Stephen Burrell's annual forecast for the development of the biotechnology industry
G. Steven Burrill Issues Annual Predictions for the Biotechnology IndustryTranslated by Evgenia Ryabtseva, IVAO
The main trend of 2015 will be the transition from promises to deeds
2014 broke all records for the financial activity of transactions in the field of biotechnology.
Based on the observations made, the biotechnological "prophet" Stephen Burrill (G. Steven Burrill) made his annual forecast for the development of biomedical sciences in 2015.
Burrill, who is the CEO of Burrill LLC and Burrill Media, argues that, despite some expected decline in the activity of the securities market in the field of biotechnology, 2015 should show stable performance in all traditional valuation parameters. At the same time, as the funds collected in 2014 are used, the speed of innovation will increase, as well as pressure on the pricing policy from payers against the background of the acceleration of the healthcare transformation process observed throughout the measure.
FORECASTSSecurities markets
Initial public offerings (IPOs)
By the end of November 2014, 126 biotech companies worldwide had completed the initial public offering of shares initiated during the year and collected almost 10.4 billion US dollars (as a result of 101 of these transactions, 8.7 billion US dollars were collected in the US markets).
It is expected that 2015 will be another strong year for the initial public offerings market, but it will be closer to 2013, when only 49 companies completed initial public offerings on U.S. exchanges with a result of $ 6.8 billion. One of the expected differences in 2015 will be higher activity on foreign exchanges, as the strengthening economies, as well as emerging markets and companies in Europe and Asia are seeking funds in their countries. In 2015, 50-60 initial public offerings of shares are expected on the US stock exchange and 30-40 on foreign exchanges.
Fundraising (fundraising)By the end of November 2014, the total financing of the biotechnology industry on a global scale had increased to 81.9 billion US dollars, which only slightly exceeded the amount of 79.5 billion US dollars collected during the same period of the previous year.
We expect that 2015 will be relatively stable in terms of financing due to growing activity in Asia and Europe, however, compared to the level of 2014, there will be a moderate decrease in financing.
Private financing
Globally, venture capital investment in the biotech industry reached US$ 15.3 billion in the first 11 months of 2014, compared to US$ 11.5 billion raised in the same period of the previous year. Venture investors have received new resources and are reusing them due to the activity observed in recent years on initial public offerings, as well as mergers and acquisitions. We expect 2015 to be a record year for venture capital investment, but we are also seeing a continued migration from the origins and the emergence of new biotech companies that may take more than 10 years to turn a profit. An increasing amount of funds will flow to a new type of medical companies working on the use of digital technologies to improve the efficiency of the health system through new approaches to monitoring the condition of patients, early interventions, the use of available information to improve health and transform models of access to health services and their provision.
Mergers and acquisitionsGlobal M&A activity in the biotech industry reached $340.8 billion in 2014, compared to just $118.3 billion in 2013.
Despite the changes in US policy that eliminate the incentive to take over in order to move the main offices of American companies to countries with lower tax levels, which will slow down the process of so-called "corporate inversion", we expect the continuation of high activity of mergers and acquisitions due to the fact that Bolshaya Pharma will refresh its structure through acquisitions. It is expected that in 2015 the largest companies will be noticed in large payments. To strengthen the structure and increase revenue, companies will acquire small firms rather than create their own divisions.
Building partnershipsLast year was favorable for establishing partnerships with the total potential amount of transactions increased in the first 11 months to 47.9 billion US dollars compared to 35 billion US dollars for the same period of the previous year.
Similarly to merger and acquisition activity, the tendency to externalize research and development and the need experienced by companies to "look beyond their own walls" in search of promising products will support activity. Despite significant upfront costs for particularly attractive experimental drugs, the total amount of payments will continue to be tied to commercial success.
PayersPayers will continue to try to reduce the growing share of prescription drugs, which include highly specialized drugs.
In order to reduce costs, payers will try to create competition between manufacturers of medicines, but drugs that have a unique effect will retain a high cost. The significant success of the Sovaldi drug developed by Gilead Sciences for the treatment of hepatitis C has shifted the discussion of the pricing problem from cost issues to accessibility issues. Since new methods of regenerative medicine are moving towards the market, and new approaches allow treating previously hopeless diseases, in the near future there will be an increase in experimentation with payment models. At the same time, questions of the longevity of such therapeutic approaches will be raised and attempts will be made to link payments and treatment effectiveness more effectively. The highest achievement of the biotechnology industry will be the transition from chronic therapy to a complete cure, and we will see new examples of this in 2015.
