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January 16, 2007
JPMorgan conference reinforces consolidation
by Kelly McKenna
The recent JPMorgan Healthcare Conference held in San Francisco reinforced the continued growth and valuation of the biotech industry and big pharma's increasing efforts to capitalize on biotech’s innovative science and targeted therapeutic approaches.
Bloomberg data illustrates this growth. With the most annual acquisitions yet, 2006 showed a 32 percent increase in biotech deals, including acquisitions and product alliances, over 2005. The average premium rose 10 percent (from 23 to 33 percent). Biotech companies raise $20 billion in partnerships (over $17 billion in 2005), according to Burrill & Co. Analysts and investors agreed that deals and buyouts would continue, and bidding wars would ensue.
Pharma companies are not only focusing on biotech to build a sustainable pipeline (for example, Pfizer entered six research partnerships within the past three months), they're finally seeing the value in targeting niche patient populations and the underlying causes of disease vs. treating the symptoms alone. The risks involved with potential failure of a blockbuster drug are too great for big pharma (continuing the Pfizer example).
Pharma companies are now working to build reputations as good partners for smaller biotechs. Beyond the ability to successfully commercialize drugs, these companies need the right messaging - communicated early and often - and tangible support (e.g., a history of mutually beneficial partnerships, partner testimonials, presence at biotech forums/conferences) to be successful. Biotechs can now pick and choose their partners, so differentiation and commitment are key.
Posted by kelly_mckenna at January 16, 2007 11:18 AM
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