Tale of Two Financial Trends

Published on: 
BioPharm International, BioPharm International-07-01-2017, Volume 30, Issue 7
Pages: 6

New reports address biopharma’s leading concerns: funding for drug development and pricing of finished drugs.

At the 2017 BIO convention held in San Diego in June 2017, more than 16,000 biotechnology industry representatives from around the world gathered for exhibits, education sessions, and partnering meetings. BIO reported more than 41,400 partnering meetings were held, an increase of 16% over 2016. This jump in activity may indicate stepped up needs for financing following cutbacks in investments in 2016.

A report released by BIO, Emerging Therapeutic Company Investment and Deal Trends (1), analyzes investments by phase of development and by disease area, and examines the current clinical pipeline. It also assesses the role of partnering for major disease areas; almost 42% of emerging company programs are partnered with other companies.

Overall, the investment market had mixed results in the past year. In the venture capital arena, $5.5 billion was raised in 2016, down from the record $6.9 billion in 2015; the number of companies receiving financing dropped to a decade-low 258 companies.

Since the enactment of the Jumpstart Our Business Startups (JOBS) Act in 2012, 200 biotech companies filed initial public offerings (IPOs); 23 companies filed in 2016, down from 2014 and 2015. Follow-on public offerings (FOPOs) also declined, reflecting a more difficult public investment market environment for biotech companies; US emerging companies raised 56% less in 2016 compared to 2015.

Licensing deals also declined; the number of R&D-stage licensing deals valued at $10 million or more dropped 19% in 2016, after a three-year uptrend. Upfront payments in 2016 were only half the levels of 2015.

Acquisitions were up, reaching the highest level in eight years; however, the amount paid was only half the level seen in 2015.

Drug cost concerns

The contentious public discourse about drug costs was also a discussion topic at BIO. Public scrutiny of pricing strategies for medicines is impacting drug sales growth, lowering forecasts for drug sales over the next five years, according to the Evaluate Pharma’s world preview report released on June 20, 2017 at BIO (2).


The report forecasts worldwide prescription drug sales to grow at a compound annual growth rate of 6.5% through 2022 hitting $1.06 trillion in 2022. This number, however, is down from the $1.12 trillion analysts forecast for the same period last year. The drop is the first time in 10 years of Evaluate analysis that total drug sales have failed to beat previous year forecasts, the report states.

The report also found that patent expiries and competition from biosimilars could wipe out $194 billion of pharma sales during 2016-2022, potentially signaling a second patent cliff.

According to the report, sales of cancer immunotherapies like Keytruda and Opdivo are expected to help move the sector to the $1 trillion sales target; orphan drugs are expected to make up one-third of pharma sales by 2022.

One driver for industry growth is the $522-million average value of newly approved drugs in 2016 (based on US sales post launch), which is above the 2010-2015 average. And, after a down year for FDA drug approvals in 2016 versus recent years, the report authors expect an increase in 2017.


1. D. Thomas and C. Wessel, Emerging Therapeutic Company Investment and Deal Trends, BIO Report (Washington, DC, June 2017).
2. EvaluatePharma, World Preview 2017, Outlook to 2022, Report (London, June 2017).

Article Details

BioPharm International
Volume 30, Number 7
July 2017
Page: 6


When referring to this article, please cite it as R. Peters, “Tale of Two Financial Trends," BioPharm International 30 (7) 2017.