5 trends impacting biotechs
The biotechnology sector has long been a place that big pharma turns to for innovation. But in recent years, the sector has stepped up its game and is launching small companies that offer big rewards. These changes are taking the industry into a golden age driven by exciting science and strong leadership.
The need for these companies has also reached a fever pitch as big pharma struggles to fill its pipeline through internal science alone and the pricing environment has changed the drug development game. Here's a look at the five trends driving emerging biotechs right now:
1. Really cool science
Just as 2014 and 2015 were dominated by the emergence of biotechs focused on CAR-T immunotherapies, 2016 has a new class of biotechs focused on CRISPR-Cas9 gene editing that has investors and scientists excited about the prospects. While there are no U.S. biotechs testing this technology in the clinic just yet, China's Sichuan University began the first human clinical trial of CRISPR in November.
2. Women at the helm
Even though the U.S. will not have its first woman president in 2017, women are starting to make up more of the biotech boardroom. GlaxoSmithKline will be the first big pharma to have a woman take the top job when Emma Walmsley takes over in 2017, but smaller biotechs have been leading the way for female leadership with leaders like Katrine Bosley at Editas Medicine and Helen Torley at Halozyme.
3. New catalysts for M&A
Experts admit that all of the ingredients are there for a massive surge to occur in M&A over the coming year, including innovative science, a need to fill the big pharma pipeline, the likelihood of tax breaks under the new administration and a surplus of cash. There hasn't been much deal activity over the last year, but expect big pharma to start tapping biotech in a big way now that some uncertainties have been removed.
4. Niche patient populations
Even as biotech stocks climbed at the prospect of avoiding potential pricing regulations under a Donlad Trump administration, the reality is that pricing issues are here to stay for the biopharma industry. Pricing constraints make drugs for niche patient populations all the more valuable — whether that be for rare disease drugs or targeted immunotherapies that use biomarkers, companies that can develop drugs for more-defined patient populations will demand a higher premium.
5. Venture capital is still flowing
Despite a downturn in both M&A and IPO activity during 2016, venture funding for the biotech sector remained at a high — with the industry garnering the second highest amount of capital behind only the software industry in the third quarter, according to consulting firm PriceWaterhouseCoopers.
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