Pharma and Medtech Sectors Struggle in First Half of 2016

LONDON & BOSTON & SAN FRANCISCO & TOKYO–(BUSINESS WIRE)–Falling stock markets, political uncertainty and continued global
economic weakness all contributed to a mixed first half for the pharma
and medtech industries. While M&A activity and drug approvals remained
buoyant, falling equity markets in the first six months of the year had
a clear impact on IPO and venture financing for pharma. Similarly, the
first half of 2016 saw no end to the worrying developments in the
medtech industry, with the venture crisis worsening and the IPO window
all but shut. The second half promises further turmoil with nervousness
growing ahead of the U.S. presidential elections – both candidates have
promised to train their sights on the healthcare sector – according to
first half reviews of 2016 from EP Vantage, the editorial arm of life
science market intelligence firm Evaluate
Ltd.
Pharma & Biotech Half-Year Review 2016 Highlights:

• Venture funding falls from peak: The amount of venture
  financing raised so far this year indicates that the peak has passed.
  Funding is now expected to fall to 2014 levels.
• Stock market jitters: The Nasdaq Biotechnology Index lost 21
  percent of its value across the first half of the year.
• IPO stagnates: Flotations dropped off substantially in the
  first quarter of 2016, with only eight companies making it to market.
  Companies were also forced to offer substantial discounts in the first
  half to succeed.

“Concerns about the pressures on drug prices continue to scare
investors, who also have tepid economic recoveries in the west and a
slowdown in China to grapple with,” said Amy Brown, author of the pharma
report. “There are no obvious triggers on the horizon to improve
matters, meaning these trends could deepen over the remainder of the
year. However, it is not all doom and gloom, as many companies remain
well capitalised. The sector is a long way from plunging into the depths
of the last recession.”
The full version of the Pharma & Biotech Half-Year Review 2016 can be at
downloaded at www.evaluategroup.com/PharmaBiotechHalfYear2016.
Medtech 2016 Half-Year Review Highlights:

• M&A dollar decline: Of the deals closed in 2016, only five
  broke the $1 billion barrier and none were over $10 billion – in
  contrast, all of the 2015 top 10 were over $1 billion, and four exceed
  the $10 billion threshold.
• Worrying signs for venture funding & IPOs: Medtech
  companies raised a total of $670 million from VC rounds in Q2, the
  lowest quarterly amount since Q1 2009. The number of rounds also
  plunged to 27 in the most recent quarter.
• Fewer, but faster FDA approvals: The FDA granted either, a
  first-time premarket approval or a humanitarian device exemption to 38
  devices, a 27 percent decline from 2015. However, the FDA is speeding
  up, with the average review time for the first half of 2016 just 16.2
  months compared to 17.3 months in 2015 and 16.7 months in 2014.

“While concerning developments plagued the medtech industry during the
first half of 2016, the sector could be moving away from megadeals and
back to mid-sized acquisitions which would be beneficial for smaller
groups,” said Madeleine Armstrong, author of the medtech report. “The
fundamental problem is a dearth of funding for young companies, which
leads to a lack of new products and a dip in the quality of innovation
available for acquisition by bigger players. The rest of 2016 is shaping
up to be rocky, but delivering innovation to patients and returns to
investors are key to the health of the industry.”
The full version of the Medtech Half-Year Review 2016 report can be
downloaded at www.evaluategroup.com/MedtechHalfYear2016.
About Evaluate Ltd
Evaluate is the trusted provider of commercial intelligence including
product sales and consensus forecasts to 2022 for commercial teams and
their advisors within the global life science industry. We help our
clients make high value decisions through superior quality, timely,
must-have data and insights, combined with personalised, expert client
support. Our online subscription services cover the pharmaceutical,
biotech and medtech sectors. Our Custom Services group delivers project
based analytical and data services. EP Vantage, our independent,
award-winning editorial team, offers data-driven, forward-looking news,
commentary and analysis on a daily basis. For more information visit www.evaluategroup.com.
On Twitter: @evaluatepharma,
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