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2014 Biopharmaceutical Partnering Survey

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2014 Biopharmaceutical Partnering Survey

Our latest biopharma-partnering survey highlights the qualities that sell-side companies are looking for in a licensing partner and ranks the industry’s top-tier partners.

View our infographic for highlights from the survey: http://on.bcg.com/14BlGJ8.

Our latest biopharma-partnering survey highlights the qualities that sell-side companies are looking for in a licensing partner and ranks the industry’s top-tier partners.

View our infographic for highlights from the survey: http://on.bcg.com/14BlGJ8.

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2014 Biopharmaceutical Partnering Survey

  1. 1. 2014 Biopharmaceutical Partnering Survey "Sustained performance in a fiercely competitive environment" January 2015
  2. 2. 2014_BCGLicencingSurvey_vF.pptx 1 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Purpose of this document This presentation is intended to give a "state of the world" overview to the worldwide biopharma licensing and business development environment, as perceived by those active in that area This presentation reflects BCG's multi-year investment in studying the relationships between the demand and supply side in the market for biopharma licensing • This 2014 survey edition, following-up on 2003, 2006, 2008, 2010 and 2012 editions, had three key objectives – Explore some key trends in biopharmaceutical partnering – Share issues on the minds of BD execs in sell-side companies – "Sell-side" means companies licensing out ("licensors") to other (typically larger) companies ("licensees") – "Buy-side" means companies licensing in ("licensees") from other (typically smaller) companies ("licensors") – Assess perceived performance of individual buy-side companies along key characteristics • We sent the survey to ~750 CEOs and heads of BD at sell-side firms in July/August 2014, with 63 responses Questions regarding these materials should be directed to Dirk Calcoen, BCG Partner, San Francisco - Email: calcoen.dirk@bcg.com; Phone: +1 415 732 8010
  3. 3. 2014_BCGLicencingSurvey_vF.pptx 2 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Executive summary Partnering today is highly competitive, reflected in declining deal volumes at high valuations • Partnership deals have declined ~41% since 2010, driven in part by the favorable IPO market • Deal valuations have increased by ~$100M (57%) including upfronts which have more than doubled • Heavy concentration in a small number of specialty TAs, including oncology and inflammation BCG survey shows that the sell-side continues to focus on partnering skills in selecting a partner • "Sell-side" looking for a partner who can add value to their product, have partnering skills to close the deal, have dependable clinical development capabilities and who can deliver internationally • "Sell-side" looking less for a partner who can bring certain capabilities (commercial, regulatory, access / reimbursement) that are seen as "table stakes" Overall performance of buy-side companies broadly in line with performance 2012 • Continue to see strong performance by "established leaders", especially Celgene which leads the pack on most partnering dimensions • Also see increasing diversity among top performers vs. prior year, including a few companies which have made marked progress since our last survey, in particular J&J/Janssen These results indicate that there are clear opportunities for improvement, particularly for those companies who want to compete in the 'hot' TAs but are lagging on partnering skills
  4. 4. 2014_BCGLicencingSurvey_vF.pptx 3 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Biotech landscape has recovered since 2010 in terms of number, default risk profile, and market cap Number of companies1 Market Cap1Default risk2 1. Public biotech and pharma companies with $10M-$10B market cap 2. 'Medium to high default risk' includes all companies with 30% or higher 5 yr cumulative default risk, based on CreditGrade as of December 2014 Source: CreditGrades.com, Global Vantage, Reuters, BCG ValueScience Center 191 137 184 0 50 100 150 200 2010 2012 2014 # companies 165 103 78 0 50 100 150 200 2014 $B 20122010 53 7355 26 23 36 21 8 0 20 40 60 80 100 4 Low High Med 2014 % of companies 20122010
