Table of Contents
- CHAPTER 1 EXECUTIVE SUMMARY
- Scope of the report
- Key findings
- CHAPTER 2 LICENSING TRENDS AND THE CREDIT CRISIS
- Why has Pharma' s R&D been in crisis?
- Until the financial meltdown, licensing was becoming an increasingly
expensive and complex option for Pharma
- The credit crunch has given Pharma a stay of execution from its R&D
crisis
- Cash and time is on Pharma' s side
- Pharma has been given a stay of execution, but still needs to address
its internal R&D crisis
- Licensing deals made by Big Pharma continue to fall
- The majority of Big Pharma are making fewer licensing deals
- Pharma' s competition to restock pipelines has driven up licensing
costs in recent years
- There has been a dramatic decline in $0-50m deals since Q1 2008 due
to the credit crunch
- Competition and high deal prices have traditionally led Pharma to
license earlier-stage drug candidates
- Pharma is now looking to license Phase III bargains from cash-hungry
biotech companies
- Oncology, anti-infective and CNS drugs remain popular in-licensing
targets
- CHAPTER 3 BIOTECH' S FUNDING CRISIS
- Biotech funding options - then... and now
- Biotech funding options - then
- Biotech funding options - now
- Traditional strategies to improve biotech valuations no longer apply
- Financing deals are harder to come by
- The death of IPOs - at least for now
- Bankruptcy - a likely end for numerous struggling biotech
- Selling - M&A, licensing and divesting
- Companies will forgo licensing agreements due to the short window of
opportunity
- M&A - potential buyers
- Biotech acquisition targets
- M&A - announced and completed
- Future M&A targets
- Divesting - a less drastic alternative to a complete takeover
- Reverse mergers have a poor track history
- CHAPTER 4 FINANCIAL SOLUTIONS FOR BIOTECH
- Biotech need to cut costs and raise cash fast
- Putting Biotech on ice - to buy time, Biotech needs to spend less
- Suspend any unessential R&D
- Restructure and retaining only core personnel
- Outsourcing where possible rather than carrying out functions in-house
- Spin-out high cash-burning units
- Merging with other biotechs to strip out redundancies
- Selling - the company, assets, and royalty streams
- Pay cuts for biotech directors
- Funding strategies for Biotech
- Government support - Pharma needs to lobby governments for cash
- US - Biotech lobbying Congress for tax rebates
- EU - UK Biotech lobby' s government for cash
- Novel investor strategies - more risk, but few alternatives
- Grants - only companies with drugs in development for chronic,
debilitative and fatal diseases will be considered
- CHAPTER 5 BIBLIOGRAPHY
- Publications and online articles
- Datamonitor resources
- Databases
- Exchange rates
- List of Tables
- Table 1: Highest value US licensing deals made by the top 20 Pharma
companies, Q1-Q3 2008
- Table 2: Weaker investor confidence in US Biotech is reflected in IPO
and market cap valuations, 2006-08
- Table 3: Ideal target biotech companies - attractive pipelines, a year
or less in cash left, and less than $50m cash on hand, Q4 2008
- Table 4: US public biotech company divestment deals since September 2008
- Table 5: Biotechs that could be potentially used as public shells for
reverse mergers, Q4 2008
- Table 6: EUROTRANS-BIO Biotech funding organizations
- Table 7: Exchange rates, 2007
- List of Figures
- Figure 1: Global ethical sales for the top 50 Pharma companies, 2006-12
- Figure 2: $115 billion worth of branded drugs from the top 50 pharma
companies face patent expiry through 2012
- Figure 3: Number of approvals for New Molecular Entities (NMEs)
declining by an average of 1.5 a year, 2000-07
- Figure 4: External factors affecting product portfolios in the
pharmaceutical industry, 2008
- Figure 5: The line between licensing and M&A is becoming
increasingly blurred
- Figure 6: Schematic of trends affecting Biotech-Pharma licensing deals
- Figure 7: Cash and equivalents and short-term investments for top 20
pharma and biotech companies ($m), Q2 2008
- Figure 8: Number of US licensing deals made by the top 20 Pharma
companies, Q1 2006 - Q3 2008
- Figure 9: Number of US in-licensing deals made by the top 20 Pharma
companies, Q1 2006-Q3 2008
- Figure 10: Number of US licensing deals valued at $0-50m, made by the
top 20 Pharma companies, Q1 2006-Q3 2008
- Figure 11: The rising cost of licensing deals, 2000-05
- Figure 12: Mean deal value by phase of drug (phase linked to furthest
developed drug if deal is for multiple drugs) of deals made by the top 20
Pharma companies, Q1 2006-Q3 2008
- Figure 13: Proportion of US licensing Phase I and III deals made by the
top 20 pharma companies, Q1 2006-Q3 2008
- Figure 14: Proportion of US licensing deals by therapy area made the top
20 pharma companies, Q1 2006-Q3 2008
- Figure 15: More than half of biotech companies analyzed have a year or
less in cash, Q4 2008
- Figure 16: The majority of traditional sources of finance are now closed
to Biotech following the 2008 ' financial meltdown'
- Figure 17: Eight mistakes that hurt your biotech company' s valuation
- Figure 18: Number of US Biotech financing deals, Q1 2006-Q4 2008
- Figure 19: Capital raised from Biotech financing deals has declined
throughout 2008
- Figure 20: Number of US IPOs in 2008 is at an all-time low
- Figure 21: Needs and challenges that drive Pharma-Biotech deals are
complementary
- Figure 22: Pharma will forgo forming partnership agreements,
prioritizing M&A
- Figure 23: Pros and cons of M&As without prior partnership
agreements during the financial crisis
- Figure 24: The most attractive biotech companies are also in need of the
most cash, Q4 2008
- Figure 25: Ideal acquisition targets for Pharma are Biotechs with
attractive pipelines, high cash-burn rates and limited cash on hand
- Figure 26: Publicly owned US biotech company (market cap under $1
billion) acquisitions announced since September 2008
- Figure 27: Publicly owned US biotech company (market cap under $1
billion) acquisitions announced since September 2008
- Figure 28: Ideal target Biotechs - attractive pipelines, a year or less
in cash left, and limited cash on hand
- Figure 29: The top 20 Pharma could increase profits by $202 billion to
2013 simply by cutting costs
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