LONDON, BOSTON, SAN FRANCISCO, TOKYO (Aug. 17, 2016) — Falling stock markets, political uncertainty and continued global economic weakness all contributed to a mixed first half for the pharma and medtech industries. While M&A activity and drug approvals remained buoyant, falling equity markets in the first six months of the year had a clear impact on IPO and venture financing for pharma. Similarly, the first half of 2016 saw no end to the worrying developments in the medtech industry, with the venture crisis worsening and the IPO window all but shut. The second half promises further turmoil with nervousness growing ahead of the U.S. presidential elections - both candidates have promised to train their sights on the healthcare sector - according to first half reviews of 2016 from EP Vantage, the editorial arm of life science market intelligence firm Evaluate Ltd.
Pharma & Biotech Half-Year Review 2016 Highlights:
• Venture funding falls from peak: The amount of venture financing raised so far this year indicates that the peak has passed. Funding is now expected to fall to 2014 levels.
• Stock market jitters: The Nasdaq Biotechnology Index lost 21 percent of its value across the first half of the year.
• IPO stagnates: Flotations dropped off substantially in the first quarter of 2016, with only eight companies making it to market. Companies were also forced to offer substantial discounts in the first half to succeed.
“Concerns about the pressures on drug prices continue to scare investors, who also have tepid economic recoveries in the west and a slowdown in China to grapple with,” said Amy Brown, author of the pharma report. “There are no obvious triggers on the horizon to improve matters, meaning these trends could deepen over the remainder of the year. However, it is not all doom and gloom, as many companies remain well capitalised. The sector is a long way from plunging into the depths of the last recession.”
The full version of the Pharma & Biotech Half-Year Review 2016 can be at downloaded at www.evaluategroup.com/PharmaBiotechHalfYear2016.
Medtech 2016 Half-Year Review Highlights:
• M&A dollar decline: Of the deals closed in 2016, only five broke the $1 billion barrier and none were over $10 billion – in contrast, all of the 2015 top 10 were over $1 billion, and four exceed the $10 billion threshold.
• Worrying signs for venture funding & IPOs: Medtech companies raised a total of $670 million from VC rounds in Q2, the lowest quarterly amount since Q1 2009. The number of rounds also plunged to 27 in the most recent quarter.
• Fewer, but faster FDA approvals: The FDA granted either, a first-time premarket approval or a humanitarian device exemption to 38 devices, a 27 percent decline from 2015. However, the FDA is speeding up, with the average review time for the first half of 2016 just 16.2 months compared to 17.3 months in 2015 and 16.7 months in 2014.
“While concerning developments plagued the medtech industry during the first half of 2016, the sector could be moving away from megadeals and back to mid-sized acquisitions which would be beneficial for smaller groups,” said Madeleine Armstrong, author of the medtech report. “The fundamental problem is a dearth of funding for young companies, which leads to a lack of new products and a dip in the quality of innovation available for acquisition by bigger players. The rest of 2016 is shaping up to be rocky, but delivering innovation to patients and returns to investors are key to the health of the industry.”
The full version of the Medtech Half-Year Review 2016 report can be downloaded at www.evaluategroup.com/MedtechHalfYear2016.
About Evaluate Ltd
Evaluate is the trusted provider of commercial intelligence including product sales and consensus forecasts to 2022 for commercial teams and their advisors within the global life science industry. We help our clients make high value decisions through superior quality, timely, must-have data and insights, combined with personalised, expert client support. Our online subscription services cover the pharmaceutical, biotech and medtech sectors. Our Custom Services group delivers project based analytical and data services. EP Vantage, our independent, award-winning editorial team, offers data-driven, forward-looking news, commentary and analysis on a daily basis. For more information visit www.evaluategroup.com. On Twitter: @evaluatepharma, @evaluatemedtech, @evaluateJP @epclinicaltrial, @epvantage.
Issued for and on behalf of Evaluate Pharma by Instinctif Partners.
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