  5. 5. 2014_BCGLicencingSurvey_vF.pptx 4 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Licensing deal volumes down 41%, while IPOs on the rise 949 855 724 704 559 0 200 400 600 800 1,000 -41% Total biopharma licensing deals 201320122010 2011 2014 Share of deals by typeNumber of total deals 1. Biotech public offerings that are closed, effective, expired. Does not include announced but not yet closed IPOs Source: EvaluatePharma as of Jan 6th 2015, BCG M&A database, S&P Capital IQ McGraw Hill Financial 20 0 40 60 80 100 2013 20142010 2011 % 2012 IPO1 M&A Licensing
  6. 6. 2014_BCGLicencingSurvey_vF.pptx 5 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Licensing deal values up >$100M since 2010 Upfront payments comprise a growing proportion of total value, up >2x absolute terms 44 57 155 153 133 185 223 212723 20 19 15 13 0 100 200 300 0 10 20 30 20132012 14 20112010 % upfrontAvg. value ($M) +57% 2014 155 179 230 280 178 Upfront paymentMilestone payments% upfront Note: Deal value includes upfront and milestone payments Source: EvaluatePharma as of December 2014 Breakdown of average deal value into upfront vs. milestone
  7. 7. 2014_BCGLicencingSurvey_vF.pptx 6 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Deal focus shifting from development to discovery and marketed products 1. Sample of deals by top 10 biopharma companies by 2014 revenue: AstraZeneca, BMS, Eli Lilly, GSK, J&J, Merck, Novartis, Pfizer, Roche, Sanofi 2. Including preclinical and clinical development Source: EvaluatePharma as of December 2014 Distribution of licensing deals by development stage1 34 36 33 39 44 52 53 60 49 40 14 10 7 12 16 0% 20% 40% 60% 80% 100% 2014201320122010 2011 DiscoveryDevelopmentFiled/Marketed Filed/ Marketed Development2 Discovery
  8. 8. 2014_BCGLicencingSurvey_vF.pptx 7 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. High deal concentration in "hot" specialty TAs Note: deals covering multiple TAs counted once per relevant TA Source: Windover/EBI database as of December 2014 0 10 20 30 Inflam/ Rheum Oncology % of deals Select TAs CNS ID / Antiviral Endocrine/ Metabolic GI CV OphthoWomen’s Health Respiratory Derm 2010 2012 2014 Distribution of licensing deals by TA -10 -5 0 5 10% Differential between TA share of deals and share of pharma sales TA over-represented relative to sales TA under-represented relative to sales
  9. 9. 2014_BCGLicencingSurvey_vF.pptx 8 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Against this backdrop, we launched sixth edition of BCG licensing survey in the summer of 2014 Survey targeted representative sample of ~750 biopharma "sell side" companies yielding 65 responses in 2003, 51 responses in 2006, 88 in 2008, 95 in 2010, 160 in 2012, and 63 in 2014 • Data from multiple editions allows identification of trends Respondents were geographically diverse • North America: 35 • China: 13 • Europe: 12 • Israel: 2 • Other Asia: 1 Respondents were senior level executives involved in licensing or business development • President, CEO, VP / Director of Business Development Key objectives of survey • Determine most important characteristics in selecting a licensing partner • Determine perceived performance of specific buy-side companies
  10. 10. 2014_BCGLicencingSurvey_vF.pptx 9 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. We surveyed a broad cross-section of biopharma ... 0 10 20 30 40 OtherPsychRespGIHemeCVIDNeuroEndoInfOnc Lower proportion of small firms vs 2012 Products are across therapeutic areas1 In 2014, higher % of experienced respondents Mix of early and late stage projects 1. Onc = oncology, Inf = inflammation, Endo = Endocrinology, Neuro = neurology, ID = infectious disease, CV = cardiovascular, Heme = hematology, GI = gastroenterology, Resp = Respiratory, Psych = Psychiatry, Nephr = Nephrology, Source: BCG survey of Biotech CEOs and Licensing Executives, 2014 % respondents% respondents % respondents % respondents 0 20 40 60 80 # employees >1,000501-1,000301-500101-30051-1001-50 2014 2012 2010 2008 100 50 0 2014201220102008 Late stageMid stageEarly stage 2014 2012 2010 2008 0 50 100 150 20142012201020082006 <3 3–5> 10 6–10
