Report: Oncology drove record pharma dealmaking in 2015
- Dealmaking in the biopharmaceutical industry hit new highs last year, setting records in venture funding raised for drug development companies as well as in the upfront dollar value of licensing deals for R&D-stage assets, according to a report from the industry association BIO.
Venture equity funding hit $6.8 billion in 2015, with over $2 billion plowed into companies developing cancer drugs.
Heightened interest in oncology was also seen in licensing, as pharma companies struck 57 deals with a value over $10 million last year.
But IPOs for therapeutic companies tumbled to 39 in 2015, down from 60 the year before.
While the fall in biotech stock indices has likely held back the willingness of companies to test public markets, interest in partnering and venture funding seems to have been more resilient (although the report's data did not extend into 2016).
Acquisitions of emerging therapeutic companies, defined by BIO as those in R&D stage or with a drug on the market that has yet to pass $1 billion in sales, hit a record $26.3 billion in upfront, non-contingent dollars. This was spurred by Alexions's $8.5 billion acquisition of Synageva as well as Celgene's $7.2 billion buyout of Receptos.
Ralph Marcello, Deloitte's new biopharma segment leader, thinks this greater interest in partnering with and acquiring emerging companies reflects the willingness of big pharmaceutical companies to look for innovation outside of their own R&D shop.
"I think what we are seeing first and foremost over the last few years is a recognition by some of the mid- and large-sized biopharma companies that innovation exists beyond the walls of their own companies," Marcello said in a conversation with BioPharma Dive at the BIO conference in San Francisco.
"There has been a lot more acceptance and openness over the last few years to partner for innovation in the biopharma space."
Rather than looking at M&A as primarily an opportunity to trim operational costs, pharma increasingly appears to view acquisitions as opportunities to expand or improve in specific therapeutic spaces, Marcello said.
Unsurprisingly, oncology has been the top target for companies looking to partner or add to their pipelines. Licensing deals for oncology assets jumped to decade highs last year, according to the BIO report. Boosted by increased interest in immuno-oncology, upfront payments more than doubled, totaling $3.4 billion in value.
But acquisitions of companies developing cancer drugs dropped to five last year, falling below the five-year average of nine. The report suggests this could be a factor of the "sheer breadth" of opportunity to partner, particularly as many pharma companies turn to combo trials in an effort to boost response rates.
Despite the ill effects of the bear biotech market, Marcello still sees a lot of cash on balance sheets that companies want to deploy. A robust partnering environment might also lessen the need for emerging biotech to tap public markets, as deals with larger companies could keep them afloat through clinical development.
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