Evaluate provides trusted commercial intelligence for the healthcare industry. Below are highlights from their Vantage 2020 Preview of the biopharma sector.


The highlights:

  • Rhetoric around drug pricing is only going to increase as the US presidential election gets closer, keeping a sector already unpopular with voters under the spotlight
  • The IPO window is not expected to completely close in 2020, but equity investors are probably not going to be as receptive as in 2019. Venture investors too could adopt a more prudent stance towards financings, particularly if it starts to look like their own funds will need to last longer.
  • The unpredictability of stock markets and other macro-economic issues mean it is hard to predict how the financial health of the sector might change. Events from outside the sector can quickly shift sentiment towards the high-risk drug development industry
  • This report pinpoints the sector’s biggest sales growth drivers next year, and highlights the companies that are capturing that growth. Certain mechanisms of action are projected to add billions of dollars in extra revenues in 2020, while there are surprisingly few brakes on biopharma’s top line. No prizes for guessing that cancer drugs feature prominently here
  • The report also identifies the most highly valued R&D projects, and the clinical programs that are consuming huge amounts of money
  • The November market rally means that the biotech sector is heading towards a triumphant finish to 2019. Whether this can be maintained for much longer is now the dominant question on investors’ minds.
a chart of product growth


Advances in oncology over the past decade mean that this field has become a major preoccupation for the biopharma space. Cancer drugs and the companies that develop them dominate overviews of the sector. This is true of both short and long term outlooks. In 2020, for example, eight drugs are expected to add $1B or more in new sales, and four of them are cancer drugs. The ability to charge relatively high prices in oncology helps these products to feature prominently, though it is also true that several of them represent real breakthroughs.


  • That Merck has played its hand to perfection in the anti-PD(L)1 antibody class is abundantly clear from this chart. Should the huge growth forecast for Keytruda next year come to pass, it will yield 2020 sales of $13.9B
  • Abbvie’s Humira, along with the whole anti-TNF space, is flat-lining thanks to the arrival of cheaper versions of several projects that utilize this mechanism. Growth or no growth, annual sales of $18.7B could be considered a nice problem to have
  • Revlimid is father of the house, having arrived in 2006 and still growing strongly more than a decade later, although this is a product notorious for enjoying steep price rises. These sales will now be booked by Bristol-Myers Squibb, which also sells another big grower, the blood thinner Eliquis


This chart looks more broadly at the mechanisms expected to drive the sector’s combined top line next year, or act as a brake.

  • Keytruda will contribute more than half of the new sales created by antibodies targeting anti-PD(L)1
  • The immunomodulatory category is represented entirely by Revlimid; the pathways through which the blood cancer treatment exerts its effects are still not fully known. Antibodies with various interleukin targets have been grouped here, though they target a wide range of autoimmune and inflammatory conditions, such as asthma and psoriasis
  • Dupixent and Stelara are big beasts here. Despite significant pricing pressure throughout the diabetes disease area, several of these mechanisms are expected to see major growth next year
  • GLP receptor agonists in particular are set to expand, driven by Novo Nordisk’s Ozempic; the SGLT2 inhibitors fall just outside this chart with an anticipated $1B in new sales in 2020
  • Vaccines are not considered a particularly exciting area of biopharma but they remain a big growth area, albeit largely consolidated into the hands of three companies: Glaxosmithkline, Merck & Co and Sanofi
  • Remarkably, a rare disease now stands as a sector growth driver, though cystic fibrosis is dominated by one company, Vertex Pharmaceuticals, which is capturing all the sales growth here
a chart of the biggest drivers and brakes to the sector's top line


The next analysis looks at the most highly valued R&D projects, as determined by EvaluatePharma Vision’s NPV Analyzer, which is based on the sellside’s consensus sales forecasts.

