06Jun

Mega-deals were few last year, but pharmaceutical deal-making hit record levels. Nearly 2,000 transactions were recorded in 202 with a value of almost $200 billion.

One in five deals involved some aspect of COVID treatment or prevention, though these accounted for less than 3% of the total deal value,” says a new report from the biosciences intelligence group Cortellis. “Consistent with the historic trend, oncology remains the most attractive therapeutic area for deal making.”

A blockbuster year for biopharma deal making says that 2020 “ended up being a solid year for the biopharmaceutical industry. Records were broken by financing transactions, and several deals and M&As fell within the highest values on record.”

The biggest M&A deal was AbbVie’s $63 billion acquisition of Allergan. Though it closed during the year, the purchase was announced well before the SAR-CoV-2 virus first appeared. A second mega-deal — AstraZeneca’s buyout of Alexion Pharmaceuticals for $39 billion – was announced in December but won’t close until late this year.

However, most of the 147 M&A transactions were smaller, collectively totaling $181.3 billion, far below the banner $256 billion in 2015 and 19% below 2019. The report says “About 82% of the M&As were “bolt-ons” or those in which an acquirer was attaching itself to needed technology. The rest were financial, expansion and mega-deals.”

Though M&A activity was slower than in the past, the1,580 financing transactions were 42% higher than 2019. According to the report, “Collectively, global public and private biopharmaceutical companies raised approximately $134 billion, which is almost double the previous record of approximately $69 billion set in 2015. It is also greater than the combined amount generated in 2018 and 2019.”

The largest share of the global financings (70%) went to US companies, with firms based in California and Massachusetts capturing $34.1 billion and $26.8 billion, respectively. New York trailed the two leaders with $6.7 billion.

Summarizing the year, the report points to the “culture of collaboration that developed between competitors” driven by the need to develop COVID treatments and vaccines.

“It will be interesting to see whether this newfound enthusiasm for cooperation can be adapted to tackle other major unmet medical needs. Continued deal-making can only strengthen this collaborative spirit within the biopharma ecosystem, benefiting shareholders and patients alike.”

Photo by JOSHUA COLEMAN on Unsplash

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Green Key
Jun 6, 2023

Clinical Research Hit By High Turnover

Clinical research associates in the US are leaving jobs at the rate of 30% a year, says a new report from the consulting, tax and advisory firm, BDO.

Where turnover rates for these clinical monitoring professionals had been holding steady at 25%, the rate jumped between 2017 and 2018 by 4%. Outside the US, the global average is a modest 16%.

Turnover has plagued clinical / contract research organizations (CROs) for several years, but the increase in the US promises to heighten the problem. The BDO report says the impact to a CRO can be severe: “Losses of team members can disrupt clinical trials, and ultimately damage the relationship with the trial sponsor. High levels of turnover may deter sponsors from engaging in a strategic partnership with a contract research organization.”

There are multiple causes behind the increasing CRA turnover, though compensation and competition for these professionals is at the top of the list.

“If CROs hope to retain key talent, they must do a better job of linking pay raises to an employee’s level of contribution and re-assess merit budget increases,” said Judy Canavan, Global Employer Services Managing Director at BDO. “Competency models can help companies quantify this linkage.”

BDO’s analysis found CRA compensation levels remained “largely unchanged during the last five years” while CRAs have significantly increased their skills relative to their rate of pay. Likewise, annual incentive programs, a tool to attract and retain talent, haven’t changed much in the last five years. Payouts as a percentage of salary, have actually decreased, the report says.

“Quite simply, says Canavan, “Companies need to link the size of the raise to the increase in an employee’s contribution. This may mean increasing the size of the merit budget. Utilizing a competency model can help companies quantify this linkage.”

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Green Key
Jun 6, 2023

Roche Predicted to Top the List of Big Pharma In 2026

Making predictions is always dicey – especially so in this unprecedented global environment. Yet that isn’t stopping EvaluatePharma from predicting Roche will still be the world’s biggest drugmaker 6 years from now.

If that seems a bold forecast – over the years, Roche has moved up and down the list of largest pharmaceutical firms – EvaluatePharma predicts that Bristol-Myers Squibb will drop from 4th this year to 8th in 2026.

Though the firm is projected to grow at a compound annual rate of 8.23% — second only to AstraZeneca’s 8.47% — the company’s lock on at least one of its big sellers will expire, lowering its drug revenues. It broke into the top five through its takeover of Celgene at the end of last year..

Other companies, according to the forecast, will move ahead on the list. By virtue of its merger with Allergan, which closed in May, Abbvie is on track to occupy 4th place in 2026. However, the online publication FiercePharma notes that the company’s big selling Humira is vulnerable to biosimilars which could “eat away at billions in revenue.”

These rankings are all based on prescription and over-the-counter drug sales. On a gross revenue basis, Johnson & Johnson tops the list of largest firms with 2019 revenue of $82.1 billion.

Many big pharma companies have other products that add to their total revenue. Johnson & Johnson manufactures skin and hair care, including such well-known brands as Neutrogena and Aveeno, as well as medical devices.

Solely on its drug sales, EvaluatePharma ranks J&J 3rd in 2026.

The forecast predicts Gilead Sciences will struggle to stay in the top 15. The company is forecast to barely grow through 2026. According to the analysis, “The company is famously under pressure to strike deals, but has steadfastly stuck to bolt-ons to date.”

Acknowledging that the “coronavirus pandemic is making the job of forecasting particularly tough right now,” Evaluate concludes by declaring, “it seems clear that Roche will lead the pack in 2026.”

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