Riding the Bull Market: What’s in Store for Biotech Dealmakers in 2015?

Riding the Bull Market: What’s in Store for Biotech Dealmakers in 2015?

In many ways, 2014 was a record year for biopharma dealmaking, with $355 billion in total transactions, including $53 billion in partnering deals, $16.5 billion in venture investments and 133 IPOs. According to the 2015 Campbell Alliance Dealmakers’ Intentions Study, 2015 is shaping up to be the year of historic M&A in the biopharmaceutical sector, driven in part by greater access to capital. The partnering numbers at BIO 2015 further indicate that the appetite for collaboration and dealmaking remains strong, as the Convention set a new record by hosting over 29,000 partnering meetings.

A panel at the conference discussed the numbers from 2014, predictions for the year ahead, and the impact these market forces will have on pharmaceutical and biotech companies. Dave Thomas, Senior Director of Industry Research and Analysis at BIO, opened the discussion with an optimistic outlook on the industry backed by data showing continued growth since down years in the wake of the recession. He then handed things off to Neel Patel, Vice President, Corporate Development at Campbell Alliance, who provided an overview of the report moderated a discussion that included:

  • David Donabedian, Vice President, Head of Ventures & Early Stage Collaborations, AbbVie
  • Asthika Goonewardene, Senior Biotech Analyst, Bloomberg Intelligence
  • Patrick Verheyen, Global Head, Janssen Business Development
  • Timothy Walbert, Chairman, President and CEO, Horizon Pharma

The panelists all believe that the optimism for the biopharma bull market is warranted. Goonewardene pointed to the low cost of capital as a key indicator of the upward trend, and Verheyen noted that there’s a high level of innovation happening across the industry at both large and small biotechs. This innovation is leading to higher levels of competition when it comes to M&A and licensing deals, which has made it a seller’s market. As a result, the industry as a whole is seeing higher valuations for early stage and small companies and different deal models being struck.

Walbert sees more large-cap biopharma companies and venture capital firms assessing the long-term value of deals and balancing that out with the initial investment or cost. ”Sometimes we get too caught up in the valuation today” he said. “It’s not always what it costs, it’s what you can do with it that makes a difference.” Small and medium size players also have access to the capital necessary to make these judgments and push deals through. A better understanding of biology and disease prevalence is helping the market’s buyers and sellers, according to Donabedian. “It’s an exciting time, and without that capital, we might still be far behind in developing these therapies.”

The panel also touched on the question of whether this market is approaching bubble proportions, and while all the participants acknowledged the reality of failure when it comes to challenging drug development and resulting market deals, they noted that they’re all seeing increased collaboration between academia, venture capital firms, and pharma and biotech. New types partnerships are enabling both discovery and growth.

“It’s a combination of very smart people and availability of capital,” said Verheyen. “And it’s fundamental that we get a wave of meaningful new products to patients.”

 

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