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Press Release

Fall in Licensing Deals Characterizes First Half of 2013 in the Pharmaceutical Sector

Although caution abounds, the industry is still on track to meet 2013 market expectations, according to Evaluate’s “Pharma Half-Year Review 2013” report

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LONDON, BOSTON, TOKYO (September 19, 2013) — Despite a positive start to the year characterized by healthy IPO activity and free-flowing venture capital, licensing deals, the life blood of the industry, have stalled, signaling that rising valuations could be pricing buyers out of the market. The industry now faces the second half with cautious optimism over its ability to sustain some of the buoyancy seen in the first half , according to the newly released, “Pharma Half-Year Review 2013” report from Evaluate’s editorial arm, EP Vantage. The report, based on data from EvaluatePharma, is available for download at http://www.evaluategroup.com/PharmaHalfYearReview.

Of note in the first half of 2013 was exceptional growth in the Nasdaq Biotechnology Index, a key valuation metric of small and medium-sized companies. The Index exceeded its previous record of 1,596.93 set 13 years earlier, growing 27 percent through June 30 — nearly equal to its growth for all of 2012.  The Dow Jones U.S. Pharmaceuticals Index showed similar gains at 21 percent. Compare this with the gains of 14 percent and 13 percent for the Dow Jones Industrial Average and S&P 500 respectively, and the amount of investment rushing into the pharma sphere becomes even more apparent.

However, not all areas of the industry were  quite as bright. While venture financing and merger-and-acquisitions activity  picked up, the industry will continue to fall short of the M&A activity that preceded the patent cliff. Additionally, licensing activity remains low now that high valuations raised many sellers’ expectations out of realistic territories.

“Despite the encouraging signs that have emerged recently, there are still deep seated issues to deal with, such as productivity, reimbursement and proving the value of products to payers,” said Lisa Urquhart, EP Vantage editor. “How well the industry performs during the next 16 months as it seeks to extend the lifecycles of important franchises or build up new classes of medicines will go a long way towards determining whether the current optimism is sustained, or if another bust is hiding just beyond this boom.”

Key findings of the “Pharma Half-Year Review 2013” report include:

  • IPO activity continues to increase as 20 companies floated in the first half of the year raising $1.28bn between them.  Only 16 companies completed IPO’s during the whole of 2012.
  • $2 billion in venture finance raised in first half with two thirds of total coming in the second quarter.
  • A total of 416 licensing deals were closed, with $1.59 million changing hands in the first half of 2013. Given these weak numbers, the industry may struggle to match the total of 2012, which was the slowest in at least five years.
  • The pharma industry saw $29 billion worth of M&A transactions in the first six months, putting 2013 on track to be the best year since 2010 (excluding mega-mergers).
  • US product approvals have nearly matched the encouraging pace of 2012, with 17 approved by June 30.  Should the 29 small-molecule therapies and nine biological agents make it to the market this year, projected five-year US sales will reach $16.3 billion, above the $15.9 billion projected from 2012.

Download your free copy of EP Vantage’s “Pharma Half-Year Review 2013” report at http://www.evaluategroup.com/PharmaHalfYearReview.

About Evaluate Ltd.
Evaluate is the trusted source for high quality commercial market intelligence and exclusive consensus sales forecasts to 2018.  Our services are EvaluatePharma, EvaluateMedTech and EvaluateClinicalTrials. Our award-winning editorial arm, EP Vantage, leverages our market intelligence and analysis to provide daily opinion and insights. Evaluate’s services give you the insights you need to ask the right questions and get the right answers. That’s intelligence you can act on. For more information visit: www.evaluategroup.com. On Twitter: @evaluatepharma, @evaluatemedtech, @epclinicaltrial, @epvantage.

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