  11. 11. 2014_BCGLicencingSurvey_vF.pptx 10 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. ... and expanded the number of companies surveyed over the last six years for more comprehensive coverage • Abbvie • Amgen • AstraZeneca • Bayer • BMS • Boehringer Ingelheim • GSK • J&J • Lilly • Merck • Novartis • Pfizer • Roche • Sanofi • Astellas • Biogen • Celgene • Daiichi-Sankyo • Eisai • Gilead • Merck Serono • Mitsubishi Tanabe • Novo Nordisk • Takeda • UCB • Shire • Teva Analyses use core or full set of companies Analyses of trends across years use core companies • E.g., comparison of average performance over 6 survey editions Other analyses use full company sample • E.g., importance of attributes, dispersion in perceived performance,... Clearly indicated on each analysis whether only core set vs. full set of companies used Core companies Added between 2008-2014 While survey sample size is relatively small, we feel the results reflect perceived reality
  12. 12. 2014_BCGLicencingSurvey_vF.pptx 11 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. "Sell-side" primarily focused on partnering skills and a few select capabilities 3.0 3.5 4.0 4.5 5.0 Average Research capability Medical affairs capability Allows partners to retain control in dev Alliance management Pricing, access and reimbursement capability Fit with corporate culture Sales / marketing capability Willingness to pay the highest price BD/licensing group easy to access Regulatory capability Global / international reach Responsiveness during the deal negotiations Clinical capability Executive leadership committed to partnering Creativity and flexibility on deal terms Allows partners to develop and prosper Ability to add value to your compound/TA of interest Manufacturing capability HEOR capability Source: BCG survey of Biotech CEOs and Licensing Executives, 2014; BCG analysis; see appendix 1 for format of survey questionnaire Very Important Indifferent While other capabilities and post-deal factors (culture, alliance mgmt) are of lesser importance Overall value creation and core partnering skills remain the most important attributes Certain development and commercialization capabilities (clinical, regulatory, global reach) are key considerations for licensors Absolute change from 2012 Survey results Partnering Culture Capability attributes
  13. 13. 2014_BCGLicencingSurvey_vF.pptx 12 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Culture Percent of respondents agreeing that median company1 exhibits the associated criteria More important Partnering Less important Capabilities More important Less important 0 20 40 60 80 100 Alliance mgmt Mfrg. expertise Medical affairs capability HEOR capability Research capabilities Regulatory capability Pricing/ access capability Sales / marketing capability Global / int. reach Clinical capability TAs of interest Fit with corporate culture Allow retained control Pay highest price BD/ Licensing group access ResponsiveFlexibility on deal terms Executive leadership Develop and Prosper Perceived performance remains high on capabilities, lagging on partnering skills 1. Values are calculated as median of "Strongly agree and somewhat agree responses" only for core companies – see slide 13 for list of core companies Note: The chart has been updated to reflect 2014's importance scales and individual attributes – the trend line is broken where attributes didn't exist in previous editions, Source: BCG survey of Biotech CEOs and Licensing Executives, 2014 20142010 20122008 2006 Analysis of core companies only
  14. 14. 2014_BCGLicencingSurvey_vF.pptx 13 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. 0 20 40 60 80 100 Medical affairs capability Sales / marketing capability Regulatory capability Fit with corporate culture Allow retained control Alliance mgmt Pay highest price BD/ Licensing group access Executive leadership Flexibility on deal terms Mfrg. expertise HEOR capability Clinical capability TAs of interest Global / int. reach Develop and Prosper Research capabilities Pricing/ access capability Responsive Among core companies, Merck and J&J leading in partnering skills, while capability leadership split More important Less important More important Less important Note: scores calculated as percent of respondents who agree with statements associated with each company; 1. Median, high and low scores calculated across core set of companies only Source: BCG survey of Biotech CEOs and Licensing Executives, 2014; see appendix 2 for format of survey questionnaire Percentage of respondents agreeing that company exhibits the associated criteria Analysis of core companies only CulturePartnering Capabilities Industry median (2014)1 Low (last place company)1 High (first place company)1
