Biopharma in 2018: A year of contrasts as stocks and M&A slump, but venture financing and IPOs remain strong

LONDON, BOSTON, TOKYO (February 26, 2019) – Macroeconomic trends in Q4 wiped out biopharma’s stock market gains from earlier in 2018, with the S&P Pharmaceuticals Index the only major biopharma index to finish the year in the black. M&A and product licensing volumes were also down, despite notable deals such as Takeda’s $64bn acquisition of Shire and Bristol-Myers Squibb’s $1bn payment to Nektar. Deal-making slowed in the medtech sector too, with fewer acquisitions closed and a corresponding decrease in venture investment rounds.

  • Falling share prices in Q4 turned a 15% nine-month climb for the Nasdaq Biotechnology Index into a 9% year-end decline, while the S&P Pharmaceuticals Index only managed a 5% gain.
  • M&A activity hit its lowest level since 2009, with 173 total deals; licensing activity also dropped from 2017 levels by both deal count (112) and value measures ($4.94bn).
  • The total value of medtech M&A deals came to $27.4bn, a precipitous decline from 2017’s figure of nearly $100bn.

Conversely, 2018 was a banner year for venture financing, with $16.8bn invested in drug development start-ups. Biotech IPOs set new records, with two of the biggest flotations – Moderna and Allogene – occurring in the final months of the year. Medtech IPOs also flourished in the fourth quarter, giving the smaller players a welcome cash injection. The FDA set records as well, with 62 novel drugs approved, and managed a slight reduction in average approval times.  

  • 37 drug developers raised over $100m in financing, more than double the number in 2017.
  • Biotech IPOs raised a record $7.23bn, with the average amount raised tipping over $100m for the first time.
  • A total of $695m was raised by device companies going public in the fourth quarter, more than any other three-month period since Vantage started tracking medtech listings in 2013.
  • The FDA’s 2018 class of novel drugs is forecast to sell $24bn by 2023, including new migraine drugs Aimovig, Emgality and Ajovy; Alnylam's RNAi therapeutic Onpattro; and 17 new cancer drugs.

“The progress of biopharma and medtech companies last year paints a mixed picture,” said Amy Brown, co-author of the Vantage Pharma, Biotech and Medtech 2018 in Review report. “However, there are signs of health, if the industry is able to capitalize on them”. 

To download a complimentary copy of the report, visit http://www.evaluate.com/2018Review

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