2014 a highly successful year
for the biopharmaceutical industry
In terms of New Drug Approvals
Both the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) have reported an exceptional high level of drug approvals in 2014.
The FDA has approved 41 new Molecular Entities (NMEs) and Biological License Applications (BLAs) versus 27 in 2013, the highest total since 1996. The FDA approved 9 novel cancer treatments and nearly 40% of new approvals were for rare disease conditions.
The EMA has reported that it recommended 82 new products in 2014 – including generics– versus 79 in 2013 and 57 in 2012.
Among 2014's breakthroughs were two cancer drugs that help the body's own immune system fight tumours. The two drugs – Merck’s Keytruda and Bristol-Myers Squibb's Opdivo – work by blocking a protein called Programmed Death receptor (PD-1), and are the first prototypes of novel immunotherapies that could generate billions of dollars of annual sales.
Both agencies are expecting a similar number of applications, presented by the different sponsors, in the year to come and a high percentage of the new applications are forecast to be for the treatment of specialized and rare diseases.
In terms of Value Creation….
Innovative new drugs are always commanding premium prices which might explain why the industry has slowly moved away from primary care to focus on specialised products where competition is limited and annual costs of treatment often in the hundreds of thousands dollars per year.
The launch and the success of recently approved new drugs have stimulated the biotech initial public offerings (IPOs) and the mergers and acquisitions (M&As) to a record high. A few numbers show how far the value of 2014’s IPOs and top deals involving biopharma mergers and acquisitions (M&A) has surpassed those of 2013. At the end of November 2014, 126 life sciences companies – 78 in the US and 9 in France-, have completed their IPO project in raising nearly $10.4 billion. In the three previous years combined, the U.S. had just completed 66 biotech IPOs. In addition mergers and acquisitions were flourishing: the value of 2014’s top 10 M&A transactions reached a combined $179.05 billion—nearly three times the combined $66.4 billion of a year earlier.
What about 2015 ?
Veteran industry observer Steven Burrill, CEO of Burrill LLC and Burrill Media, in his annual reports, says: “The unprecedented IPO and M&A activity, this year, will make 2014 one for the record books and unlikely to ever be surpassed…. 2015 will be another strong year” but Burrill added” We do expect financing activity to slow down as companies put to work all of the money that’s been raised”