Biotechnology Sector

Profitable companies and non-Profitable Biotech companies (rising stars) have developed innovative drugs for treatment of chronic and non chronic diseases. In the next five years the distinction between mature biotech companies and large global pharma is likely to disappear as investment in R&D and acquisition start delivering and Market Cap match the large global pharma. Dividend and consolidation could be the future drivers and continue to attract long term investors. Optimism prevails around the future of this sector as a whole which was reflected in the unprecedented rally in shares in 2012.

This trend continued in the next five years driven by launch of Innovative drugs catering to unmet needs in Alzheimer’s, HCV, osteoporosis, RA, Psoriasis, MS, Dyslipidemia, Cystic fibrosis, Cancer and orphan diseases. Drug approvals and label expansion of existing portfolio of launched drugs and data from late stage pipeline drugs should maintain the growth momentum and investors interest.

The early part of the previous decade (2010-20) was spent recovering from the big acquisitions made by this sector but followed by the exercising of some restrain for similar large acquisitions as investors wanted to see the returns reflected in the top-line and EPS. However in- licensing of early or mid stage compounds or small acquisitions continued since the Rising Stars kept throwing the bait by taking risks and innovate using novel technology platforms or validating novel targets for treating diseases.

Patent expiry impact was also modest as majority had “not so easy to copy” biologics and other drugs in their portfolio. They, however were not complacent and were not leaving any stones unturned to meet the challenges as well as exploring emerging market opportunities with local partners. Favorable regulatory environment finally saw biosimilar mAbs entry in regulated markets  The optimism of biosimilar players is reflected in the maturing pipeline. Para IV Filing from other generic players continues to pour leaving room for surprises and volatility.

Moving forward the sector should see a strategic rise of the digital mindset and further adoption of transformative and augumentative technologies. While mergers & acquisitions can still expect a sharper focus despite being more traditional, external innovation should result in a meaningful shift in culture through innovative and creative partnerships with both new entrants and less traditional companies.

There will be an increasing demand for even more transparency and disclosure and a need for real relationship-driven partnerships will encroach across all sector stakeholders including regulators, patients, advocacy groups and also to outsourcing players critical to the supply chain. Data will be a dominating force behind new revenue models and crucial to understanding and delivering an exceptional patient experience. Pricing will continue to exert much pressure, increasing access to drugs, growth of gene and cell therapies, and uncertain trade policies will further change the dynamics of the market.

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