Download - Pharma, Biotech & Medtech 2017 in Review
Pharma, Biotech & Medtech 2017 in ReviewAmy Brown, Elizabeth Cairns, Edwin Elmhirst – February 2018
EP Vantage Pharma, Biotech and Medtech 2017 in review
In the early weeks of 2017 biopharma investors were preoccupied with working out whether the year would head up or down. Put generously, 2016 had been flat, and hopes were high that the months ahead would see a recovery.
On most measures, 2017 delivered a resurgence. And the picture was similar for the medical technology industry,
though life got tougher for the smaller groups.
Drug approvals in the US jumped, with plentiful evidence emerging over the year of the FDA’s industry-friendly
stance. Stock market indices climbed, helped in no small part by US politicians, who eased back on the drug pricing
rhetoric and finally pushed through tax reform. The rebound in investor optimism threw open the IPO window and
helped venture funding soar – all of which helped forge a fertile environment for small drug developers working on
innovative technologies.
These conditions caused valuations in certain areas of biopharma to surge ever higher last year – though this was
not true across the sector. Concerns about the growth prospects of large drug developers, most notably in the
biotech arena, led to a disappointing year for many in the big cap space. The ability of these companies to raise
prices on some elderly franchises in the coming months will remain a worry.
Meanwhile, the widely wished for pick-up in M&A never materialised, and activity dimmed even further – uncertainty
around tax reform and a refusal by buyers to accept sky-high valuations were widely blamed.
Over in the device sector, 2017 was a good year in many respects: most listed medtechs – and all the big-caps – saw
their share prices head skywards, often to record-breaking heights. In contrast to biopharma M&A activity increased
markedly, by value if not by number. And the FDA had a storming year, approving 50 new devices at the fastest rate
for the past five years.
But the funding crunch still exists for small medtechs. This phenomenon has been manifest for several years now and
it would be tempting to refer to it as a “new normal” if it were not for the fact that every year it gets worse. Last year
so few venture deals were done, and so few IPOs got away, that there is a real possibility that the pool of start-ups
could dry up completely if this trend is not reversed.
With two vast deals closing in 2017 at significant premiums, shareholders know that buying into big-cap medtech can still
result in significant payoffs. Investors, however, are well aware that with every megamerger, a potential acquirer of venture-
backed companies vanishes. The ebbing prospect of exits is one of the main factors behind the venture crunch.
Small players in both the medtech and biotech sectors will be hoping to see an increased appetite for deals in the
coming year.
Report authors | Amy Brown, Elizabeth Cairns, Edwin Elmhirst – February 2018
Unless stated, all data are sourced to Evaluate and were compiled in January 2018.
2 Copyright © 2018 Evaluate Ltd. All rights reserved.EP Vantage Pharma, Biotech and Medtech 2017 in review
Contents
Introduction 2
Pharma and Biotech in review 4
Few storms for biopharma to weather in 2017 4
M&A fails to pick up 8
Venture funding accelerates 11
New issues rebound 13
US FDA adds quantity to new drug approval speed 15
Medtech in review 18
The stars align for big-cap medtech 18
M&A comes back with a bang – or two – in medtech 20
Medtech funding ventures into the unknown 22
US listings disappoint in quiet year for medtech floats 24
Twice as many in half the time: the FDA speeds up approvals 26
Looking forward to 2018 29
3 Copyright © 2018 Evaluate Ltd. All rights reserved.EP Vantage Pharma, Biotech and Medtech year in review 2017
4 Copyright © 2018 Evaluate Ltd. All rights reserved.Few storms for biopharma to weather in 2017
Few storms for biopharma to weather in 2017
Biopharma investors started 2017 praying for a market recovery, and by the end of the year
their wish had pretty much been granted. The worst fears about the economic impact of
Donald Trump’s US presidency failed to materialise, and low-tax rhetoric ensured that by
the end of the year the markets presented a picture of health.
All major healthcare indices climbed in 2017, in Europe, the US and Japan, echoing wider stock market strength.
The dizzy heights of mid-2015 might not have been reached, but the indisputable trend for the year was up.
Stock index % change in 2017
NASDAQ Biotechnology (US) 21%
S&P Pharmaceuticals (US) 10%
Dow Jones Pharma and Biotech (US) 15%
S&P 500 (US) 19%
DJIA (US) 25%
Dow Jones STOXX Healthcare (EU) 2%
Thomson Reuters Europe Healthcare (EU) 16%
Euro STOXX 50 (EU) 7%
FTSE-100 (UK) 8%
TOPIX Pharmaceutical Index (Japan) 11%
Indices
Among individual stocks Abbvie ended the year as big pharma’s winner by a wide margin, thanks to the group’s
success in delaying biosimilar competition to its mega-blockbuster Humira.
