Profitable companies and non-Profitable Biotech companies (Rising stars) have developed innovative drugs for treatment of chronic and non chronic diseases. In the next five years the distinction between mature biotech companies and large global pharma is likely to disappear as investment in R&D and acquisition start delivering and Market Cap match the large global pharma. Dividend and consolidation could be the future drivers and continue to attract long term investors. Optimism prevails around the future of this sector as a whole which was reflected in the unprecedented rally in shares in 2012. We expect this trend to continue in the next five year driven by launch of Innovative drugs catering to unmet needs in Alzheimer’s, HCV, osteoporosis, RA, Psoriasis, MS, Dyslipidemia, Cystic fibrosis, Cancer and orphan diseases. Drug approvals and label expansion of existing portfolio of launched drugs and data from late stage pipeline drugs should maintain the growth momentum and investors interest.
2012 was spent recovering from the big acquisitions made in the last five years by this sector but they expect exercising of some restrain for similar large acquisitions as investors would like to see the returns reflected in the top-line and EPS. However in- licensing of early or mid stage compounds or small acquisitions will continue since the Rising Stars will keep throwing the bait by taking risks and innovate using novel technology platforms or validating novel targets for treating diseases.
Patent expiry impact is modest for the next five years for the sector as majority have “not so easy to copy” biologics and other drugs in their portfolio. They however are not complacent and are not leaving any stones unturned to meet the challenges as well as exploring emerging market opportunities with local partners. Favorable regulatory environment should finally see biosimilar mAbs entry in regulated markets in the next five years. The optimism of biosimilar players is reflected in the maturing pipeline. Para IV Filing from other generic players continues to pour leaving room for surprises and volatility.