![]() BCG’s ValueScience team estimates that the top 20 biopharma companies have more than $700 billion in cash, short-term investments, and additional debt capacity. They also have significant financial resources to pursue business development. Moreover, biopharma companies can finance transactions cheaply with today’s very low interest rates. A recent example is AstraZeneca’s acquisition in late December of Alexion for $39 billion. But since the core drivers of deals remain intact-scientific breakthroughs, expiring patents, and an increasing focus on key therapeutic areas or on modalities such as cell and gene therapy-deal activity will continue to rebound. The COVID-19 pandemic slowed biopharma M&A activity in 2020, especially in the first half of the year. All in all, close to 60% of new therapeutic drugs in the last five years have been externally sourced. Most of those deals involved midsized biotech companies, for which the average premium paid was close to 70%, with an average EV/sales multiple of nearly 8x. We have identified six success factors that enable more rapid and effective decision making, which, in turn, will lead to substantially enhanced business development performance.īiopharma M&A and Licensing Remain Strongīiopharma M&A deal value more than doubled between 20, from $138 billion to $336 billion, and valuations reached all-time highs. They may agree in theory that business development should pursue partnerships, ecosystems, and collaborations, but that consensus falls apart when it comes to making decisions about specific deals. Often a major reason for this shortfall is that executive team members are not fully aligned on the role of business development in achieving the company’s strategic priorities. ![]() ![]() Unfortunately, those teams are frequently unable to deliver the transactions needed for innovation and growth. While some innovation and new revenue can come from internal pipelines and assets, business development teams are under intense pressure at most companies to supplement internal efforts with external licensing agreements and M&A. Technology, Media, and TelecommunicationsĪt a time of rapidly evolving scientific breakthroughs and, coincidentally, of the expiration of many blockbuster drug patents, the key to innovation and revenue growth is pharmaceutical business development. ![]()
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