Astrazeneca surprisingly overcame the initial failure of its flagship immuno-oncology asset Imfinzi in a hugely
important lung cancer study called Mystic. And Johnson & Johnson climbed on a strong performance from its
pharmaceutical unit over the year, demonstrating resilience to biosimilars and delivering a big win with its prostate
cancer drug Zytiga.
At the other end of the table, Glaxosmithkline made its annus horribilis official, its new chief executive Emma
Walmsley suffering a baptism of fire on several fronts. Ironically Glaxo was the best-performing big cap stock of 2016.
Sanofi was buffeted by mounting concerns around its reliance on the difficult diabetes space and a lack of pipeline
prospects; the French firm responded in early 2018 with an M&A spree. Meanwhile Merck & Co never recovered
from October’s collapse on a third-quarter revenue miss and an expected delay to Keytruda’s confirmatory first-line
lung cancer study, Keynote-189, which has now yielded positive top-line results.
Pharma and Biotech in review
5 Copyright © 2018 Evaluate Ltd. All rights reserved.Few storms for biopharma to weather in 2017
Teva’s fall from grace continued in 2017; the Israeli company lost nearly 50% of its value last year, and has lost 70% since
January 2016. Even with a new chief executive and a recovery plan in place, fresh concerns about its debt burden are
never far from the surface, and Teva’s fourth quarter results suggested that the group’s problems are intensifying.
A poor year for Allergan also served to demonstrate how tough things have become for speciality pharma groups
– the Botox maker is struggling to drive top-line growth, and its controversial attempts to protect the patents on its
dry-eye drug Restasis won the company few friends.
Not so Australia’s CSL, basking in US approval for its hereditary angioedema drug Haegarda, which now has a handy
head start over Shire’s lanadelumab. And Novo Nordisk showed that life is not terrible for all diabetes players. Its
GLP1 agonist Victoza beat expectations in a competitive market, sending the Danish group’s stock on a tear from
early August.
Takeda represented the sole Asian company among the larger cap rankings. Investors were seemingly convinced by
the Japanese drug maker’s shift towards oncology, and hopeful for a handful of new product launches.
Market capitalisation ($bn)
Top 3 risersShare price % change
YE 2017 12 M change
Abbvie ($) 54% 154.4 52.6
Astrazeneca ($) 27% 87.9 18.7
Johnson & Johnson ($) 21% 375.4 61.9
Top 3 fallers
Glaxosmithkline (£) (15%) 86.5 (8.0)
Sanofi (€) (7%) 106.7 (2.6)
Merck & Co ($) (4%) 153.3 (9.0)
Big pharma companies: Top risers and fallers in 12 months Source: Evaluate® January 2018
Market capitalisation ($bn)
Top 3 risersShare price % change
YE 2017 12 M change
CSL (A$) 44% 49.8 14.9
Takeda (¥) 32% 44.8 8.0
Novo Nordisk (DKr) 31% 132.1 56.2
Top 3 fallers
Teva ($) (48%) 19.2 (17.5)
Allergan ($) (22%) 54.4 (24.4)
Fresenius (€) (13%) 42.3 (2.4)
Other big pharma companies ($25bn+): Top risers and fallers in 12 months Source: Evaluate® January 2018
6 Copyright © 2018 Evaluate Ltd. All rights reserved.Few storms for biopharma to weather in 2017
Among mid-cap drug makers – those capitalised at $5-25bn – Asian companies dominated the leading quintet.
South Korea’s Celltrion benefited from securing a positive EU regulatory opinion for Herzuma, a biosimilar version
of Herceptin. Meanwhile Chugai, majority owned by Roche, proved to be a better way for investors to trade on the
success of the haemophilia A therapy Hemlibra than did its Swiss parent.
And China’s Jiangsu Hengrui Medicine reaped the rewards of a modest licensing deal covering its anti-PD-1, SHR-
1210/INCSHR1210, with Incyte.
As for non-Asian winners, Vertex cemented its perceived lead in cystic fibrosis, the best efforts of Galapagos/Abbvie
notwithstanding. And Ipsen benefited from buying out Merrimack’s irinotecan formulation Onivyde and the successful
progress of its deal with Exelixis over the cancer drug Cabometyx.
