Annual global biotech report released

EY’s annual report on the global biotechnology industry shows the industry rebounded strongly in 2013, with public companies achieving double-digit revenue growth and a sharp rise in funds raised. Product successes have boosted revenues, drawn investors and motivated large companies to invest strongly in R&D.

However, the report went on to say that much of the industry’s growth was driven by a relatively small group of commercial-stage companies, increasing the urgency for the rest of the industry to achieve greater efficiency in their drug development efforts.

Several key findings are presented in the analysis of key performance indicators:

• Revenue climbed: Companies in the industry’s established biotech centres (the US, Europe, Canada and Australia) generated revenues of US$98.8bn, a 10% increase from 2012. However, virtually all of this growth came from 17 US-based ‘commercial leaders’, defined as companies with revenues in excess of US$500m.
• R&D spending rebounded: R&D spending rebounded forcefully, up 14% from the prior year, driven primarily by a 20% increase in spending in the US. This is the first time since the onset of the global financial crisis that R&D growth has outpaced revenue growth.
• Net income slipped: Net income declined by US$0.8bn, driven in part by the US$3.7bn increase in R&D expenditures during the year.
• Market capitalisation skyrocketed: Market capitalisation grew 65% to US$791.8bn, catalysed by strong performances from commercial leaders, which increased enthusiasm in the sector overall.
• Funding soared: Biotech companies in North America and Europe raised US$31.6bn in 2013, a sharp increase from the US$28.7bn raised in 2012 and the second-highest total since 2003. Fifty biotechs (in the US, Canada and Europe) debuted on the public markets in 2013, raising US$3.5bn, a 300% increase compared to 2012 and the highest one-year total since 2000.
• VC held steady: Venture capital raised by companies in North America and Europe totalled US$5.8bn, up slightly from the US$5.5bn raised the prior year.
• M&A: The total value of mergers and acquisitions involving US or European biotechs equalled US$55.7bn, an increase of 106% from 2012. But that upswing was driven by three mega-mergers, with two of the year’s largest acquisitions coming surprisingly from a medtech and a specialty pharma/OTC company.

Meanwhile, acquisitions by increasingly active biotech buyers (US$21bn) dwarfed those by big pharma companies as the value of pharma-biotech acquisitions grew by only 2% from 2012 to 2013. Excluding the Amgen/Onyx Pharmaceuticals mega-merger, biotech-biotech deal-making increased in value 68% during the same period (to US$10.6bn).

More information can be found on the EY website.