Payers will also fend off a growing number of genomic-based diagnostic tests designed to categorize patients, optimize treatment and improve its results. They will demand data that provides a clear explanation of the benefits and value of such tests. At the present stage, they are overloaded with attempts to understand the proposed advantages of numerous diagnostic tests of the new generation.
Healthcare
The political situation in the United States will continue to be determined by the fact that the Republican majority in the House of Representatives and Parliament will try to eliminate unpopular aspects of the "Patient Protection and Affordable Care Act", which underlies the legislative framework of the healthcare reform carried out by the Obama administration. Given that the right to veto belongs to President Obama, serious threats to the law are more likely to come from the judiciary than from the legislature. In 2015, a decision should be made in the case "King v. Barwell" (King vs. Burwell) – a lawsuit questioning the legality of tax benefits for people who have signed health insurance contracts in 34 states that have not created their own medical exchanges, as required by law. The decision taken may affect the provision of medical care to 4.5 million people. However, healthcare systems of the future will appear in emerging markets, as the emergence of new technologies will allow for rapid changes. Instead of modernizing existing structures and technologies to meet their needs, these systems are being created around new digital technologies, which will ensure the emergence of decentralized service delivery models and profit from diagnostic services provided at the place of demand or "at the bedside".
Biosimilars (bioequivalent medicines, generics)The US Food and Drug Administration (FDA) has yet to resolve a number of issues related to working with biosimilars, but the industry does not agree to wait.
Biosimilars represent an important growing segment in global markets, and drug manufacturers are already beginning to aggressively submit applications for their consideration, even though the FDA has not yet solved a number of problems. We expect that in 2015 biosimilars will begin to gain their place in the market, especially on a global scale. Despite the fact that the impact of biosimilars on biotech companies producing branded products will be less pronounced than the impact of competition from generic drugs faced by Big Pharma companies, it will begin to put pressure on companies as the biotech industry begins to approach its own patent barrier. This pressure will increase over the next few years as the number of biosimilars increases and confidence in their safety and effectiveness increases, which will lead to an increase in their scope of application.
Legislative regulation
It is necessary to find ways to put pressure on the FDA in order to ease the regulatory burden on drug manufacturers to accelerate the promotion of drugs through the clinic and to the market. Given the Republican majority in Parliament and the Senate, the inertia of the "21st Century Drugs Initiative" (21st Century Cures Initiative) and the discussion that has begun on updating the Law on charging fees when submitting applications to the FDA, the industry will do everything possible to soften the agency's attitude towards industry, using support in Congress for this.
Innovative methods of therapy
The emergence of methods of cancer immunotherapy, gene therapy and regenerative medicine represents a rapidly developing trend of transition from the treatment of symptoms to the mobilization of the body's own forces to fight the disease, repair damage and, in some cases, for a complete cure.
DataDrug manufacturers, payers and suppliers will increase their investments in data analysis, as they realize that the key to success in competition is their ability to collect, integrate and analyze numerous large databases to support the decision-making process.
Genomics
A significant transition is expected from using a new generation of DNA sequencing methods as a research technology to technology as a service, as companies will make major investments in improving the complex of genomic tools for using genomic technologies as routine diagnostic tests.
DiagnosticsThe development of genomics will complicate the introduction of new discoveries and development tools.
The search for diagnostic methods suitable for use not in the laboratory, but "at the patient's bedside" is used to speed up and facilitate the analysis process.
National Institutes of Health (NIH)Research funding will continue to be under pressure from Congress.
This will happen against the background of how other governments around the world will increase funding for research and development, increase their economic competitiveness and encourage local entrepreneurship. We also expect continued FDA pressure on funding.
Global marketsCompanies producing medicines and devices will look for new markets in Asia, where there will be a steady growth and an increase in demand for innovative therapies as economic prosperity strengthens and spreads in these countries.
Instead of the historical triumvirate of the USA/Europe/Japan, on which the attention of previous generations was focused, new generation companies will pay great attention to China and other Asian countries, countries of the Middle East, Africa and individual countries with large populations and growing health care costs.
ResumeOverall, 2015 will be a record year for the biotechnology industry with large own funds, promising new products and growing global needs.
Portal "Eternal youth" http://vechnayamolodost.ru09.02.2015