Mid-cap fallers included Mallinckrodt, punished for flatlining sales of H.P. Acthar gel; Hikma, hurt by revenue forecast
cuts and US delays to generic versions of Advair; and Tesaro, the victim of a 2017 drift as its newly launched ovarian
cancer drug Zejula struggled in the face of competition from Astrazeneca’s Lynparza.
Market capitalisation ($bn)
Top 5 risersShare price % change
YE 2017 12 M change
Celltrion (KRW) 106% 24.0 12.9
Vertex Pharmaceuticals ($) 103% 37.9 19.6
Chugai Pharmaceutical (¥) 72% 28.6 10.5
Jiangsu Hengrui Medicine (RMB) 52% 29.3 13.5
Ipsen (€) 45% 9.8 3.5
Top 5 fallers
Mallinckrodt ($) (55%) 2.1 (3.1)
Opko Health ($) (47%) 2.7 (2.4)
Lupin (Rs) (40%) 6.1 (3.9)
Hikma Pharmaceuticals (£) (40%) 3.6 (2.0)
Tesaro ($) (38%) 4.5 (2.7)
Mid cap ($5bn-$25bn): Top risers and fallers in 12 months Source: Evaluate® January 2018
Of course, for those with a taste for volatility the real money was to be made trading smaller biopharma groups.
Among companies capitalised at $250m to $5bn Sangamo and Esperion climbed fivefold, while Nektar,
Immunomedics and Spectrum rose over 300%.
Nektar added a huge $7.5bn to its market value over 2017 in large part due to its early-stage immuno-oncology
project, NKTR-214. Despite having generated only scant phase I data, the asset has become one of the hottest
pipeline projects in this space, based on its potential to turn “cold” tumours “hot”.
Sangamo and Esperion were both recovery stories, the former receiving a massive boost from a technology-
validating deal with Pfizer in May. The case of Spectrum is more curious: the group surged on the promise of its pan-
Her inhibitor poziotinib in a small NSCLC niche, before firing its chief executive, Rajesh Shrotriya.
7 Copyright © 2018 Evaluate Ltd. All rights reserved.Few storms for biopharma to weather in 2017
On the downside, Ipsen’s Onivyde buy explains Merrimack’s poor showing: part of the $575m received from Ipsen
was paid out as a special dividend to Merrimack investors. Forward Pharma also collapsed after paying out a one-off
windfall to investors.
Novan suffered a clinical setback with its acne candidate SB204, while Adocia lost Lilly as a partner for
BioChaperone Lispro.
Market capitalisation ($m)
Top 5 risersShare price % change
YE 2017 12 M change
Sangamo BioSciences ($) 438% 1,386 1,171
Esperion Therapeutics ($) 426% 1,725 1,443
Nektar Therapeutics ($) 387% 9,404 7,529
Immunomedics ($) 340% 2,457 1,754
Spectrum Pharmaceuticals ($) 328% 1,908 1,551
Top 5 fallers
Novan Therapeutics ($) (84%) 67 (344)
Curis ($) (77%) 115 (275)
Forward Pharma (DKr) (77%) 347 (356)
Merrimack ($) (74%) 137 (389)
Adocia (€) (73%) 116 (289)
Small cap ($250m-5bn): Top risers and fallers in 12 months Source: Evaluate® January 2018
Top 5 risers
Sangamo BioSciences Sangamo’s gene therapy gets Pfizer stamp of approval
Esperion Therapeutics Positive triplet data spurs Esperion deal-making chatter
Nektar Therapeutics SITC – Nektar’s plan to make cold tumours blossom
Immunomedics Activist investor puts Immunomedics phase III in play
Spectrum Pharmaceuticals World Lung – Spectrum shoots for another lung cancer niche
Top 5 fallers
Novan Therapeutics Novan’s spotty acne performance hurts shares
Curis -
Forward Pharma Biogen burned as Forward goes backwards
Merrimack Daily Market Movers: Global Majors & Industry (30 May 2017)
Adocia Lilly dumps Adocia again
Related EP Vantage commentary and analysis
One company is not captured in the 2017 numbers by virtue of having been taken over: the $11.9bn acquisition of
Kite Pharma by Gilead in August cemented that group’s 304% share price appreciation on the year. Had Kite had a
standalone existence at the end of 2017 it would have graduated to the mid-caps according to this classification.