  • Topping the list with an eye-watering net present value of almost $12B is Eli Lilly’s attempt to bring a new mechanism to the diabetes market. Diabetes is a fiercely competitive space that has been subject to substantial pricing pressure, mainly in older drug categories like insulin. This means that any new mechanisms will have to offer substantial advantages over existing approaches
  • Another high value asset is Bristol-Myers’ Tyk2 inhibitor, BMS-986165, which should yield data from two large psoriasis studies in the second half of the year. As well as placebo Bristol-Myers is also pitting the project against Otezla – notably, this is the product that was sold to Amgen to win antitrust regulators’ blessing for the Celgene takeover. Pfizer and Johnson & Johnson are also working with Tyk2 inhibitors, so this is a mechanism to watch.
  • Ascendis stands out in this list as a rare smaller drug developer with a highly valued asset. Success with its long-acting human growth hormone means that the Danish company now sports a $5B valuation, which leaves little room for disappointment
  • Europe also contributes another big ticket asset in the shape of Argenx’s efgartigimod, the sector’s leading anti-FcRn project, intended to treat a range of rare autoimmune conditions
  • Sage-217 is also in the hands of a smaller company, and the failure of the phase III Mountain study in early December, which wiped billions from Sage’s market cap, shows how precarious these forecasts are. All the sales figures that provide the basis for the valuations listed here are estimates, and all projects are vulnerable to the clinical setbacks that are a fact of life of this sector
  • Roche’s bispecific antibody, RG7828, or mosunetuzumab, was another star of the Ash medical meeting, generating durable responses in an impressive proportion of very poor prognosis non-Hodgkin lymphoma patients, some of whom had relapsed after Car-T therapy. This is exactly the sort of progress that threatens developers of some of the more complex cell therapy approaches
table of biopharma's most valuable R&D projects

It is also interesting to note that oncology accounts for only three of the top 10 most highly valued R&D projects. True, cancer projects tend to target smaller niches now, but this could also reflect the fact that the next wave of immuno- oncology assets are taking a lot longer to arrive than expected.


  • An under-the-radar heart attack therapy in development by the Australian blood product specialist, CSL, stands out. CSL112 is an apoliprotein A-1 infusion that therapy that is being tested for its ability to reduce the incidence of secondary cardiovascular events after an initial heart attack
  • 2020 should also see results emerge from Regeneron and Teva’s 5,331-patient study of the long-term safety and efficacy of fasinumab in osteoarthritis pain. A huge amount of money has been thrown at the anti-NGF antibodies – the first projects entered the clinic over a decade ago – but safety concerns stalled development
  • Pfizer’s haemophilia B gene therapy, licensed from Spark, is unlikely to complete its pivotal study until 2021, though many will be hoping for an interim update next year
  • Finally, Takeda will presumably be hoping to complete the divestment of SHP647 next year. The company was required to commit to sell the anti-integrin antibody in return for antitrust clearance of its Shire takeover; the project has a similar mechanism to the Japanese group’s blockbuster Crohn’s and ulcerative colitis treatment, Entyvio
table of Most expensive clinical programmes- R&D projects
table of Most expensive clinical programmes- marketed drugs
a chart of biggest new sales generators in 2020


  • Once again, Keytruda is a league apart, though the billions that Merck is estimated to have spent on the drug are being returned in commercial success
  • Arguably, its smaller rivals in this space – Astrazeneca and Roche, for example – have yet to justify this level of spend
  • Diabetes projects that require huge cardiovascular outcome studies will inevitably be expensive programs to run, hence Novo Nordisk featuring here
  • Eli Lilly and Sanofi’s work in this disease area features in the look at expensive R&D programs; Lilly has yet to start an outcome study for tirzepatide, a move that will require the company to be supremely confident in this product’s potential.


  • The addition of Shire’s top-line helps Takeda join the ranks of the companies with the biggest projected top-line growth IN 2020
  • Bristol-Myers Squibb also gets a clear boost from the Celgene takeover, though the arrival of Revlimid generics in 2022 means that pressure on the pharma giant to find new sources of growth will not let up for long
  • That Abbvie is gaining very little top line uptick from its move on Allergan shows just how financially motivated that deal was
  • Standing out is AstraZeneca, which has several successful oncology franchises to thank for its pole growth position. Tagrisso in lung cancer and the Parp inhibitor Lynparza have proven themselves highly effective targeted cancer drugs; its anti-PD(L)1 contender, Imfinzi, might be lagging Keytruda and Opdivo but sales of the product are forecast to reach almost $2B IN 2020 – hardly a commercial failure


The boom that the biophama sector been enjoying over the past few years has been facilitated in no small part by an increasingly cooperative and flexible regulatory regime at the FDA. The stances that the FDA adopts play an important role in setting investor sentiment towards the biopharma sector, and not only because the US is the biggest acquirer of medicines globally. A ten year view of novel drug approvals in the US shows how numbers have climbed recently. The sector’s focus on rarediseases or poorly served niches in the oncology world has a lot to do with this focus, which the FDA has rewarded with very fast decisions. There are few signs that the US regulator’s industry-friendly stance will substantially shift next year.

a chart of FDA approval count vs. 5th year US sales


The FDA green-lit 47 novel agents in 2019, slightly ahead of the 10 year average. This cohort carries a fifth year sales potential – based on sellside consensus – of $23.8B, a figure that also looks respectable, over a ten year view.