  15. 15. 2014_BCGLicencingSurvey_vF.pptx 14 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. 0 20 40 60 80 100 Mfrg. expertise Medical affairs capability Sales / marketing capability Regulatory capability TAs of interest Fit with corporate culture Allow retained control Alliance mgmt Executive leadership Flexibility on deal terms Develop and Prosper Responsive BD/ Licensing group access Clinical capability Pay highest price Global / int. reach Pricing/ access capability HEOR capability Research capabilities When including all companies, Celgene stands out once again as the strongest in partnering skills More important Less important More important Less important Note: scores calculated as percent of respondents who agree with statements associated with each company; High (first place company) and low (last place company) must have at least 10 responses Source: BCG survey of Biotech CEOs and Licensing Executives, 2014; see appendix 2 for format of survey questionnaire Percentage of respondents agreeing that company exhibits the associated criteria Analysis of all companies CulturePartnering Capabilities Industry median (2014)High (first place company) Low (last place company)
  16. 16. 2014_BCGLicencingSurvey_vF.pptx 15 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Celgene, Merck, and Roche and J&J leading the pack in overall performance Highest proportion of respondents that have a positive impression3 Highest average score across all attributes1 Most nominations as a "top partner"2 2.0 2.5 3.0 3.5 4.0 Roche J&J Celgene Merck BMS Lilly Average Rating1 0 20 40 60 80 Proportion agreeing (%) NovoNordisk Lilly Biogen Merck JnJ Celgene 0 10 20 30 40 Share of best-in-class votes (%) Novartis J&J Merck AstraZeneca Roche Celgene 1. Mean score across all partnering attributes and capability scores 2. Share of times mentioned as one of best two companies to partner with 3. Proportion of respondents agreeing that company demonstrates positive partnering attributes. Weighs each response equally. Source: BCG survey of Biotech CEOs and Licensing Executives, 2014 Median Median Analysis of all companies
  17. 17. 2014_BCGLicencingSurvey_vF.pptx 16 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Celgene, Roche and Merck have been established leaders, while J&J has stepped up performance in 2014 Highest proportion of respondents that have a positive impression3 Highest average score across all attributes1 Most nominations as a "top partner"2 2.5 3.0 3.5 4.0 Celgene AstraZeneca Merck & Co. GSK Novo Nordisk Roche 0 20 40 60 AstraZeneca Merck & Co. Roche GSK Novo Nordisk Celgene 0 10 20 30 BMS Novartis AstraZeneca Roche GSK Merck & Co. 1. Mean score across all partnering attributes and capability scores 2. Share of times mentioned as one of best two companies to partner with 3. Proportion of respondents agreeing that company demonstrates positive partnering attributes. Weighs each response equally. Note: Companies that have remained at the top over most recent three editions have been labeled in bold Source: BCG survey of Biotech CEOs and Licensing Executives, 2014, 2012, and 2010 editions 2.5 3.0 3.5 4.0 Average Rating1 Pfizer Eli Lilly Novartis GSK Merck & Co. Roche 0 20 40 60 Proportion agreeing (%) Novartis GSK Eli Lilly Celgene Roche Merck & Co. 0 10 20 30 Share of best-in-class votes (%) Eli Lilly Pfizer Novartis Merck & Co. GSK Roche 201220102014 2.5 3.0 3.5 4.0 Eli Lilly BMS Roche JnJ Merck & Co. Celgene 8040200 NovoNordisk Eli Lilly Biogen Merck & Co. JnJ Celgene 0 10 20 40 Celgene Roche AstraZeneca Merck & Co. J&J Novartis
  18. 18. 2014_BCGLicencingSurvey_vF.pptx 17 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. GSK, PFE, and AZ remain "best in class" for Emerging Markets; JnJ and Lilly join the EM leaders 0 5 10 15 20 Novartis Roche Pfizer AZ GSK ... % of votes 0 5 10 15 20 AZ % of votes ... GSK Lilly JnJ Pfizer "Best in Class" for Emerging Markets – 2012 20142012 Source: BCG survey of Biotech CEOs and Licensing Executives, 2012 and 2014 editions
