PharmaDeals Annual Review 2010

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Video title: PharmaDeals Annual Review 2010
Released on: March 04, 2011. © PharmaDeals
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PharmaDeals Annual Review 2010

PharmaDeals Reference: 1433

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PharmaDeals Annual Review 2010
Helen Wright :
Hello the pharmaceutical industry like most others has had to weather the storm of two-years of global economic gloom, biotech companies struggle to raise equity from risk averse venture capitalists and big pharma was forced to restructure as products hit patent cliffs. Not surprisingly all this had a hugely negative effect on deal making, but with the world's advanced economies beginning to emerge from recession into the light was deal making reenergized in 2010? Well a review of the PharmaDeals V4 database shows a 20% increase in the number of deals signed from 2009 to 2010, in fact deal making activity almost returned to the level seen in 2008. This upturn highlights three key trends, declining R&D productivity means pharma companies still regard licensing as a cost effective way to fill their pipelines, stoning growth in traditional markets is also forcing firms to embrace the increasingly significant emerging markets, they are also proving keen to diversify into the generics and biologics sector, so in more detail. Collaborative R&D deals continued the decline of previous years through 2010 falling almost 10% they were often broader in scope than before in concerned multiple targets all therapy areas. The reduction in these deals also reflects a narrowing of the therapeutic focus by some pharmaceutical companies. The average total value excluding royalties of the collaborative R&D deals also fell significantly in 2010. However where programs or technologies offered the prospect of creating new therapeutic classes big pharma was willing to offer large deal values. For example Sanofi-Aventis and Regulus Therapeutics formed the largest micro RNA partnership to date in June 2010 with Regulus receiving $25 million upfront a $10 million equity investment and potential milestone payments about to $665 million. Looking at licensing activity a different picture emerges here deals are in the increase after declining significantly from 2007, though the average total value excluding royalties of licensing deals actually fell in 2010 from the high of 2009. This may be because of big pharma licencees were in a stronger negotiating position, but it could simply be that fewer deals by smaller players in 2009 skewed the data towards cash rich big pharma deals. 2010 saw fewer licensing deals for Phase III products then in any of the proceeding four-years, in contrast the number of Phase II licensing deals increased from 2009 to 2010. This reflects an increase in the number of attractive Phase II licensing opportunities produced by quality biotech companies. In mergers and acquisitions 2010 saw an upturn in activity following a significant fall in transactions in 2009 as the economic crisis took hold, although the average value of M&A transactions in 2010 was down 25% on 2008 and substantially less then in 2009. That 2009 figure is however distorted by the two big pharma mega mergers namely the union of Pfizer , Wyeth for $68 billion and Merck & Co with Schering Plough for $41.1 billion. The M&A landscape in 2010 saw an increase in small biotech acquisitions and moved towards increasingly complex deal structures. By far the most prolific deal makers of 2010 were big pharma companies with Pfizer and Sanofi-Aventis leading the way with Roche, GSK and Novartis following hot on their heels. Following the trend of the last five-years neoplasms remained the top therapy area for deal making in 2010 reflecting the size of the market opportunity in oncology. Infectious and parasitic diseases comprise the second most popular therapy area, although the number of deals in this category has been falling steadily since 2006. An upturn in the level of partnering activity for diseases of the nervous system, endocrine, nutritional and metabolic diseases and for diseases of the circulatory system also saw a rise in these deals in 2010. What's also clear from our review is that as the value of highly genericized small molecule markets falls big pharma is increasingly looking to high value specialty markets and biological therapies. In 2010 more therapeutic deals were signed that involved biologics than small molecule, the number of deals for biological's therapies has steadily increased over the past five-years while small molecule deals have fluctuated in number. As well as a shift in therapy markets there was also an increasing focus on new geographical areas with a number of deals for high growth emerging markets steadily rising last year. These deals are often driven by branded generics a sector that big pharma companies are now being forced to embrace. Overall a PharmaDeals review of 2010 highlights the most active deal making areas as those with the most significant growth potential. It also shows that pharmaceutical companies are still pursuing licensing and M&A transactions as a cost-effective way of filling their development pipelines, but what's also clear is that these cash rich companies are able to exert considerable influence on the structure and valuation of their deals and they are using creatively structured agreements to minimize and share risk in what is still financially uncertain times.
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Helen Wright
Helen Wright has worked as a broadcast television journalist for several years, covering general news, business and politics and currently involved with PTV news of Helen Wright has also worked as ITV News education correspondent and covered disability affairs. She has reported from Europe and the US. She also researched, directed and presented films for a Yorkshire TV regional documentary programme. Helen Wright began her journalistic career in local radio in Bradford. She has a BA Honours Degree in English.
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialization.