Michael Christel is Group Managing Editor of Pharmaceutical Commerce, Pharmaceutical Executive, and Applied Clinical Trials. He can be reached at mchristel@mjhlifesciences.com.

Michael Christel

Joerg 5

PC: How are large pharma companies adapting their strategies in product lifecycle management and portfolio development in the face looming headwinds such as the 2030 patent cliff?

 This adaption in lifecycle management and portfolio development by large pharmaceutical companies is currently top of mind and a key priority for many leaders in the pharmaceutical industry. The 2030 patent cliff is a real thing. We’ll see nearly 200 drug products losing their patents over the upcoming years, with 69 of them being blockbusters. Over time, it could be one of the biggest patent cliffs that we’ll observe in the market.

Overall, we can observe two major strategies by biopharmaceutical companies in this area (navigating and absorbing looming patent losses). The first one is an increased focus on making internal development faster, more agile, and less costly. So, therefore, also increasing the ROI on your internal R&D. The next strategy, as we’ve seen in the last few years, is using M&A, external deals, and licensing as further fuel for growth of the market.

Looking at the key blockbusters and doing an analysis, 72% of these products have been developed by smaller companies and then purchased by mostly bigger ones. Therefore, this trend that we’ve observed in last few years will also further prevail, and will have a strong focus on external deals that will continue. That is also backed by the comments we heard at the JP Morgan conference [in January]. For instance, the CEO of Eli Lilly saying we're open to business, and also having a very focused approach in purchasing new assets or companies; but then keeping these companies outside of the Eli Lilly universe in order to also have some additional external/internal R&D.

Other executives, too, from Novo Nordisk, J&J, and others made clear statements that external growth will be a key part of their strategy and they have a key focus on doing BD&L activities, especially in the areas where the company already has a strong foothold and expertise. And then further building this out with these external deals with especially smaller- and mid-sized biotechs.

For more on the changing trends in biopharma dealmaking, read our industry outlook analysis 

Videos

In this Pharmaceutical Commerce video interview, Joerg Tritschler, a partner in Simon-Kucher’s life sciences division, explores the two major strategies big pharma companies are employing amid current macro challenges and efforts to offset looming patent losses to blockbuster brands.

‘Cliff’ Countdown: Balancing Internal and External Growth

Joerg Tritschler M&A

PC: Which therapeutics settings, or technology/platform areas, are you seeing the most M&A and partnering activity at the moment?

 There are several therapeutic areas and technology platforms where we’ve seen a very strong focus in 2023 and the first few months of this year. In terms of TA, oncology is still, by far, ahead regarding deal volumes compared to all the other therapeutic areas. But then we see neurology and cardiology also being very relevant at the moment. When it comes to more of the individual technologies, I think it's very obvious that ADCs (antibody-drug conjugates) are the hottest topic in the industry at the moment, especially looking at the rise in licensing-deal volume that we've seen in the last year. In 2023, the ADC licensing-deal volume was $43 billion alone. When you look at it over time, [volume] has increased in the last few years by 350%. So, from a clinical as well as deal perspective, this is the hottest topic in the industry.

There’s also cell and gene therapies. [These products] have actually declined in deal value, and not just in 2023; it started beforehand with many gene therapies, in the end, not making it to the market. There’s just a handful of companies and assets that we have seen in the market; therefore, with the higher aversion to risk, we’ve seen investors pulling out a little bit from that area. But cell and gene therapies are still very relevant for the future. We see many promising approaches, such as CRISPR, and dealmaking in this area is still active, just not as big as it used to be in [recent] years.

PC: What are some emerging or hot areas for dealmaking in the future?

 When we look at the next big thing in the industry, one of them could be radioligand therapy (RLT)—as a contender to that title. We currently see Novartis putting its bets on RLT instead of ADCs. We also see other companies going into the RLT area, such as Eli Lilly, and others investing in this new therapeutic platform. The future will bring a lot of changes in this area.

