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BioPharma licensing and M&A trends

Nature Reviews Drug Discovery volume 4, pages 273–274 (2005)Cite this article

The pharmaceutical industry faces a number of challenges, including a more rigid regulatory and reimbursement environment, a series of imminent blockbuster patent expiries and increasing generic penetration of the prescription drug market. Generating growth through strong pipeline innovation and productivity is therefore a key issue. Total R&D spending of this sector in the US has grown tenfold from US $3.2 billion in 1983 to US $33 billion in 2003 (Ref. 1). Although the industry enjoyed a wave of innovation during the early 1990s, peaking in 1996 when 131 New Drug Applications (NDAs) were filed and 53 New Molecular Entities (NMEs) were approved2, R&D productivity has declined on almost a year-on-year basis. In 2003, 72 NDAs were filed and 21 NMEs approved3, which represents a 45% and 60% decline, respectively, since 1996. Therefore, well-managed or wisely-positioned licensing or acquisition deals that increase the biotechnological diversity of R&D represent strategic paths by which pharma companies can boost productivity, both as an alternative to in-house development, and to complement organic R&D innovation.

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Figure 1: Reliance of the leading US and European pharma players' ethical income (with market capitalizations greater than US$45 billion in 20 October 2004) on licensing deals.
Figure 2: Contribution of all types of 139 M&A deals signed or announced between 1999 and 2004 and their contribution to total M&A value (US$54.6 billion in September 2004).
Figure 3: Four main types of 139 biotech to biotech or biotech to pharma M&A deals signed between 1999 and 2004 and their contribution to total M&A value (US$54.6 billion in September 2004).

References

  1. Research and Manufacturers of America (PhRMA). Pharmaceutical Industry Profile 2004 [online], <http://www.phrma.org/publications/publications//2004-03-31.937.pdf>

  2. Friedman, M. A. Testimony on 1998 budget proposal [online], <http://www.hhs.gov/asl/testify/t970501b.html> (1997).

  3. US FDA. FDA sees rebound in approval of innovative drugs in 2003; new innovation initiative anticipated to speed approvals in years ahead [online], <http://www.fda.gov/bbs/topics/NEWS/2004/NEW01005.html> (2004)

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  1. Ph.D., and Mark Belsey are at Datamonitor Healthcare, 108–110 Finchley Road, London, NW3 5JJ, UK

    Alex K. Pavlou & Mark J. Belsey

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  1. Alex K. Pavlou
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Pavlou, A., Belsey, M. BioPharma licensing and M&A trends. Nat Rev Drug Discov 4, 273–274 (2005). https://doi.org/10.1038/nrd1697

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