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Life Science Industry Outlook: 2019 In Review and 2020 Trends to Watch

Healthcare Sales & Marketing wants to offer you the long view. So we sifted through some of the best research to examine what happened in 2019 and what we might be able to expect in 2020.

2019 saw over $350B in global pharma and life sciences deals, up 62% in deal value from 2018, with the BMS/Celgene deal leading the way at $99.5M. And the trend continues in 2020 with $1.4 trillion of capital on hand. The FDA approved 48 new drugs, 8 new biologics, 10 biosimilars, 32 new medical device PMAs, and 2,933 medical device 510ks. The sector is planning for a continued year of success. M&A activity is expected to remain high. According to EY’s Global Capital Confidence Barometer, “52 percent of life sciences executives said their company plans to actively pursue M&A activity in the coming 12 months, and that 68 percent are expecting the M&A market to be even more lively in 2020.” Here are some of the highlights.

2019 INDUSTRY REVIEW

DRUG, BIOLOGIC, AND DEVICE APPROVALS

FDA reports indicate that 2019 included the approval of 48 new drugs by CDER (the Center for Drug Evaluation and Research). Of these, 21 (44%) were considered orphan drugs, 20 (42%) were first-inclass, and 13 (27%) were considered breakthrough therapies.

a chart of FDA New Drug Therapy Approvals 2019
Source: FDA New Drug Therapy Approvals 2019
a chart of 2019's Novel Drug Approvals
FDA New Drug Therapy Approvals 2019
a chart of 2019's Novel Drug Approvals
FDA New Drug Therapy Approvals 2019
a chart of CDER'S Annual Novel Drug Approvals: 2010-2019
FDA New Drug Therapy Approvals 2019

CDER also approved ten biosimilars in 2019:

  • Avsola (infliximab-axxq), the fourth biosimilar to Remicade (infliximab)
  • Eticovo (etanercept-ykro), the second biosimilar to Enbrel (etanercept)
  • Hadlima (adalimumab-bwwd) and Abrilada (adalimumab-afzb), respectively the fourth and fifth biosimilars to Humira (adalimumab)
  • Ontruzant (trastuzumab-dttb), Trazimera (trastuzumab-qyyp), and Kanjinti (trastuzumab-anns), respectively, the third, fourth, and fifth biosimilars to Herceptin (trastuzumab)
  • Ruxience (rituximab-pvvr), the second biosimilar to Rituxan (rituximab)
  • Ziextenzo (pegfilgrastimbmez), the third biosimilar to Neulasta (pegfilgrastim) approved to treat patients with cancer receiving myelosuppressive chemotherapy
  • Zirabev (bevacizumab-bvzr), the second biosimilar to Avastin (bevacizumab)

On the biological front, CBER (The Center for Biological Evaluation and Research) approved 8 new products, 22 BLAs (Biologic License Application Approvals), 3 Biologic NDA and ANDAs and 38 biological device and application approvals.

Source: December 2019 FY 2019 Report by Director Peter Marks, M.D., Ph.D.

CBER approved Zolgensma, a gene therapy for pediatric patients less than two years of age with spinal muscular atrophy caused by a specific genetic mutation. They also approved three vaccines:

  • Dengvaxia, to prevent dengue disease in individuals nine through 16 years of age with laboratory-confirmed previous dengue infection and living in endemic areas
  • Jynneos, to prevent smallpox and monkey pox disease in adults 18 years of age and older who are at high risk for either of these infections
  • Vaxelis, to prevent diphtheria, tetanus, pertussis, poliomyelitis, hepatitis B, and invasive disease due to Haemophilus influenza type b, for use in children from six weeks through four years of age.

“In addition, we approved three treatments for primary immunodeficiency: Xembify, indicated for patients 2 years of age and older; Asceniv, indicated for adults and adolescents 12 to 17 years of age; Cutaquig, indicated for adults.

