Biopharma stages a strong recovery over the first half even as M&A deals disappoint

EP Vantage has released its 2017 half-year reports on pharma & biotech and medtech sector performance. Report authors Elizabeth Cairns and Jon Gardner provide their expert viewpoints, powered by Evaluate data and consensus forecasts. Key findings include

Pharma & Biotech:

• Nasdaq Biotechnology Index hit an 18-month high, and healthcare indices in general outperformed wider markets over the first half
• Initial public offerings of development-stage companies exceeded $1bn in the second quarter, making it the strongest quarter in nearly 2 years
• The first half of 2017 generated the lowest number of M&A deals and total transaction value since 2013
• Venture capital investment looks to be on track to at least match 2016’s total
• 2017 new drug approvals should recover to close to the five-year average, putting to rest any fears of a regulatory or innovation slowdown
• Approaching regulatory decisions on the first CAR-T therapies will help set the tone for the remainder of the year.

Medtech:

• Total venture funding raised in the first quarter was over $2.5bn, more than twice the quarterly average over the past seven years, but the second quarter saw the fewest deals since the second quarter of 2006
• The first half of this year saw the three biggest ever VC rounds in medtech, Grail, Verily and Guardant Health raising more than $2bn between them
• The mega-merger is back in vogue with nine out of the top 10 deals in the first half worth $1bn or more, versus only five in the first half of 2016
• 2017 could see nearly $98bn spent on medtech M&A – double last year’s total – but with only around 150 transactions versus 234 in 2016
• 2017 on course for the highest-ever number of approvals: 52 PMAs and HDEs combined and 34 de novo clearances.