  19. 19. 2014_BCGLicencingSurvey_vF.pptx 18 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Top partners in selected markets differ from the overall leaders PFE, AZ, Roche strongest in China, while Takeda, Astellas, and Daiichi Sankyo lead in Japan China Japan ... Roche AstraZeneca Pfizer % of total votes % of total votes ... Daiichi Sankyo Astellas Takeda Share of top votes1 Pricing and reimb. Clinical Regulatory Marketing / Sales Market knowlege Share of top votes1 Pricing and reimb. Clinical Regulatory Marketing / Sales Market knowlege AttributesTopperformers 1. Share of top votes calculated as # of 1st place ranks plus 0.5 x # of second place ranks. source: BCG survey of Biotech CEOs and Licensing Executives, 2012 and 2014 editions
  20. 20. 2014_BCGLicencingSurvey_vF.pptx 19 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Implications for licensing stakeholders Continued focus on improving partnering skills is required to remain being seen as an attractive partner • E.g., shuffle in top tier illustrates possibility of declining or improving perceived performance Perceptions of partnering skills can be impacted (positively or negatively) even in the short term (i.e. over a time span of a few years) • E.g., several examples of companies that have been able to up their game Complacency is not an option as the partnering market becomes ever more competitive, and many companies leveraging partnering skills as a differentiator • E.g., Celgene, Roche, and Merck & Co. consistently ranking as partners of choice Managing negative perceptions is also key, especially among those companies that you actually engage with in a meaningful way (during deal negotiations and consummation)
  21. 21. 2014_BCGLicencingSurvey_vF.pptx 20 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Appendix 1: 2014 partnering survey questionnaire: importance of attributes What attributes do you look for in a partner? Please rate each attribute from "extremely important" to "extremely unimportant" Extremely important Somewhat important Indifferent Somewhat unimportant Extremely unimportant Ability to add value to your compound/TA of interest Research capability Clinical capability Regulatory capability Sales/marketing capability Pricing, access and reimbursement capability Medical affairs capability Pharmacoeconomic or Health Economic and Outcomes Research (HEOR) capability Global/international reach Manufacturing capability Fit with corporate culture Responsiveness during the deal negotiation process Willingness to pay the highest price Creativity and flexibility on deal terms and structures Alliance management capability Executive leadership committed to partnering Business development/licensing group is easy to access Allows partners to develop and prosper / commitment to partners' long term success Allows partners to retain control in development and/or commercialization
  22. 22. 2014_BCGLicencingSurvey_vF.pptx 21 Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Appendix 2: 2014 partnering survey questionnaire: assessment of individual company by attribute Strongly agree Somewhat agree Neutral Somewhat disagree Strongly disagree Ability to add value to your compound/TA of interest Research capability Clinical capability Regulatory capability Sales/marketing capability Pricing, access and reimbursement capability Medical affairs capability Pharmacoeconomic or Health Economic and Outcomes Research (HEOR) capability Global/international reach Manufacturing capability Fit with corporate culture Responsiveness during the deal negotiation process Willingness to pay the highest price Creativity and flexibility on deal terms and structures Alliance management capability Executive leadership committed to partnering Business development/licensing group is easy to access Allows partners to develop and prosper / commitment to partners' long term success Allows partners to retain control in development and/or commercialization Please indicate the degree to which you agree or disagree that [company] possesses the following attributes

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