“Our ongoing efforts to ensure the safety of the nation’s blood supply included approval of two assays that detect the genetic material of the Babesia species of protozoan parasites in whole blood specimens: the Procleix Babesia Assay and the cobas Babesia test for use on the cobas® 6800/8800 System. These assays enable screening of donated blood and living donors of organs and tissues.”

The FDA was also active with medical devices, 32 of which were approved through the CDRH (Center for Devices and Radiological Health) Premarket Approval Process (PMA) in 2019. 135 Devices received Humanitarian Device Exemption (HDE) status, and 22 receved De Novo approval and 2,933 received 510k approval. The 32 devices that received PMA approval are listed below.

table of DEVICE NAME
table of DEVICE NAME

2019 DEALS

2019 saw over $350B in global pharma and life sciences deals, up 62% in deal value from 2018. 2020 already has its first major deal, with Lilly’s purchase of Dermira for $1.1 billion. And with $1.4 trillion dollars ready to be invested, deal flow should continue.

a chart of 2019 DEALS
PWC Global Pharma & Life Sciences deals insights Year-end 2019
table of PWC Global Pharma & Life Sciences deals
PWC Global Pharma & Life Sciences deals insights Year-end 2019

2020 INDUSTRY TRENDS TO WATCH

Looking over the ups and downs of 2019, we can now project some of the ongoing and emerging trends of 2020. Not surprisingly, a lot of the movement will be in areas like mergers and acquisitions, the search for C-suite talent, data, and the hot sectors of oncology, gene therapy, Alzheimer’s and, of course, the growing CBD market.

M&A Activity Will Grow

M&A activity has grown over the past year and is expected to remain high. According to EY’s Global Capital Confidence Barometer, “52 percent of life sciences executives said their company plans to actively pursue M&A activity in the coming 12 months, and that 68 percent are expecting the M&A market to be even more lively in 2020.” Dan Chancellor, therapeutic area director at Informa Pharma Intelligence, estimates M&A will continue with a 10% growth rate with 260 deals in 2020. E&Y’s 2020 report highlights deals based on Firepower.

M&A Focus Will Continue in the Area of Cell and Gene Therapy

E&Y predicts the cell and gene therapy market will continue to grow, with the promise of personalized therapies and the expertise and opportunity to scale manufacturing and supply chain. M&A activity increased 880% in deal totals between 2014-2015 and 2018-2019, suggesting continued interest in 2020.

Biopharma Revenue Growth Will Come From Oncology

Vantage’s 2020 Preview highlights the oncology advances in the past 10 years and the hold it has taken on the biopharma space. Cancer drugs and the companies that develop them dominate the sector. Oncology will remain strong both in the short and long term. Of the eight drugs expected to add $1B or more in new sales in 2020, four are cancer drugs. The combination of high prices and real breakthroughs is strong.

Source: Vantage 2020 Preview

a chart of M&A GROWTH
a chart M&A activity in the cell and gene therapy market (2014-19)
A medicine bottle

CBD Market Will See Exponential Growth

BDS Analytics and Arcview Market Research, project that the collective market for CBD sales in the U.S. will surpass $20 billion by 2024.

The new forecast takes into account products sold through licensed dispensaries, pharmaceuticals and in general market retail, which includes cafes, smoke shops, grocery stores and pharmacies. However, BDS Analytics predicts that the majority of CBD product sales will soon occur in general retail stores instead of cannabis dispensaries. BDS Analytics is predicting an compound annual growth rate of 49 percent by 2024 across all distribution channels. Also, they expect that the CBD market, combined with THC products, will create a total market of $45 billion for cannabinoids by 2024.

Source: The State of the Legal Cannabis Markets, BDS Analytics https://bdsanalytics.com/u-s-cbd-market-anticipated-to-reach-20-billion-in-sales-by-2024/

EU MDR Will Take Its Toll in 2020

According to a survey conducted by KPMG and the Regulatory Affairs Professionals Society (RAPS), achieving MDR compliance by the May 2020 deadline remains difficult for companies, mainly due to a lack of resources. Product launches may be driven outside of Europe. With the deadline looming large, only 27% believe they will be fully compliant by the cutoff without using transitional provisions.

