Will the market get better in 2024? The answer is not certain, but optimists have emerged.
On December 13, PricewaterhouseCoopers gave two major ** in the report
First, the IPO window in the biotech sector is expected to gradually reopen in 2024, but it may be biased towards companies with strong clinical data.
Second, it is expected that the M&A market will gradually move towards a high-quality era, and pharmaceutical companies will pursue profit margin growth more than focusing on scale growth.
So, will PwC's ** become a reality?
01 IPO window reopened
After most biotech companies give up hope of going public in the short term, the IPO window will "gradually reopen" next year. PwC analysts like this**.
According to the current IPO trend, it is not impossible to achieve this **.
Compared with the first half of the year, the IPO market in the U.S. biotechnology industry has picked up in the second half of the year.
From July to November, the number of companies listed in the form of IPO was 4, 2, 3, 1 and 3, totaling 13, which exceeded the first half of the year, and the total financing reached 17$2.8 billion.
And regardless of whether the volume continues to recover, it is already an established fact that the market is more skewed towards companies with strong clinical data. Most of the companies that have completed high financing this year have pushed their pipelines to a critical stage.
For example, the size of the financing reaches 5$400 million acelyrin. Its core pipeline, izokibep, is an IL-17 inhibitor. As an important inflammatory factor, IL-17 is associated with the occurrence of autoimmune diseases such as psoriasis, ankylosing spondylitis, and periodontitis, so it is also a target with super potential. Novartis' IL-17 inhibitor Cosentyx reached 47$8.8 billion.
Izokibep, on the other hand, has the potential to differentiate. On the one hand, its molecular weight is smaller and the affinity is higher, which not only has the possibility of subcutaneous injection, but also has unique advantages in the field of tissues and organs such as ** and joints;
On the other hand, the effect of izokibep has also been preliminarily verified by clinical data. Previously, the phase 2 data released showed that it has the potential to become BIC in the field of psoriatic arthritis, and the indications of psoriatic arthritis, hidradenitis suppurativa, and uveitis are all in the phase 2b and 3 clinical trial stage.
02 M&A has entered the era of high quality
In addition to IPOs, mergers and acquisitions are also important drivers for the development of the biotech industry.
In terms of the M&A market, PwC's expectation is that dealmakers will increasingly focus on margin growth in M&A, rather than focusing on growth-driven deals.
The logic is that there are still geopolitical and regulatory uncertainties in 2024, coupled with the reality of rising interest rates, so pharma companies will have to pursue greater certainty.
Against this backdrop, the M&A market will show the following two trends.
On the one hand, M&A risks in the pharmaceutical industry will be higher in 2024, as competition for high-quality assets will remain fierce. There may be an increase in large transactions of $5 billion to $15 billion in the market;
On the other hand, with a better understanding of the impact of the Inflation Reduction Act, it is expected that pharmaceutical companies will increasingly spend money on biologics at the expense of small molecule drugs in M&A.
Do you agree with the above view?