PharmaVentures [www.pharmaventures.com] provide valuation, strategy, market insight and transaction services to the health care industry. 80% of their clients are from outside the UK . Tonight we had Finton Walton (CEO) speak to the forum about ‘ deal making in a risk averse environment for success…’.
- tough to raise money now because we are in a risk averse environment
- pharma experiencing patent cliff meaning a sudden drop in revenue is looming. Therefore decreasing R&D spend.
- regulations and reimbursement is getting tougher
- leading to fewer pharma companies that spend less = less partnering opportunities
- deal making is making a recovery since GFC
- collaboration R&D deals are declining
- but big pharma still interested in early stage R&D – of interest to NZ
- average deal value is decreasing
- option-based deals reduce the risk for the license (capital linked to milestones). GSK tops the pharmas with respect to performing option-based deals. Amgen and AstraZeneca have the lowest levels.
- only 12% of options are exercised within the first 2 years
- pharma are worried about deals = competition is fierce
- before GFC M&As involving spinouts or emerging companies were on the decline, now they are increasing
- contingent value rights are options for shareholders of an acquired company
- plan your company exit from the beginning. Forget IPOS, get to know your buys early on.
- Pharmas looking to move research close to where the science is i.e. universities and institutes = more partnerships on the way
- NBI (NASDAQ Biotech Index) out performs the NASDAQ even more so since GFC.
- Finton mentioned that NZ has all the ingredients to attract foreign investment.
Graeme @ graemefielder.com