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Global Biopharmaceutical Leaders Study 2022

Sep 15 2022

Lazard’s Healthcare Group completed its fifth in-depth study of global healthcare industry leaders – this year focusing on the biopharmaceutical sector – surveying 211 biopharmaceutical industry leaders, including 171 C-level executives and 40 investors.

Lazard Global Leaders study 2022

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This year’s Global Biopharmaceutical Leaders Study was conducted amid a decline in biotech valuations and a widespread liquidity crunch. Factors driving this decline include the difficult geopolitical environment, macroeconomic challenges, numerous high-profile data misses, an inability to digest historically high issuance levels, an outflow of generalist investors, and relatively limited M&A activity.

However, there have been signs of recovery, with some recent positive clinical data, higher trading levels, a resurgence of certain forms of financing, and increased M&A activity. It is hard to say yet whether or not the improvement is durable.

In this context, the 2022 Study was fielded in June, just following the May biotech market nadir. As such, respondents expressed some pessimism regarding recovery expectations for the market, and the drivers that would propel that recovery. Central findings include:

1. Biopharmaceutical market recovery is unlikely before the first half of 2023, and there is significant uncertainty about the timing of the recovery thereafter. While innovation is expected to remain the same or increase in the next cycle, access to capital and company formation are predicted to be lower.

  • Almost no respondents – just 7% – believe there will be a biopharma market recovery in 2022, and there is significant uncertainty about the timing of a recovery.
  • While nearly all respondents share a bearish sentiment regarding a biopharma market recovery during the back half of the year, the majority believe that a recovery will occur in 2023, with opinion almost evenly split on a first-half or second-half recovery.

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2. A more optimistic biopharma market sentiment will primarily be catalyzed by an improved macroeconomic outlook, higher levels of M&A and business development activity, and meaningful positive data catalysts.

  • Over three-quarters of participants (76%) believe that an improved macroeconomic environment – including tempered inflation, consensus on monetary policy and a better global growth outlook – will be the most important catalyst in improving the biopharma landscape.
  • This key driver is closely followed by higher levels of M&A and business development activity (58%), and meaningful positive data catalysts (53%).

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3. While large-cap biopharma consolidation is expected to remain at the same low level, bolt-on acquisitions and strategic alliances are expected to increase. Value expectations, the need for growth and positive clinical data will be important catalysts to rising strategic activity.

  • A significant majority of biopharmaceutical leaders – 84% – expect large-cap biopharma consolidation to remain at the same prevailing low level for the balance of 2022, or to be even lower. However, a significant majority – 75% – expect bolt-on acquisitions activity to be higher, while 76% expect strategic alliance activity to be higher, a trend we are already seeing in the second half of 2022.
  • Mid-cap and large-cap biopharma executives and investors are particularly optimistic that bolt-on acquisition activity will be higher, with 85%, 80% and 83% of these groups of respondents expecting higher activity, respectively.

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4. The top therapeutic priorities are solid tumors, rare diseases, autoimmune/inflammation/fibrosis, and neuroscience. Views on the top innovative, disruptive technologies are widely distributed, reflecting the exciting breadth, depth and pace of innovation.

  • Solid tumors is a top therapeutic priority for more than half of the respondents (53%). This priority is followed closely by rare diseases (46%), autoimmune, inflammation and fibrosis (42%), and neuroscience (42%). These priorities are in line with last year’s Study, except there is now a lower focus on antivirals, antibacterials and other anti-infectives.
  • Large-cap biopharma executives and investors tend to be even more focused on autoimmune, inflammation and fibrosis (55% and 53%, respectively), and less focused on rare diseases (30% and 33%, respectively).

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5. Legislation that will significantly impact drug pricing is not expected, while drug price increases are anticipated to be at or below inflation in 2022 and 2023.

  • A large majority of industry leaders did not expect the U.S. to enact new legislation in 2022 that would significantly impact drug pricing. With the recent passage of the Inflation Reduction Act shortly after the Study was fielded, starting in 2026, HHS will have the authority to negotiate prices for 10 Medicare Part D drugs with no generic or biosimilar competition, increasing to 20 Part B and Part D drugs by 2029.
  • Among certain other provisions, the law also institutes inflation caps in Medicare Parts B and D that limit price increases for drugs year over year (beginning in 2023) and annual caps for beneficiaries’ out-of-pocket Part D spending (beginning in 2025). While the legislation establishes mechanisms to impact drug pricing, many view that the magnitude of the impact will not be significant for years to come, due to the limited scope and delayed timing for key provisions in the legislation.

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Click here to read the Global Biopharmaceutical Leaders Study 2022.

 

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