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INDUSTRY INSIGHT
M&A IN PHARMACEUTICALS AND BIOTECH -
PREDICTIONS FOR 2017
www.epmscientific.com | [email protected] Industry Insight | Exabling Exceptional Careers
The recent political and media focus on the pharmaceutical and biotech sector has led to a turbulent few years for the industry. One of the main issues of contention is pricing. For example, Turing’s acquisition of anti-parasite drug Daraprim and price hike of more than 5,000% received media notoriety and resulted in an investigation by the Federal Trade Commission.
What else is affecting this sector?
Mergers and acquisitions in the sector are growing in value and becoming increasingly significant, with the yearly average M&A value around $200 billion between 2014 and 2016.
Recent deals, such as Japanese pharmaceutical company Takeda acquiring ARIAD Pharmaceuticals for $5.6 billion and household name Johnson & Johnson acquisition of Actelion, have both received significant media attention due to their high value. These follow on from the attempted merger between Pfizer and Allergan last year, worth a notable $160 billion . Pfizer planned to relocate its tax domicile to Ireland through the purchase and led to the Obama administration introducing strong rules to deter the process.
As we move on from this year’s J.P. Morgan Healthcare Conference, new product approvals and progress updates are giving the sector a healthy outlook for M&As in the coming months.
What factors are propelling this growth?
52% of respondents to a KPMG survey of M&A executives identified ‘fortifying competitive position in the market’ as the reason for the growth of M&As from a seller perspective. Other factors catalysing sales include: companies hoping to expand beyond their current markets; satisfying shareholder pressure for growth; and enlarging an organization’s global footprint. From a buyer perspective, the key accelerants are: entering into new lines of business; expanding customer base; increasing geographical reach; and enhancing intellectual property.
M&A IN PHARMACEUTICALS AND BIOTECH
www.epmscientific.com | [email protected] Industry Insight | Exabling Exceptional Careers
What types of companies present the most attractive proposition?
Biotech is a constantly evolving sector. Biotech drug sales stood at $289 billion in 2014. By 2019, they are projected to be worth $445 billion.
Within this sector, products relating to oncology, high blood pressure, hypertension and vaccines are all thriving. CAR T-Cell Therapies in particular are an attractive proposition for M&A deals. And with $107 billion of oncology medication sold each year, this is a significant industry in its own right.
Other desirable acquisitions include Alzheimer’s and Parkinson’s medication, with treatments in this sector geared towards increasing the quality of end of life care.
Which phase is best for drug acquisition?
For biotech companies, the best stage for acquisition is as early as possible, whereas pharmaceutical companies tend to favor later in the cycle. While biotechs are at the cutting-edge of new biologic discoveries, pharmas are more risk averse, preferring to mass-market proven drugs that are in the later stages of development. These two unique tactics are related to the differences between the two industries.
On one hand, pharmaceutical companies only use
chemical components and therefore represent a lower risk product. On the other, biotech uses biological products that are more volatile during development but have the potential to create more innovative drugs down the line.
What does this mean for recruitment?
When it comes to recruitment in this sector, most candidates typically spend two to three years in a top-tier consultancy or strategy house on completion of their PhD and then step out into industry at a higher salary range or in a preferable leadership position. And, as we’re currently seeing here at EPM Scientific, a better work-life balance has presented itself as the key factor in attracting candidates across from consultancies into industry roles.
When it comes to building a commercial team, EPM has a specific network across marketing, market access, sales and pricing and are able to work as a total solution for companies looking to expand into Europe. Sourcing specialist talent quickly, we provide a holistic solution in a minute area. EPM has an unrivalled selection of both active and passive candidates in this space as well as direct access to industry influencers that enable us to accurately anticipate recruitment needs.
Sources
https://www.zacks.com/stock/news/246285/4-drug-stocks-poised-to-surprise-this-earnings-season
http://www.fiercepharma.com/pharma/deal-hungry-pfizer-will-likely-overpay-for-m-a-analyst-predicts
http://www.imap.com/Reports/Global%20Pharma%20Biotech%20MA%20Report%202016.pdf
https://info.kpmg.us/ma-survey/index.html
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/gx-lshc-2016-life-sciences-outlook.pdf
https://www.washingtonpost.com/news/wonk/wp/2016/06/02/were-spending-107-billion-on-cancer-drugs-but-is-it-worth-it/?utm_term=.2bd1e9feebef
This guide has been brought to you by EPM Scientific, part of the Phaidon International.
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Contact EPM Scientific for more information about career opportunities in this sector, or if you are looking to expand your team.
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INDUSTRY INSIGHT