In this Pharmaceutical Commerce video interview, Joerg Tritschler, a partner in Simon-Kucher’s life sciences division, discusses the hottest therapeutic settings for dealmaking activity at the moment—and one platform approach in particular poised to be at the center of future M&A and licensing pursuits.

Today’s Most Promising Therapeutic Areas for Dealmaking

Emerging Biophama: Striving for Optimal Commercial Positioning

PC: What steps can young innovator companies take to better differentiate their value proposition and attract interest from potential buyers?

 The early-stage companies are phenomenal in one area—they have a great understanding of the clinical value of their asset. The key problem is not the clinical side of things, but more the commercial and market access side that a lot of these young companies are not sufficiently focusing on. Early-stage companies often miss the focus on striving for the optimal commercial positioning [of their potentially approved product]. This can be setting up the ideal LCM (lifecycle management) strategy in their trial program; or to consider payer-relevant evidence-generation to later on convince the different HTA (health technology assessment) and payer bodies of the value of their assets. And then having the right M&A outcomes at hand. That’s kind of the [challenges] that we'll see with a lot of emerging companies.

Therefore, I have three recommendations to these companies.

First and foremost, continue with the focus on the high understanding of your clinical value. That's still your key to success. But then take a further step into understanding the market even more in-depth, looking at all the different levers when it comes to commercial and market access. For example, we just did a recent study looking into how the forecasts of certain companies reflected in the later-on performance and actual sales [produced] by these companies. We’ve seen that the deviation, especially among early-stage companies, has been quite extreme with hardly any meeting their forecasts. In order to extract the full value of your product or your company, it's very important to also have a good grasp of this commercial knowledge of the future markets, preparing your strategies, and optimizing the pricing and access potential for payers for your product in order, then, to have better outcomes in deals later on.

Lastly, be bolder on your go-to-market strategy. We see a lot of companies that directly strive for the exit option and, therefore, leaving a lot of money on the table. We would recommend to the smaller companies to think about and prepare yourself for commercializing your product yourself, because then you have this alternative option. You can still sell your company later on or sell the asset or out-license it in certain geographies. But think about [commercializing] it yourself; then you have this plan B and much better cards to play in future negotiations with potential partners or buyers.

For more on the evolving relationship factors in life sciences dealmaking and investment, read our industry outlook analysis 

In this Pharmaceutical Commerce video interview, Joerg Tritschler, a partner in Simon-Kucher’s life sciences division, discusses the important and often missing element in strategic planning for clinical-stage companies—and ways to close that focus gap.

Emerging Biopharma: Striving for Optimal Commercial Positioning

A Tougher Road for Startups in Selling Their Value Story

PC: Amid a seemingly more risk-averse investment and funding climate, has it become increasingly difficult for startup or emerging life sciences companies to justify the value of their early-stage assets?

 Last year was probably, compared to the boom years before, where everything was bought more out of this fear-of-missing-out; and very positive valuations were taken where everything would have needed to fit perfectly in order to earn this investment back later on. We’ll see these changes in the investment approach, with risk tolerance and the long-term focus that has been taken—but more in a good way where companies are looking very strategically at how they can build out their portfolios and add promising assets to them.

Overall, the investors are taking on more of a decrease-in-risk approach. So, they are looking more at the later-stage investments, staying away from the preclinical stages or discovery stages, and showing a higher risk aversion when it comes to entering into these deals. Also, when you look at venture capital, this has declined and is more difficult for companies to get.

Nevertheless, both of these elements show a very difficult and challenging environment for biotechs. However, the market is very active. We see companies with great potential out there, especially some of these startups that still have, of course, a higher risk and need to have great innovations to get funding and, then, ultimately be the target of investors. [But] there are good chances for these companies to attract investment and potential buyers.

For more on the changing trends in life sciences dealmaking, read our industry outlook analysis 

In this Pharmaceutical Commerce video interview, Joerg Tritschler, a partner in Simon-Kucher’s life sciences division, talks about the challenging environment today for emerging biopharma companies in demonstrating the value of their promising early-stage drug candidates to potential investors or buyers.

Michael Christel

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