SAN FRANCISCO, June 9, 2016 /PRNewswire/ -- The eighth annual Dealmakers' Intentions Study from inVentiv Health Consulting (formerly Campbell Alliance), concludes that after a chart-topping year, life sciences dealmaking will return to historic norms or slightly higher. The survey of biopharmaceutical dealmakers points to the rise of acquisitions with earn-outs and identifies top opportunities for buyers and sellers.
The study, which was released today during a Super Session at the BIO International Convention, provides a review of biopharmaceutical dealmakers' intentions for the next twelve months. Results indicate the year ahead will be a sellers' market with ample opportunities for creative and nimble buyers.
"Despite dealmaking deceleration and the early 2016 biotech equity markets, we believe dealmaking volume will return to levels closer to what we saw in the previous five years. It's a robust, but risk-adjusted dealmaking environment," said Neel Patel, Managing Director, inVentiv Health Consulting. "To be successful in this environment, dealmakers must be well versed in deal dynamics, carefully identify and evaluate their opportunities and be ready to pivot as market conditions continue to evolve."
Key report findings include:
Deal Structures Dynamics: New Structures and Buyers Emerging
- Traditional M&A will see slowing growth or be flat, a stark contrast to expectations in 2015 where only 9 percent of buyers and 7 percent of sellers expected fewer traditional licensing/partner deals.
- Acquisitions with earn-outs are expected to see the greatest uptick (47 percent of buyers and 49 percent of sellers predict). This shift indicates buyers seeking to push more risk onto sellers.
- Last year, there was a diversification away from large company dominance in total deal volume. New buyers have now emerged – regional biopharma companies and mid-sized buyers – and are expected to offer more options for sellers.
The Sellers' Landscape: Opportunities Abound, Driven By Market Changes, Outsourcing Options
- Companies licensing assets at all stages have more financing options and buyer demand than ever before.
- Sellers are increasingly able to retain assets longer as a result of cash reserves, the emergence of new types of buyers and the increasing options to commercialize through contract commercial services and other specialty paths.
- Despite this positive outlook, sellers need a clear understanding of the long-term potential of their assets in the changing payer landscape.
The Buyers' Landscape: Hyper-Competitive Market Creates Need for Precise, Creative and Fast Decision Making
- Prices have increased and the margin for error has narrowed, but there are still ample opportunities. Buyers will be looking to make more tailored and precise portfolio additions in the next year.
- In this new environment, buyers will need to act decisively when seeking highly sought after assets, keep alternative deals top-of-mind and be more aggressive in crafting acquisitions with earn-outs and creative licensing agreements.
- The speed of new product development continues to accelerate, making risk evaluation and earlier deal consideration decisions more crucial than ever before.
Identifying Opportunities and Evaluating Value: Supply and Demand Imbalance Indicate Areas for Assessment
- Buyer and seller interests are nearly aligned for phase I and phase II deals, indicating that these deals are more likely to represent realistic value expectations.
- The volume of oncology development activity has pushed this therapeutic area into a buyers' market for the first time since the inception of this study, representing an opportunity to add assets to a portfolio at a later stage and offer more affordable valuation.
- Genomics have emerged as the hottest areas for licensing, including CAR-T therapies and CRISPR/Cas9, while enthusiasm for biosimilars and orphan products has slightly cooled.
- We can expect to see increased competition in the coming year in the early stage antibiotics and CNS (non-pain) categories. A seller's market also exists for phase II cardiovascular and preclinical gastrointestinal assets.
- In the year ahead, a buyers' market is expected to exist for phase II gastrointestinal, phase I oncology, preclinical hepatic, phase I hematology and phase II respiratory assets.
Download the full Dealmakers' Intentions 2016 survey results or submit a request to have an inVentiv Health Consulting team member present survey results and implications for your business via our website: inVentivHealth.com/Consulting/Dealmakers.
About inVentiv Health Consulting (formerly Campbell Alliance)
inVentiv Health Consulting is an industry-leading consulting firm specializing in the biopharmaceutical industry and is part of inVentiv Health, a global professional services organization designed to help the biopharmaceutical industry accelerate the delivery of much-needed therapies to market. We provide a comprehensive range of services across key areas including commercial strategy and planning, medical affairs, risk and program management and pricing and market access. Industry focus and depth of functional expertise, combined with strong scientific and market knowledge, uniquely position inVentiv Health Consulting to tackle highly complex business and market challenges to develop actionable client strategies. For more information on inVentiv Health Consulting, a 2016 Forbes' Best Management Consulting Firm, please visit inVentivHealth.com/Consulting.
About inVentiv Health
inVentiv Health, Inc. is a global professional services organization designed to help the biopharmaceutical industry accelerate the delivery of much-needed therapies to market. Our combined Clinical Research Organization (CRO) and Contract Commercial Organization (CCO) offer a differentiated suite of services, processes and integrated solutions that improve client performance. With more than 14,000 employees and the ability to operate in more than 90 countries, we enable clients to successfully navigate an increasingly complex environment. For more information, visit inventivhealth.com.
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