8 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A fails to pick up
M&A fails to pick up
The strength exhibited by biopharma shares in 2017 is perhaps surprising when considering the
failure of M&A action to pick up. Widely considered a driver of investor enthusiasm, takeover
activity actually dimmed over the year.
A paltry 179 deals were struck, raising just $80bn and thus making 2017 the slowest M&A year of the past five. These
figures encompass global drug makers - medtech M&A is detailed later.
Source: Evaluate® January 2018Five years of M&A – deal values and volumes
Com
bine
d de
al v
alue
($bn
)
Dea
l cou
nt
50
100
150
200
250 350
300
250
200
50
100
150
00
Combined deal value ($bn)
Deal Count
Year2017
80.0
2016
104.4
2015
188.9
2014
219.3
2013
79.5
203
290
229226
179
Many blamed uncertainty over US tax reforms for holding big companies back from making bold strategic moves.
Escalating valuations were another culprit, while the hobbling of several of the industry’s serial acquirers, namely the
speciality companies, cannot have helped.
Whatever the reasons, the analysis below suggests that a big drop in small and mid-sized takeovers pushed transaction
volumes, and total deal values, lower.
Year <$250m $250m-$1bn $1-10bn $10-25bn $25+bn
Count Avg ($m) Count Avg ($m) Count Avg ($bn) Count Avg ($bn) Count Avg ($bn)
2017 67 69 18 620 8 2.5 1 11.9 1 30.0
2016 72 54 28 564 14 2.8 1 14.0 1 32.0
2015 134 57 32 521 26 2.9 3 16.4 1 38.7
2014 86 47 35 524 23 3.6 1 16.0 2 49.3
2013 52 86 30 479 14 3.6 1 10.4 0 -
M&A totals by valuation category* Source: Evaluate® January 2018
* Where deal values disclosed.
9 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A fails to pick up
The fall in total M&A spend last year was also due to an absence of very big deals. True, both Actelion and Kite
managed to attract $10bn-plus price tags last year, and the analysis above shows that deals of this size typically only
occur once a year. However, compared with the big deals of the biotech boom years, these takeovers were smaller –
the sector has not seen a $40bn-plus transaction since 2015.
And excluding Actelion and Kite, last year’s deals quickly slip into the $1bn dollar territory.
As an aside, it is clear that oncology remains a red-hot space – half of the targets below were involved in cancer research.
Date announced Acquirer Target Value ($bn)
Jan Johnson & Johnson Actelion 30.0
Aug Gilead Sciences Kite Pharma 11.9
Jan Takeda ARIAD Pharmaceuticals 5.2
Apr Fresenius Akorn 4.3
Oct Novartis Advanced Accelerator Applications 3.9
Aug Bristol-Myers Squibb IFM Therapeutics 2.3
Nov Shanghai Pharmaceuticals Holding Cardinal Health’s China business 1.2
Jul Mitsubishi Tanabe Pharma NeuroDerm 1.1
Apr Sawai Pharmaceutical Generic pharmaceuticals business of Upsher-Smith Laboratories 1.1
Jan Ipsen Merrimack’s commercial & manufacturing infrastructure for Onivyde 1.0
Biggest M&A deals announced in 2017 Source: Evaluate® January 2018
Johnson & Johnson J&J sets benchmark with massive Actelion price
Gilead Sciences For Gilead Kite is no Pharmasset
Takeda Takeda pays 2012 price for 2017-model Ariad
Fresenius Fresenius shows biotech how to get the deals done
Novartis Novartis bets big on US Lutathera approval
Bristol-Myers Squibb Bristol’s private Sting should have venture financiers celebrating
Shanghai Pharmaceuticals Holding -
Mitsubishi Tanabe Pharma Mitsubishi Tanabe joins Japanese biopharma in easing deal bankers’ pain
Sawai Pharmaceutical -
Ipsen Merrimack falls for $1bn oncology offer from Ipsen
EP Vantage coverage
One group of investors for whom takeovers are extremely important are venture capitalists. And, while buyouts of
private drug developers dipped along with the wider M&A market, these investors have reasons to remain cheerful.
VC-backed companies accounted for 28% of last year’s biopharma takeovers – a five-year high. It seems that the
private sphere is not only incubating increasingly desirable targets, it is also still managing to get the deals done.
The following analysis looks only at full company takeovers – data elsewhere in this M&A section also include
transactions such as stake purchases or product acquisitions.