Of course these straightforward measures of productivity are far from the end of the story. Concerns exist about what some consider the overuse of accelerated approvals and lack of oversight of confirmatory studies, for example, while the development of expensive new products that offer little improvement over existing therapies will continue to be held up as bad news for patients. But while novel technologies like gene therapy and RNA-based projects continue to reach the market with very little hold-up, the FDA will continue to be seen as one of the sector’s tailwinds.


The most immediate impact of greater stock market volatility next will be felt in the IPO market. Indeed, investors and companies are already feeling the effects. Carolyn Ng, managing director at the cancer-focused venture firm Vertex Ventures HC says it is already becoming harder to predict whether private companies will be able to float. “Most companies that are coming to us for funding right now are highly concerned about whether it’s at all possible to go out to the public markets next year. The majority are trying not to,” she says. Much depends on broader market conditions next year; as well the US political situation, macro-economic factors like changes in interest rates will dictate the market’s appetite for high-risk biotech stocks.

a chart of Biotech IPOs by quarter on Western exchange

By mid-November 2019, 13 drug developers had floated on Western exchanges in the fourth quarter, raising a total of $1.2B, according to EvaluatePharma. The chart above counts only companies involved in the development of human therapeutics; it excludes medtech and diagnostics, for example, and therefore provides a look at the most risky end of the biotech spectrum.


  • The huge takeovers of Celgene and Allergan in 2019 and Shire the year before has produced some record-breaking M&A years for the biopharma sector in terms of the amount of capital deployed
  • On deal volume the story has been slightly different. An uptick in M&A is typically predicted at the beginning of any new year, though the graph above suggests that this Christmas wish – on the part of that bankers and advisers at least – has failed to materialize in recent years. The volume of acquisitions happening has stayed stubbornly flat since 2016
  • This analysis concerns only the deal making activity of drug developers – it excludes sectors like medtech and diagnostics, for example. It does, however, encompass all forms of acquisition, such as buyouts of business units or single product purchases
  • The state of the equity markets in 2020 will help determine whether any power shifts back towards the buyers. Some believe that the cashrich bigger beasts of the sector, several of which are under pressure to find new sources of growth, will be forced to act. Gilead is frequently named as a group that needs to buy new growth
  • Another issue that potential buyers will have to contend with next year is an increasingly watchful US antitrust watchdog. The FTC’s demands likely delayed the Celgene takeover and more notoriously has prevented Roche from completing its purchase of Spark Therapeutics. Should this deal collapse, regulatory considerations will have to move up the agenda for companies and investors alike. Still, the larger takeovers of 2019 that did happen – The Medicines Company for $9.7B, Array Biopharma for $11.4B and Loxo Oncology for $8B – show that when big pharma wants an asset, the price seems almost immaterial
  • This also applies to R&D-stage takeouts: Novartis paid $8.7B for Avexis while Eli Lilly spent $1.6B on Armo Biosciences, both oneproduct companies. If the Spark deal closes, Roche is on the hook for $4.8B
a chart of Pharma and biotech M&A transactions announced each quarter


While certain concerns will persist this year, many see reason for optimism. The burning question is whether the rally will continue and whether, unlike 2019, any upturn will be more widely felt. “Performance has been quite narrow this year, the tide has not lifted all boats,” says Dan Mahony of Polar Capital. “There hasn’t been a lot of risk appetite. I think that’s beginning to change but it’s a fickle thing – some small caps are recovering but I don’t know whether it will persist into next year.” Larger biotechnology companies have been a big area of disappointment, and the likes of Gilead, Biogen and Amgen are all seen as suffering from similar problems: aging franchises and thin pipelines. A broad sector recovery will be hard while the big beasts of the industry remain out of favor with investors.

a chart of Relative growth of NBI and S&P 500


Others are predicting a more sudden end to this rally: Julia Skripka-Serry, a private investor and former biotech fund manager, believes a market correction is inevitable. She points to examples like Karuna and Allakos, both of which boast now multi-billion dollar valuations on the back of ostensibly positive but still early-stage data. “Who doesn’t think that’s insane? Some of these valuations are not sustainable,” she says.

Events in the US could easily provide the trigger. While the chance of near-term, substantive changes to America’s healthcare system seem as far away as ever, the biopharma sector’s pricing practices are under intense scrutiny. That is not going to let up next year, in the US or elsewhere, and in fact will only intensify as drug developers, and investors, increasingly turn their attention towards the sort of therapies that can more easily command a high price.

2020 will be full of deals to access innovation. It will also be filled with discussions about how society can afford to pay for the real clinical and technological breakthroughs that are coming to market at an ever-faster pace.

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