SAN DIEGO, June 21, 2016
/PRNewswire/ -- The ninth annual Dealmakers'
Intentions Study from inVentiv Health Consulting, an industry-leading consulting firm specializing in the biopharmaceutical industry, concludes that dealmaking will be robust in 2017, but is unlikely to reach the peak achieved in 2015.
study, which was released during a Super Session at the BIO International Convention, provides a review of biopharmaceutical dealmakers' intentions for the next twelve months. Results indicate that the year ahead will be a seller's market, as buyers narrow their therapeutic focus and fiercely compete for entry and leadership in hot therapeutic areas or gain a technological advantage.
Download the full Dealmakers' Intentions 2017 survey results.
"While dealmaking volume may continue to regress to the five-year average, decision makers are continuing to think creatively about new partnership opportunities," said Neel Patel, Managing Director, inVentiv Health Consulting. "True innovators can expect to benefit from the emergence of new buyers and more financing options from the capital markets, permitting them to hold on to assets through commercialization in some disease areas. However, success with this strategy requires a clear understanding of the long-term potential of their assets in a rapidly evolving buyer's market and payer landscape."
Key findings include:
Innovators Can Retain Rights Longer, Thanks to New Buyers and Financing Options
- The trend away from large company dominance in total deal volume is continuing. Financing to small-cap and private biopharma companies saw significant continued growth in 2015 and remained steady through 2016 at $20 billion. Financing in this range – far above the $6-8 billion range that we saw from 2009 to 2012 – appears to be the new normal.
- Driving this trend is the emergence of new buyers and more financing options, from venture capital and other vehicles that are available to emerging companies and innovators.
Internal Factors Dominate Dealmaking, Some Unpredictable External Forces in Play
- The political environment and pricing pressures are expected to have less impact on dealmaking than anticipated. In fact, the major factors affecting dealmaking are internal, the biggest one being buyers' ability to finance acquisitions, followed by the ability of buyers to access debt.
- However, the Trump administration's stated intention to incentivize US companies to repatriate their overseas cash could spark a new wave of life science dealmaking.
Buyer's Becoming More Risk Averse, Searching for More Precise Portfolio Additions
- Compared to 2016, the survey shows a greater mismatch between the assets buyers want to buy and those sellers want to sell. This suggests that buyers are becoming more risk averse and are waiting for later stage products with more data.
- However, pre-clinical assets are still generating higher overall interest relative to assets in phase I, II or II. These assets can be acquired much less expensively and are attractive as buyers narrow their therapeutic areas of focus and engage in stiff competition to break into hot therapeutic areas or gain technological advantage.
Imbalances in Supply and Demand Shape Seller's and Buyer's Markets
- Seller's market exists in all areas of hepatic disease (including non-alcoholic steatohepatitis or NASH), women's health and CNS-neurology assets.
- Innovation continues to drive demand in immuno-oncology and genetics. Hot areas and technologies of interest for licensing include CAR-T therapy, CRISPR-Cas9, cancer vaccines, biosimilars and antibody drug conjugates.
- A buyer's market – most notably, preclinical assets – exists in cardiovascular, oncology, CNS-psychiatry, inflammation and autoimmune disease. The volume of development activity in oncology has kept this therapeutic area in a buyer's market mode for a second year in a row.
Acceleration of Dealmaking Anticipated in 2019
- The discount rate gap between in-licensers and out-licensers is widening in 2017 (4% spread vs 2% in 2016), potentially indicating an acceleration in dealmaking activity over time. A similar trend occurred in 2013 and catalyzed the unprecedented dealmaking activity observed in 2015.
- Comparable growth in dealmaking activity can be anticipated in 2019, given the high discount rate gap. However, the activity is unlikely to reach the heights attained in 2015, as the discount rate spread is not as wide.
Deal Failures Driven by Factors Under Dealmakers' Control
- The rate of discussions leading to a Confidential Disclosure Agreements (CDA) is expected to be much lower than in years past (27% in 2017 vs 65% in 2016), leading us to believe that companies are being more selective with whom they engage to begin the process.
- Buyers and sellers report similar pitfalls in the dealmaking environment. More than 75% of respondents zeroed in on two main reasons for deal failure: differing opinions about an asset's commercial potential and unreasonable term expectations.
Connect with inVentiv Health Consulting
- Submit a request to have an inVentiv Health Consulting team member present survey results and implications for your business.
- Subscribe to our podcast for additional analysis of the survey results.
- Follow us on LinkedIn to read future blogs and insights on factors impacting deal-making.
About inVentiv Health Consulting inVentiv Health Consulting is an industry-leading consulting firm specializing in the biopharmaceutical industry and is part of inVentiv Health, a global professional services organization designed to help the biopharmaceutical industry accelerate the delivery of much-needed therapies to market. We provide a comprehensive range of services across key areas including commercial strategy and planning, medical affairs, risk and program management and pricing and market access. Recognized by Forbes magazine as one of America's Best Management Consulting Firms for two years running, our industry focus and depth of functional expertise, combined with strong scientific and market knowledge, uniquely position inVentiv Health Consulting to tackle highly complex business and market challenges to develop actionable client strategies. For more information, please visit inVentivHealth.com/Consulting.
Contact:Danielle DeForgeinVentiv Health, Inc.+1 202 210 email@example.com
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SOURCE inVentiv Health