10 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A fails to pick up
A surge in deals announced in January 2018 is raising hopes for a far more active period. It should be noted, however,
that for the last three years the opening months of the year have exhibited an enthusiasm that quickly petered out.
Source: Evaluate® January 2018VC-backed takeouts
Com
bine
d de
al v
alue
($bn
)
Dea
l cou
nt
4
2
8
6
12
10
14
16
18 30
25
20
5
10
15
0
Combined deal value ($bn)
Deal Count
Year
2016
16.6
2015
10.9
2013
5.7
2014
7.3
2012
6.1
2017
7.7
0
Abbvie –Stemcentrx$9.8bn
25
19
1717
14
21
Source: Evaluate® January 2018Pharma and biotech M&A transactions announced each quarter
Tota
l dea
l val
ue ($
bn)
Dea
l cou
nt
20
40
80
60
100
120 90
40
50
60
70
80
30
20
10
00
Total deal value ($bn)
Deal count
2013 2014 2015 2016 2017
Year
Q1
5.5
Q2
22.8
Q3
29.3
Q4
22.0
Q1
41.2
Q2
50.8
Q3
31.2
Q4
96.1
Q1
70.0
Q2
27.4
Q3
62.0
Q4
29.5
Q1
44.1
Q2
22.5
Q3
29.8
Q4
8.0
Q1
40.3
Q2
9.1
Q3
19.2
Q4
11.5
Teva-Allergangenerics:
$41bn
J&J-Actelion$30bn
Allergan-Actavis: $71bn
Shire-Baxalta:$32bn
Abbvie-Pharmacyclics:
$21bn
Allergan-Forest:$28bn
43
54
64 65
52
64
5558
7477
7168
60
46
53
44
65
31
37
46
GSK-Novartisasset swap:
$23bn
11 Copyright © 2018 Evaluate Ltd. All rights reserved.Venture funding accelerates
Venture funding accelerates
With two record-breaking final quarters under its belt 2017 moved into the annals as one the
biggest years for venture funding. The total haul for 2017 hit $11.3bn, putting it ahead of 2015’s
previous record.
The huge funds raised by venture firms over the past few years were deployed at pace last year, while the trend
towards making much bigger bets on companies also played a part in boosting the total amount raised. A notable
example of this much-to-few strategy was seen last year when Roivant pulled in a staggering $1.1bn in a single round.
1.5
1
0.5
Source: Evaluate® January 2018Quarterly VC investments
Inve
stm
ent (
$bn
)
Fina
ncin
g co
unt
2
2.5
3.5 140
3 120
100
80
60
40
20
0
Amount raised ($bn)
Financing count
Year
2013 2014 2015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q40
3.6
3.3
1.91.9
2.5
2.72.72.72.7
2.22.1
1.61.61.7
0.7
1.1
1.5
2.92.9
2.290
133
106
121116
137
125
139
130 129
106
134
120
103
92
99
132
111
8385
The data here concerns only companies developing human therapeutics; medtech investments are covered later in
the report. The trend towards fewer but larger rounds is surely now the new normal though this pattern still seems
to be developing. The number of mega-rounds hit a new high last year, the following table shows, while falling deal
volume helped push averages ever higher.
The expanding size of these mega-rounds indicates that in certain fields investment models have fundamentally
changed. The super-sizing of investments has meant much larger venture syndicates, which now frequently include
technology companies alongside traditional VC and pharma groups.
12 Copyright © 2018 Evaluate Ltd. All rights reserved.Venture funding accelerates
But as Roivant’s lead investor, Softbank, has found, investment in healthcare comes with great risk. The umbrella
company’s two public investments, Myovant and Axovant Sciences, have disappointed, the latter crashing with the
failure of its Alzheimer’s project intepirdine.
Other fund-raising winners in the year included the infectious disease company Vir Biotechnology, which despite
only being launched in January 2017 managed to pick up $500m in two funding rounds during 2017, including money
from the Bill and Melinda Gates Foundation.
Few expect much to change in the venture sector this year. Biopharma’s desire to stock pipelines is never sated,
while the IPO window so far shows no sign of shutting. However, these private investors are no doubt eyeing the
recent market volatility nervously.
