Analysis: Product deal trends in 2008
With the credit crunch focusing the minds of senior management on cash preservation it seems pharma and biotech companies became a little more cautious in 2008 with a declining number of licensing deals compared to 2007, down 23 percent to 422 individual product deals.
With total potential deal values falling 17 percent to USD 28 billion, dealmakers also appear to have become more risk averse with a significant shift from phase II to phase III product deals in terms of dollars committed, driving the average disclosed upfront payment for a phase III drug up 51 percent to USD 51 million. The general shift away from conventional drugs to biotech products is reflected in 100 fewer deals over small molecules, while oncology remains the hottest research area as deals in this therapeutic category rise 16 percent to 114 partnerships.
Of the 422 deals signed last year, detailed financial terms were disclosed in just 123 of these partnerships, compared with term disclosure for 135 of the 511 deals signed in 2007.
Oncology still hot
Only two therapy areas showed an increase in the number of deals signed in 2008, oncology and cardiovascular, with 114 oncology deals almost double the 60 deals within the CNS field, the next most active therapy area. Perhaps a reflection of the pitfalls increasingly associated with developing and commercializing drugs for central nervous system disorders, dealmakers shied away from this therapy area last year, almost halving the number of deals signed in this field.
| Deals by Therapy Area | Product Count | Upfront Payment (USD million) | Deal Value (USD million) | ||||||||
| 2008 | 2007 | Change (08 vs. 07) | 2008 | 2007 | Change (08 vs. 07) | 2008 | 2007 | Change (08 vs. 07) | |||
| Blood | 17 | 27 | -37% | 113 | 334 | -66% | 559 | 1,273 | -56% | ||
| Cardiovascular | 27 | 25 | 8% | 355 | 165 | 115% | 2,461 | 1,409 | 75% | ||
| Central nervous system | 60 | 116 | -48% | 846 | 515 | 64% | 6,981 | 5,888 | 19% | ||
| Dermatology | 14 | 25 | -44% | 191 | 88 | 118% | 247 | 880 | -72% | ||
| Endocrine | 25 | 30 | -17% | 125 | 247 | -49% | 872 | 2,822 | -69% | ||
| Gastro-intestinal | 25 | 37 | -32% | 11 | 286 | -96% | 320 | 1,638 | -80% | ||
| Genito-urinary | 13 | 19 | -32% | – | 114 | – | – | 753 | – | ||
| Musculoskeletal | 24 | 35 | -31% | 318 | 590 | -46% | 3,061 | 4,108 | -25% | ||
| Oncology & immunomodulators | 114 | 98 | 16% | 904 | 1,000 | -10% | 8,669 | 11,177 | -22% | ||
| Respiratory | 30 | 36 | -17% | 290 | 61 | 375% | 1,892 | 1,302 | 45% | ||
| Sensory organs | 13 | 14 | -7% | 67 | 13 | 415% | 466 | 202 | 130% | ||
| Systemic anti-infectives | 53 | 69 | -23% | 420 | 151 | 178% | 1,766 | 1,808 | -2% | ||
| Various | 7 | 20 | -65% | 75 | 50 | 50% | 485 | 440 | 10% | ||
| Report Total | 422 | 551 | -23% | 3,797 | 3,614 | 5% | 28,068 | 33,701 | -17% | ||
Shift away from conventional
Although the number of deals for biotech based products remained fairly constant in 2007, as a proportion of the total deals signed, biotech products made up 35 percent of all deals last year compared to 27 percent in 2007. Deals for monoclonal antibodies remained the most popular for biotech products, with more companies starting to place increasingly large bets on as yet unproven technologies, such as antisense therapies.
A driving force behind the decline in overall product deals appears to be due to an aversion to signing deals for small molecule drugs, with 102 less deals last year making up the bulk of the overall 129 fewer partnerships signed in 2008.
