The 2019 Q1 biotech and pharmaceutical transactions have come to end, and the initial results showcase some stark differences when compared to the first quarter of 2018 (source: Medtrack Informa Database). These trends illustrate what markets are up and coming in 2019, as well as those that have fallen out of favor in the past twelve months. The results also highlight the ramifications on the industry from various changes in the global economic outlook.
The Value of Licensing and Acquisition
Broadly speaking, fewer, larger deals occurred in Q1 2019 relative to Q1 2018. The total value of deals more than doubled year-over-year, while the total number of deals declined by 20%. The decline in the number of deals was the result of fewer venture financings and licensing transactions taking place. Despite licensing transactions declining from 47% of all deals in Q1 2018 to accounting for 39% of all deals in Q1 2019, the value of these transactions actually increased in 2019 from $36 billion to $43 billion, led by AstraZeneca’s $7 billion agreement with Daiichi Sankyo.
Public offerings throughout the industry were flat year-over-year, but there was a renewed focus on merger and acquisition transactions. Led by Bristol-Myers Squibb $74 billion acquisition of Celgene and Takeda Pharmaceutical’s $62 billion acquisition of Shire, the value of mergers and acquisitions (for which data was available) increased from $39 billion to $171 billion. Merger and acquisition transaction values totaled more than all other transaction types combined.
Oncology is Still #1
While some takeaways from 2019’s first quarter may be surprising, the dominance of the oncology space is not one. The area of focus saw deals in Q1 2019 total more than $23 billion, compared to around $15 billion in 2018 – reflecting the continued acceleration of activity in the space. While most categories also saw increases in Q1 2019, neurology and gastroenterology both saw activity slip when compared to the same period in 2018.
North America continues dominate transaction activity globally, both in terms of total deal value and overall number of transactions. Broken out by region, North America, Europe, and Asia-Pacific rank in the top three spots in terms of both deal value and number of transactions.
How can we help?
Trying to make sense of these issues requires a deep understanding of the biotechnology market, as well significant knowledge of how biotechnology companies operate. Teknos Associates is uniquely positioned as a result of our significant experience working closely with biotechnology companies at all stages of development. We have assisted organizations with valuations associated with future sales, examined the potential value of therapies to help guide companies in the allocation of their research and development efforts, and performed strategic analyses to assist in positioning companies for organic and inorganic growth.
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Note: Transaction totals may not sum across different types, indication, and regions due to available data.