Clarivate PlcĀ (NYSE:CLVT), a global leader in connecting people and organizations to intelligence they can trust to transform their world, today released its new report,Ā Biopharma Dealmaking in 2023. Ā This year’s report examines how pharma companies are replenishing their pipelines as many face a steep patent cliff, with particular attention to such critical emerging modalities and technologies as antibody drug conjugates, artificial intelligence (AI) and machine learning, cell therapy, bispecific antibodies and RNA therapeutics.
In late 2021, investors began shifting away from biotech. In such an instance, historically, companies have turned to partnering as an alternative source of support, with the potential for an upsurge in both mergers and acquisitions (M&A) activity and biopartnering deals. However, this did not happen. Instead, during 2022, the global biotech sector saw a drop off in its ability to raise finance, with investor enthusiasm waning.
With interest rates still high across the globe and the world economy facing challenges from geopolitical tensions, biotech executives have been advised to manage their capital even more tightly, make the finds they have last longer, focus on lead programs, and find alternative sources of finance.
Leveraging data and insights fromĀ BioWorldā¢Ā andĀ Cortellis Deals Intelligenceā¢Ā paired with industry sources, the report finds:
- According to BioWorld, theĀ $60.8 billionĀ collected by biopharma companies throughout 2022 was down by 48.6% from 2021 and 54.8% from 2020.1Ā Global initial public offerings were thin on the ground, with only 35 completed generatingĀ $4.85 billion. Biotech companies raisedĀ $16.9 billionĀ throughĀ 158 follow-onĀ offerings, while there wereĀ 381 public and otherĀ financings that raisedĀ $16.86 billionĀ andĀ 493 private VC roundsĀ that raisedĀ $22.2 billion.
- M&A activity was at its lowest level since 2013, and while the reported bio partnering deal values for 2022 were the second highest recorded, the number of transactions was the lowest since 2018. With the pharma sector facing challenges when addressing R&D productivity, it continues to rely heavily upon biotech companies for innovative ideas.
- A geographic analysis2Ā of dealmaking activity confirms that biotech innovation is greatly influenced by American companies, but that trend is declining. The influence ofĀ Asia-Pacific-based industry, most notably entities based in Mainland China, is rising. In 2022, 43% of bio partnering transactions involved at least oneĀ United States-based company, while 15% of all transactions involved onlyĀ United States-based biotech companies. Moreover, 29% of deals involved at least one European partner, while one in four transactions had at least one participant from theĀ Asia-PacificĀ region.
- Big Pharma was the biggest driver of biopartnering activity, having a role in almost half the deals for which financial terms were shared. The most active large pharma company was Merck & Co. (also known as Merck Sharp & Dohme or MSD), participating in 15 such partnering deals in 2022.3
- Among pharma there is significant debate about the potential impact artificial intelligence and machine learning (AI/ML) may have in improving the economics of research and development. One of the most active pharma companies in 2022 partnering with AI/ML companies was Sanofi, which has established marquee relationships with AI/ML companies – inking three of the four most valued deals in 2022.4
- Cell therapy platforms maintain their allure for pharma, with companies such as Roche securing a research collaboration with Poseida Therapeutics to develop off-the-shelf, or allogeneic, CAR-T cell therapies to address medical needs for patients with certain blood cancers.5
- With the mRNA COVID-19 vaccines demonstrating proof of concept for the technology, pharma is keen to access next generation RNA platforms that can overcome some of mRNA’s limitations. One of the most promising platforms is the use of self-amplifying RNAs derived from the genomes of positive-strand RNA viruses. In 2022, the most valuable RNA platform partnership saw CSL-Sequirus pay ArcturusĀ $200 millionĀ up front and offer more thanĀ $4 billionĀ in potential development and commercial milestones for influenza, pandemic preparedness and three additional respiratory infectious disease vaccines.6
Mike Ward, Global Head of Life Sciences and Healthcare Thought Leadership, Clarivate, said:Ā “The rapid devaluation of biotechs has brought about a role reversal in which biotechs, recently flush with capital, are looking at some lean years while pharmas hold all the leverage in the relationship. However, the fundamental dynamic underpinning these companies remains: they need each other in order to keep pipelines producing innovative medicines. The in-depth analysis of how pharma companies are replenishing their pipelines featured in the Biopharma Deals Report provides our customers with the answers they need to shape the future of healthcare.”
Read the report, Biopharma Dealmaking in 2023,Ā here.
Clarivate draws on deep industry expertise and industry standard data to help life science partners identify market opportunities, anticipate barriers in order to deliver innovative treatments to patients and create a healthier tomorrow. To learn more, please visitĀ www.clarivate.com.