Date Investment ($bn)
Financing count
Avg per financing ($m)
No. of rounds ≥$50m
No. of rounds ≥$100m
2017 11.3 411 30.5 68 15
2016 9.4 413 24.3 48 13
2015 11.1 499 23.2 58 14
2014 7.4 517 15.4 35 4
2013 5.1 450 12.7 12 3
2012 4.8 439 12.0 16 2
Annual VC investments Source: Evaluate® January 2018
Company Investment ($m) Round Date
Roivant Sciences 1,100 Series A Aug
Vir Biotechnology 350 Series A Oct
Ginkgo Bioworks 275 Series D Dec
Cheplapharm Arzneimittel 210 Series Undisclosed Sep
ADC Therapeutics 200 Series D Oct
Cullinan Oncology 150 Series A Oct
Vir Biotechnology 150 Seed Capital Jan
Bridgebio Pharma 135 Series A Sep
Rubius Therapeutics 120 Series A Jun
Semma Therapeutics 114 Series B Dec
Top 10 rounds of 2017 Source: Evaluate® January 2018
13 Copyright © 2018 Evaluate Ltd. All rights reserved.New issues rebound
New issues rebound
Though well below the frothy exuberance of 2014 and 2015, the $3.9bn raised by biotech
flotations last year represented a significant pick-up for companies wishing to make their
public debut.
And the continued upward quarterly trend, which culminated in one of the strongest fourth quarters since 2014,
indicates that the IPO window opened wider as the year progressed.
Source: Evaluate® January 2018Biotech initial public o�erings by quarter on western exchanges
Am
ount
rai
sed
($m
)
Cou
nt
250
500
750
1,000
1,750
2,000
1,250
1,500
2,250
2,500 50
40
30
10
20
0
Amount raised ($m)
Count
Year
2013 2014 2015 2016
0Q2
1,051
Q3
1,263
Q4
704
Q1
2,26
8
Q2
940
Q3
1,478
Q4
1,837
Q1
802
Q2
1,798
Q3
1,548
Q4
941
Q1
594
Q2
677
Q3
541
Q4
464
Q1
449
Q21,0
26Q3
995
Q4
1,381
Q1
2017
1719
12
33
18
26
20
15
25
16
22
10
17
12
68
16
1214
6
237
Denali’s ability to drum up $250m from investors, the biggest biopharma IPO of 2017, will only have increased the
confidence of those waiting to list, especially as the group operates in the high-risk CNS area.
Another winner was Apellis Pharmaceuticals, whose second bite at the IPO cherry resulted in a $150m raise. Its
shares finished the year up 55%, a remarkable comeback from a company which was forced to abandon its flotation
plans in 2016, citing poor market conditions.
14 Copyright © 2018 Evaluate Ltd. All rights reserved.New issues rebound
Company Date Amount raised ($m)
Discount/ premium
Share price change to YE17
Denali Dec 250 0% (13%)
Zai Lab Sep 173 6% 18%
Biohaven Pharmaceutical Holding May 168 13% 59%
Odonate Therapeutics Dec 150 (6%) 4%
Apellis Pharmaceuticals Nov 150 0% 55%
Akcea Therapeutic Aug 144 (38%) 117%
Optinose Oct 138 0% 18%
Rhythm Pharmaceuticals May 138 13% 71%
Deciphera Pharmaceuticals Sep 128 6% 33%
Clementia Pharmaceuticals Jul 120 7% 27%
Biggest IPOs in 2017 Source: Evaluate® January 2018
Notably, more companies achieved their proposed offer price in 2017 than in the previous four years. Discounts to
initially proposed price ranges averaged at 3% across the year, a stark contrast to the more risk-averse days of 2012
when the average discount hit 24%.
Perhaps companies floating last year approached public investors with more realistic valuations on the table. The
exuberant receptions seen in the market do not entirely support this theory, however, and many would argue that the
stock market became more accepting of risk as the year progressed.
The reception to Solid Biosciences is a case in point. The gene therapy player managed to list in January 2018 and
then soared on its debut, despite at the last minute revealing a clinical hold on its sole clinical asset.
Those with an ambition for a public life should strive to make hay while the sun is shining.
Q1 Q2 Q3 Q4
Source: Evaluate® January 2018O�er price premium/discount to original IPO price range
Ave
rage
pre
miu
m/d
isco
unt
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
10%
-35%
Year
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013 2014 2015 20172016
15 Copyright © 2018 Evaluate Ltd. All rights reserved.US FDA adds quantity to new drug approval speed
US FDA adds quantity to new drug approval speed
Last year saw the US recover from a new drug approvals slump in 2016, at the expense of a
slight increase in the average time taken to complete reviews.
