Conventional products remain the core for deal makers

Megabuck deals for biotech products often grab headlines, but the licensing of small molecule drugs remains the industry’s bread and butter. A review of product deal data from EvaluatePharma, covering the first half of the year and annually back to 2007, reveals surprisingly little change in the volume or value of deals for biotech products, consistently in the 25%-30% range (see table below).

For example, in the first half of 2011 more than $1bn was paid in upfront fees for access to small molecule drugs, three times the $360m dished out for all types of biotech products; a similar ratio for upfronts was recorded in 2007. With overall deals appearing to slow down (Product deal slow down continues into 2011 - phase II assets remain popular, August 1, 2011), one potential bright spot for biotech products is the resurgence of deal values for antibody therapeutics, with more than $200m paid upfront in the first half of 2011 compared to just $160m forked out in the whole of last year.

High price, low volume

A recent report from EvaluatePharma – World Preview 2016 – shows that high price biotech products are certainly grabbing a greater share of the world’s top 100 selling drugs: 33% last year and rising to 45% by 2016.

However, across the industry as a whole, biotech agents accounted for just 18% of global prescription and OTC revenues last year, which will increase modestly to 21% by 2016, highlighting the extent to which small molecule or conventional drugs will continue to dominate the sector.

The table below shows the number of products licensed within each technology category, alongside the total upfront and potential deal values for those deals. Although the number of small molecule drugs licensed is declining, this matches the wider deal trend, and the proportion of deals for small molecules has not changed as much as one might expect.

Only 2009 saw a particularly strong swing towards biotech products, boosted by the $500m Johnson & Johnson paid Elan for access to the Alzheimer’s antibody candidate bapineuzumab and Abbott Laboratories’ purchase of anti-NGF antibody PG110 from PanGenetics for $170m.

Although this year has seen some more high profile deals for antibodies – Abbott’s $85m upfront for Biotest’s RA candidate BT-061 and Sanofi’s $50m for Glenmark’s MS agent GBR500 – big pharma’s acquisition of antibody technology platforms in recent years has understandably dampened deal activity for these high value agents.