| Deals by Technology | Product Count | Upfront Payment (USD million) | Deal Value (USD million) | ||||||||
| 2008 | 2007 | Change (08 vs. 07) | 2008 | 2007 | Change (08 vs. 07) | 2008 | 2007 | Change (08 vs. 07) | |||
| Biotechnology | |||||||||||
| Antisense therapies | 30 | 20 | 50% | 336 | 357 | -6% | 4,146 | 2,023 | 105% | ||
| Bioengineered vaccine | 24 | 31 | -23% | 143 | 117 | 23% | 844 | 1,897 | -56% | ||
| Cell therapy | 2 | 3 | -33% | 0 | 140 | -100% | 500 | 925 | -46% | ||
| Gene therapy | 1 | 7 | -86% | - | - | - | - | - | - | ||
| Monoclonal antibody | 41 | 46 | -11% | 367 | 228 | 61% | 4,072 | 6,514 | -37% | ||
| Monoclonal antibody (conjugated) | 6 | 2 | 200% | - | 10 | - | - | 10 | - | ||
| Other biotechnology product | 1 | 7 | -86% | 9 | 51 | -82% | 737 | 537 | 37% | ||
| Recombinant product | 37 | 28 | 32% | 207 | 189 | 10% | 2,124 | 2,082 | 2% | ||
| Transgenic product | 4 | 3 | 33% | 0 | 1 | -50% | 257 | 1 | N/A | ||
| Total (Biotechnology) | 146 | 147 | -1% | 1,062 | 1,092 | -3% | 12,681 | 13,988 | -9% | ||
| Conventional | |||||||||||
| Chiral chemistry | 6 | 3 | 100% | 17 | 15 | 13% | 60 | 133 | -55% | ||
| In vivo diagnostics | 1 | 2 | -50% | - | - | - | - | - | - | ||
| Miscellaneous | 1 | 1 | 0% | - | - | - | - | - | - | ||
| Plant extract | 1 | 12 | -92% | 10 | 11 | -13% | 10 | 11 | -13% | ||
| Protein extract | 4 | 20 | -80% | 37 | 14 | 165% | 248 | 61 | 304% | ||
| Small molecule chemistry | 263 | 365 | -28% | 2,588 | 2,482 | 4% | 14,779 | 19,507 | -24% | ||
| Vaccine | 1 | -100% | - | - | - | - | |||||
| Total (Conventional) | 276 | 404 | -32% | 2,651 | 2,522 | 5% | 15,098 | 19,713 | -23% | ||
| Report Total | 422 | 551 | -23% | 3,797 | 3,614 | 5% | 28,068 | 33,701 | -17% | ||
Shift to late-stage products
Although the number of deals signed at each developmental stage, as a proportion of the total number of deals signed, has remained largely constant, there seems to have been a significant increase last year in terms of upfront fees and deal values assigned to phase III products.
With financial term disclosure on 26 phase III products in 2008 and 23 drugs in 2007, not only has the average upfront fee for a phase III product increased to USD 51 million, but total deal values have also risen significantly from USD 285 million in 2007 to USD 375 million last year.
As overall disclosed deal values declined in the 2008, the increase in value for phase III products has come mainly at the expense of phase II drugs. Whereas the average disclosed deal value at phase II in 2007 stood at a staggering USD 391 million, this fell dramatically last year to an average of USD 149 million.
| Deals by Phase | Product Count | Upfront Payment (USD million) | Deal Value (USD million) | ||||||||
| 2008 | 2007 | Change (08 vs. 07) | 2008 | 2007 | Change (08 vs. 07) | 2008 | 2007 | Change (08 vs. 07) | |||
| Marketed | 88 | 115 | -23% | 486 | 104 | 367% | 723 | 255 | 183% | ||
| Approved | 19 | 21 | -10% | 306 | 364 | -16% | 597 | 438 | 36% | ||
| Filed | 13 | 24 | -46% | 1 | 81 | -99% | 291 | 596 | -51% | ||
| Phase III | 46 | 50 | -8% | 1,324 | 900 | 47% | 9,759 | 6,553 | 49% | ||
| Phase II | 47 | 60 | -22% | 592 | 920 | -36% | 3,268 | 10,959 | -70% | ||
| Phase I | 42 | 55 | -24% | 487 | 479 | 2% | 6,012 | 3,377 | 78% | ||
| Pre-clinical | 95 | 103 | -8% | 259 | 159 | 63% | 2,470 | 3,343 | -26% | ||
| Research project | 69 | 116 | -41% | 259 | 608 | -57% | 4,657 | 7,914 | -41% | ||
| Unclassified | 3 | 7 | -57% | - | - | - | - | 265 | - | ||
| Report Total | 422 | 551 | -23% | 3,797 | 3,614 | 5% | 28,068 | 33,701 | -17% | ||
This content is written, edited and published by EP Vantage Ltd. All queries regarding the content should be directed to: news@epvantage.com
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