Heard at J.P. Morgan: implications for 2015

EY - JPM scorecardOptimism was the sentiment of the 33rd annual J.P. Morgan Healthcare Conference (JPM) as more than 10,000 executives migrated to the City by the Bay to deal and dish on all things life sciences.

During dozens of investor presentations, one-on-one company meetings and cocktail-party conversations, EY’s life sciences team gleaned a number of insights while on the ground in San Francisco (see accompanying chart):

M&A mojo:

Not only did biopharma and medtech execs celebrate 2014’s record-setting M&A climate, they were optimistic the deal climate would stay hot into 2015. Certainly, the news flow at JPM didn’t disappoint: Shire got the party started with its US$5.2 billion acquisition of NPS Pharmaceuticals, but the deals kept flowing, with announcements from Roche (a majority stake in Foundation Medicine), Novartis (a digital initiative with Qualcomm Ventures), Biogen Idec (a contingent deal for Convergence Pharmaceuticals), Illumina (a non-traditional alliance with Lockheed Martin) and AmerisourceBergen (the acquisition of MWI Veterinary Supply).

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2014: A new benchmark year for biotech IPOs [infographic]

EY - 2014: A new benchmark year for biotech IPOs

In mid-December at an EY life sciences conference in Cambridge, MA, entrepreneur and venture capitalist Alexis Borisy of Third Rock Ventures reminded the audience, “These are good times for biotech.”


Unprecedented. Record-setting. Red-hot. Those are just a few of the adjectives that have been used to characterize the IPO climate of the past 12 months. As our infographic (at left – click to expand) clearly shows, the IPO winds of 2014 didn’t simply edge through the cracks in a window pane. Instead, they blew the biotech financing doors wide open — and they did so for the second 12-month period in a row.

Indeed, the IPO class of 2014 hit new benchmarks in terms of both the number of public listings (63) and proceeds raised (US$4.9 billion), outstripping the superlatives set in 2000-01 at the height of the genomics bubble.

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Firepower fireworks drive record M&A in 2014. What’s ahead for 2015?

2014 was a record year for biopharma deal making, as M&A dollars eclipsed US$200 billion for the first time in over a decade. A convergence of forces fueled the acquisition fireworks. Rising equity valuations, historically low interest rates and a desire to use deal making to add revenue growth or business focus all contributed to the explosive display.

Actavis jump-started the deal making pyrotechnics with its US$23 billion acquisition of Forest Pharmaceuticals in February 2014. Actavis’ white knight bid for Allergan, which followed six months of fireworks courtesy of activists and Valeant Pharmaceuticals, provided the year’s grand finale.

In the intervening months, the light show never really abated:  many big pharma companies joined with their own brand of fireworks, executing a “just focus” strategy that included divesting and acquiring assets where sustainable growth was more achievable. Turning heads from Wall Street to Washington, some of the loudest percussions were transformative deals that ultimately did not come to pass.

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Navigating the payer landscape [INFOGRAPHIC]

Life Sciences_Infographic_Oct14_HR

Health care’s move to outcomes and value is transforming the industry, and payers are leading the charge. This makes payers an increasingly influential customer for pharma. Yet navigating the complex and fragmented payer landscape at a time when health care is dramatically changing — both in how it is delivered and in how it is paid for — has been challenging for pharma and raised many questions about what payers want, their attitudes and how best to engage with them.

To address some of these questions, we recently surveyed 30 US payers, 30 European payers and 18 pharmaceutical company representatives from functions such as market access and managed markets. We asked payers about their business challenges and attitudes as well as the kind of trial data they regarded as most important. Then, to determine how well pharma companies understood payers’ needs and attitudes, we asked pharma companies to identify payers’ needs and attitudes and compared their answers to those provided by payers.

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