Companies are exploring new markets for innovative assets to add value to their pipeline, finds Frost & Sullivan

In recent years, the global pharmaceutical and biotechnology industry has outperformed other sectors in terms of stock market indices. The appeal of orphan drugs and systems that reduce the cost of healthcare will continue to attract investors to fund the industry. 

Analysis from Frost & Sullivan, Funding Patterns in the Global Pharma and Biotech Industry, reveals the volume of venture capital (VC) deals fell by 41.2 percent between 2010 and 2014, while private equity (PE) deal volume declined by 23.4 percent. However, investors will become established within the pharmaceutical and biotech industry to avail long-term returns. 

“Corporate investors expect to play a significant role in intensifying competition and replenishing the depleting drug pipeline,” said Frost & Sullivan Senior Research Analyst Saneesh Edacherian. “The strong return of the initial public offering market in the U.S. is likely to further encourage Private Equity / Venture Capital investors, especially in the biotechnology sector.” 

Key trends within the pharmaceutical and biotech industry include:  

·        The rise of market demand for drugs 

·        Governments striving to contain drug prices 

·        A decline in profitability of large pharmaceutical companies 

·        Firms experiencing patent expiries and revenue losses 

·        A decline of research & development by large pharmaceutical companies 

“Shrinking pipelines and increased cost pressures make mergers and acquisitions a lifeline for participants in the pharmaceuticals sector,” noted Edacherian. “Mergers and acquisitions are either approached as an exit option for investors, or as a strategy for leading pharmaceutical companies to expand their capabilities in the global market.” 

Funding Patterns in the Global Pharma and Biotech Industry is part of the Business and Financial Services subscription. Frost & Sullivan’s related studies include: Working Capital Management in the North American and European Pharmaceutical Industry, Mergers and Acquisitions in the Global Life and Health Insurance Industry and US Healthcare Real Estate Investment Trusts Industry. All studies included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Frost & Sullivan's Business and Financial Services group serves clients around the world in all aspects of financial analysis, market research and monitoring, due diligence, idea generation, opportunity analysis, investment valuation and other proprietary research. 

About Frost & Sullivan 

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? 

more about frost & sullivan