2017’s tally of US approvals amounted to 57 new small molecules and biologicals, matching the record 2015 had set
for this century. Even better for industry bulls is that combined fifth-year US sales of drugs approved last year outstrip
those of the class of 2015, positioning 2017 as a year to remember – if analyst forecasts hold up.
Source: Evaluate® January 2018FDA approval count vs. 5th year US sales
US
sal
es 5
th y
ear
post
app
rova
l ($
bn)
Tota
l NM
Es +
bio
logi
cals
app
rove
d
5
10
15
20
25
35
30
60
50
40
30
20
10
00
US sales 5th year post approval ($bn)
Total NMEs + biologicals approved
Avg. number of annual approvals. 39
Year
2010 – Prevnar 13 (Pfizer), Victoza (Novo Nordisk), Prolia/Xgeva (Amgen)
2011 – Xarelto (J&J/Bayer), Eylea (Regeneron/Bayer)
2012 – Eliquis (Bristol-Myers Squibb/Pfizer), Stribild (Gilead)
2013 – Sovaldi (Gilead), Tecfidera (Biogen)
2014 – Opdivo (Bristol-Myers Squibb), Harvoni (Gilead)
2015 – Orkambi (Vertex), Ibrance (Pfizer)
2016 – Tecentriq (Roche), Epclusa (Gilead), Venclexta (Abbvie)
2017 – Ocrevus (Roche), Dupixent (Sanofi)
2008
5.6
2009
5.4
2010
12.5
201 1
11.9
2012
13.3
2013
14.7
2014
22.4
2015
27.2
2016
13.0
2017
30.7
31
34
26
34
43
35
45
57 57
25
For investors, even more important than absolute approval numbers will be the economic potential of those new
drugs. And here 2017’s forecast beats that expected for 2015’s approvals, at $30.7bn in total, versus $27.2bn.
True, this could largely be down to the sellside becoming increasingly positive in a bull market. But the class of 2017
did have its fair share of expected blockbusters, including Roche’s Ocrevus and Sanofi’s Dupixent.
16 Copyright © 2018 Evaluate Ltd. All rights reserved.US FDA adds quantity to new drug approval speed
Product Company 2022e US sales ($bn)
Ocrevus Roche 3.94
Dupixent Sanofi 3.56
Ozempic Novo Nordisk 1.83
Imfinzi AstraZeneca 1.47
Tremfya Johnson & Johnson 1.22
Top approvals of 2017 Source: Evaluate® January 2018
Fast approvals for products like the novel CAR-T therapies Kymriah and Yescarta will have helped bump up the
numbers last year. Indeed, applications with priority review – which both Kymriah and Yescarta boasted – sailed
through in an average of 7.3 months, the fastest since 2013.
Conversely, the average time for applications under standard review went back up to that seen two years ago, while
overall review times amounted to 12.3 months, slightly above 2016’s total, with the caveat that the total numbers are
relatively small.
First-cycle approval, without requests for additional information, was achieved by 85% of applicants. And, given the
earlier reports of the FDA collapsing under the strain of its workload, the statistic about which the agency might be
most proud is that the CDER met its target PDUFA date for 100% of applications.
Source: Evaluate® January 2018NME approval times and counts
Ave
rage
rev
iew
tim
e (m
onth
s)
5
10
15
20
25
0
Standard
Breakthrough therapy
Priority review
Priority review decade average
Standard decade average
PDUFA IVPDUFA III PDUFA V
2006(n=29)
n=16
n=13
2007(n=26)
n=13
n=13
2008(n=31)
n=22
n=9
2009(n=34)
n=21
n=13
2010(n=26)
n=16
n=10
201 1(n=34)
n=18
n=16
2012(n=43)
n=28
n=14
n=1
2013(n=35)
n=24
n=9
n=2
2014(n=45)
n=23
n=13
n=9
2015(n=57)
n=29
n=17
n=11
2017(n=57)
n=25
n=15
n=17
2016(n=25)
n=8
n=11
n=6
17 Copyright © 2018 Evaluate Ltd. All rights reserved.US FDA adds quantity to new drug approval speed
Should this pace of approvals continue and the FDA’s apparent lenient stance persist, it will take issues beyond the
regulatory sphere to hit biopharma’s current optimistic mood – particularly as a look at the biggest launches lining up
for 2018 reveals a healthy clutch of blockbusters in the pipeline.
