According to the Dealmakers’ Intentions Study from inVentiv Health Consulting, it’s a seller’s market – and while headlines focus on the political environment and pricing pressures, these factors are expected to have less influence on biopharmaceutical dealmaking than anticipated, said Neel Patel, managing director, inVentiv Health Consulting.
Conversely, the major factors affecting dealmaking are internal, the chief of which is a buyers’ ability to finance acquisitions, followed by the ability to access debt, he told Outsourcing-Pharma.com.
“However, the Trump administration’s stated intention to incentivize US companies to repatriate their overseas cash could spark a new wave of life science dealmaking,” he added.
Why do deals fail?
More than 75% of survey respondents cited differing opinions about an asset’s commercial potential and unreasonable term expectations as the two main reasons for deal failure.
According to the report, financing to small-cap and private biopharma companies grew significantly in 2015 through 2016 where it topped $20bn, more than double the $6 to 8bn range seen from 2009 to 2012.
As Patel explained, these additional financing options – and new buyers – could enable innovators to move assets in some disease areas through commercialization where they may not have been able to previously.
“However, success with this strategy requires a clear understanding of the long-term potential of their assets in a rapidly evolving buyer’s market and payer landscape,” he said.
Additionally, Patel explained that clients are thinking about access and pricing much earlier in the development process, something previously addressed by their partners or acquirers, he said.
“With the new options in financing they are able to hang onto the asset longer so this becomes really important for that path,” Patel added. “And, by taking this approach, it allows sellers to demonstrate to buyers that their asset will play well once commercialized.”
Nonetheless, preclinical assets are still generating more interest compared to those in Phase I, II, or III, according to the report. Those assets generating the most interest include those in cardiovascular, oncology, CNS-psychiatry, inflammation, and autoimmune disease.
The seller’s market exists in all hepatic disease areas, women’s health, and CNS-neurology assets, with innovation furthering demand in immuno-oncology and genetics.