Companies are also concerned about post-MDR sustainability, as 66% in the survey have yet to develop a plan for what comes next, due to uncertainty about timelines with compliance.

Source: KPMG/RAPS survey

A Battle Over Patient Data

Patient data has been a major topic, and now that the biggest players are in it, the field will only get more heated. Google, Apple, Amazon and others are all jockeying for supremacy. Roche bought Foundation Medicine and Flatiron Health in major moves to change diagnostics and oncology.

What’s coming in 2020? Not only a battle among the giants, but a pushback from regulators who are not happy with the dominance of big tech companies. Health systems, too, are in the game, looking for differentiation and new revenue streams. It’s going to be a hot arena.

Source: ZS, The Shakeout of 2020: The Year That Small Changes Emerge From the Big Hype

A man and a lady sitting

Alzheimer’s Disease

MarketWatch’s recent study indicates that in 2020, the market size of Alzheimer’s Disease is 2.9 billion and will reach 10.5 billion in 2025, growing at a CAGR of 17.5% from 2020. According to a recent study from Technavio, 44% of the market growth will come from North America. The market will grow as we see the convergence of a huge potential patient population and the availability, research, and development of novel biomarkers and the emergence of regenerative therapies.

Changes at the Top in MedTech

What will be the effect of musical chairs in the medtech C suites? That’s one of the intriguing questions for 2020. Looking down the list of our Top 50 Medical Device Companies, many have had or are expecting changes. Medtronic, the #1 on our list will see Geoff Martha take the helm in April as Omar Ishrak retires after almost 10 years. Abbott Labs will see Robert Ford as its new CEO, who led the $25B St. Jude integration deal in 2017, becoming only the 13th CEO in its 131 year history. Ford takes over for Miles White who has been in the position for over 21 years. BD, #9 has a new CEO, Tom Polen who started in January along with Jean-Claude Dubacher who took over #18 B. Braun, and #25 who will be led by prior Roche CEO, Ronald Digglemann.

The Presidential Election Will Not Dramatically Change Healthcare

According to the 2020 Industry Pulse Report from Change Healthcare and the HealthCare Executive Group, regardless of who wins the White House in 2020, payers and providers don’t expect disruptive change to the U.S. healthcare system. A plurality of C-suite respondents (39%) believe there will be no significant changes to the U.S. healthcare system following the 2020 elections, and a plurality (28%) of all respondents agree. The highest percentage of providers (31%) predict a continued unwinding of the Affordable Care Act (ACA), while 26% of payers expect the ACA to be strengthened. Just 17% of respondents expect to see a public option take hold, and only 3% predict America will move toward a single-payer, “Medicare for all” system post-election

Source: 2020 Industry Pulse Report from Change Healthcare and the HealthCare Executive Group.

The War for Talent Will Increase, Especially in Biotech

A recent CBRE report entitled “Markets Positioned for ‘Century of Biology” indicates that 2019 was a year of explosive growth for the biotech industry, which is also experiencing new faces in the corner office. This is partly due to the growth of personalized medicine, including the burgeoning cell and gene therapy industries. The report calculates the life sciences sector is growing at its fastest pace since 2000, expanding 3.2% yearover- year. Lab space rents have increased in the biotech hotbeds of Boston-Cambridge which has increased in double digits in 2019. Biotech research & development (R&D) employment growth was nearly 50% over the past 10 years. Additionally, New York currently has 1.5M square feet of lab space under construction; Seattle, Houston, Austin and Denver are experiencing similar growth in biotech. The unprecedented growth in the top clusters, such as Boston and the San Francisco Bay Area, has made them the most competitive talent markets in the industry fraught with numerous hiring challenges.

Source: CBRE report entitled “Markets Positioned for ‘Century of Biology’.”

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Written by hsandm

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Bob Roda- President and Chief Executive Officer, Hemosonics

Maria Finlay, MBA- Director of Channel Marketing, Incyte