaurant & Supermarket chains

Why is AMR a highly material issue for pharmaceutical companies?

Modern medicine – and by extension the pharmaceutical sector – is heavily reliant on antibiotics.

In addition to treating common bacterial infections, which we are all familiar with, antibiotics have a wide range of important uses, including in:

  • Caesarean sections
  • Chemotherapy
  • Dialysis for chronic kidney disease
  • Hip replacements
  • Organ transplants


If antibiotics continue to lose their effectiveness, then commonplace medical interventions such as these could become extremely high risk, undoing decades of progress in public health.

Moreover, antibiotic-resistant infections are difficult to treat or untreatable. They are already responsible for c. 700,000 deaths per year globally, and are increasing healthcare costs: hospital costs of treatment for a resistant infection are estimated to be US $10,000-40,000 higher than for an infection caused by non-resistant bacteria. AMR therefore threatens the entire healthcare ecosystem, including hospital operators and health insurers.

Where are the new antibiotics?

As pharmaceutical companies have increased investment in cancer treatments, which often rely on antibiotics to prevent and treat infections in patients, it would be reasonable to assume that investment in antibiotics has also increased. Unfortunately, the opposite is true.

Since 1990, 78% of major pharmaceutical companies have scaled back or cut antibiotic research due to development challenges.

Via our engagement and research, we have sought to understand pharmaceutical companies’ perspective on the steep decline in antibiotic research. The fundamental challenges are:

  • Scientific: It is extremely difficult to find substances which kill bacteria or prevent them from spreading and are non-toxic to humans. Fewer than 1 in 70 antibiotics reach patients.
  • Economic: Antibiotic R&D is expensive and (for various reasons) antibiotics do not command high prices. To compound matters, stewardship measures limit their use in order to preserve their efficacy.

Rescuing antibiotic R&D

In order to fix the broken market and rescue the antibiotic pipeline, both push and pull incentives are needed.

Push incentives for early R&D are being provided by organisations like CARB-X, a global non-profit partnership dedicated to accelerating antibacterial research, and BARDA, The Biomedical Advanced Research and Development Authority – a US Department of Health and Human Services office. It is a funding partner of CARB-X.

Pull incentives are still a “work in progress”, and include:

  • Market entry rewards – large payments (c. $1 billion) could be given to the successful developer of a new antibiotic
  • Changing how pharmaceutical companies are paid for access to antibiotics

R&D engagement next steps

Since we began our engagement programme on AMR in 2019, there have been a number of developments which should – over the medium-term – help to reinvigorate antibiotic R&D. We will monitor the impact of the different push and pull incentives. We will also continue to encourage the major pharmaceutical companies still involved in antibiotic R&D to not abandon investment in this area, and to be transparent on collaboration to overcome the various barriers to progress.


This Viewpoint scratches the surface of how food and pharmaceutical companies are overcoming the multi-faceted challenges posed by AMR. Our main conclusion is that progress is accelerating, but we need all companies for which AMR is a material business risk to work towards implementing best practices.

We recognise that best practices will evolve over time as scientific knowledge of AMR grows and data collection efforts ramp up. In the meantime, transparency about measures to tackle AMR and – for food companies – antibiotic usage is absolutely key. Both the Access to Medicine Foundation and FAIRR play an important role in this regard: their in-depth research into antibiotics is only possible if companies disclose relevant information.

As investors, we need to collectively use this information to enhance our engagement with food and pharmaceutical companies. At BMO GAM, we will continue to commend leading practices and encourage progress in areas where there is scope for improvement.

If governments, companies, investors and civil society succeed in continuing to make incremental progress, we can keep antibiotics working, saving countless human and animal lives.


Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

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