BioPharma licensing and M&A trends

Abstract

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.