by Dr Fintan Walton, CEO, PharmaVentures.
The world economy is going through some tough times, again. This time the causes are well known, including China’s economically damaging zero-COVID strategy, post-COVID recovery challenges elsewhere and the impact of the unwelcome Russian invasion of Ukraine. As stocks crash and inflation rises, all global corporations are taking stock and reassessing their strategies.
In our own biotech sector, the global IPO market has effectively dried up and listed biotech stocks have dropped by 70% in value from their peak. In the UK, the Biotechnology Industry Association’s half year financial report shows that VC funding and follow-on financing is down by 50% for the first half of this year, compared to the first half of last year (2021). Clearly all this will have an impact on our industry over the next few years.
Despite the apparent gloom, the BIO Conference in the US was buzzing just a few weeks ago. The partnering activity was in full swing with thousands of meetings taking place over the four days. We at PharmaVentures attended over 150 partnering meetings – the highest number ever.
In some ways this activity is not surprising, our biopharmaceutical sector is still one of most robust largely due to the need by pharmaceutical companies to build their future patented product portfolios with novel therapies. Pharmaceutical companies cannot simply weaken their long-term strategy and, therefore, still need to compete against the competition to acquire the most promising future therapeutic candidates. Luckily, biotech companies have been well funded over the past few years and still hold a reasonable amount of cash. However, over the next year as those funds drop and valuations decline, new strategies and tactics will be required if these companies and their assets are to survive.
For 30 years, we have been advising companies through several economic cycles on robust arguments for the valuation of their assets and helping them to deploy alternative funding strategies.
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