Novo Nordisk’s new once-weekly diabetes medicine and Gilead’s latest HIV combination represent hugely important
franchise extension strategies – and hopes are sky-high for commercial success in both cases.
Incyte’s epacadostat is one of the most closely-watched immuno-oncology assets in the industry’s pipeline; release
of pivotal data from the Echo-301 trial, due in the coming months, is arguably one of the most important readouts for
the sector this year. And while hopes for Rova-T have dimmed somewhat, impending results are still important for
Abbvie’s oncology ambitions.
Investors will be tracking the progress of these future blockbusters with great interest over the coming months.
The success or otherwise of these products will help determine just how impressive a year 2018 turns out to be.
Source: Evaluate® January 2018Top 10 potential launches in 2018 by 2022 sales ($bn)
2022e sales ($bn)
0.00 1.00 2.00 3.00 4.00 5.00 6.00
Bictegravir/F/TAF(Gilead)
5.05
Ozempic(Novo Nordisk)
3.05
Epacadostat(Incyte)
2.24
Rova-T(Abbvie)
1.44
Ozanimod(Celgene)
1.26
Apalutamide(J&J)
1.24
Elagolix(Abbvie)
1.21
AVXS-101(Avexis)
1.14
Lanadelumab(Shire)
1.13
Epidiolex(GW pharma)
1.05
18 Copyright © 2018 Evaluate Ltd. All rights reserved.The stars align for big-cap medtech
Medtech in review
The stars align for big-cap medtech
It was already clear that 2017 would be a different kettle of fish to 2016. But the extent of the
year-on-year difference in investor sentiment when it comes to large-cap medical device
makers is genuinely surprising.
Not a single company with a market cap in excess of $10bn saw its shares finish the year lower. And one group in
this cohort put in a performance better than any other since EP Vantage began analysing the share performance of
medtech groups: stock in the cosmetic dentistry company Align Technologies climbed an unprecedented 131%. No
big cap medtech has seen an annual share price increase this big within the last five years.
Certainly it is true that the general mood last year was markedly more positive than during 2016. The Thomson
Reuters Europe healthcare index reverted from a 12% fall in 2016 to a healthy growth rate of 16%, and US indices
jumped from sluggish growth in the 5-7% range to 31%.
Stock index % Change in 2017
Thomson Reuters Europe Healthcare (EU) 16%
Dow Jones U.S. Medical Equipment Index 30%
S&P Composite 1500 HealthCare Equipment & Supplies 31%
Indices
Indeed, big-cap medtech decisively outpaced big-cap biotech. This is partly due to confusing and often contradictory
messages from the White House on drug price controls; the pricing of medical devices does not grab headlines and
therefore largely escapes governmental attention.
Align’s 131% share hike was a result of an impressive commercial performance. For the nine months ended
September 2017 sales increased by 34% year on year, and profits 56%. The obvious question is how long Align can
maintain this kind of pace given that the wider orthodontics market is growing at around 4%.
The other top three big-cap risers are in robust health too, all showing share price increases of more than 50%.
19 Copyright © 2018 Evaluate Ltd. All rights reserved.The stars align for big-cap medtech
Market capitalisation ($bn)
Top 3 risers Share price % change YE 2017 12 M
Align Technology ($) 131% 17.8 10.2
Straumann (SFr) 73% 11.1 4.7
Intuitive Surgical ($) 73% 40.9 16.3
Top 3 worst performers
Olympus (¥) 7% 13.1 (0.2)*
Essilor International (€) 7% 29.6 3.8
Philips (€) 9% 34.9 5.2
Large cap ($10bn+) medtech companies: Top risers and worst performers in 12 months Source: Evaluate® January 2018
*Market cap rose 7% on constant currency basis.
With massive risers and no fallers, it is clear that the good times are back for big-cap medtech, and huge gains can
be made by companies willing to invest in innovation and pioneer new commercial approaches. Investors might
be seeking safer, steadier growth than that seen in biotech, which last year often fluctuated on the basis of a single
Twitter account. But, if this analysis shows anything, it is that being relatively safe and steady does not preclude
vast increases.
If Align’s 131% share price rise across the past year was impressive, just look at Exact Sciences. The mid-cap
diagnostics group nearly quadrupled in value last year, and the overall performance of both mid- and small-cap
medtechs indicates that 2017 was a bumper year for investors.
But every silver lining has a cloud. The mounting valuations of device makers in this size bracket surely lower their
chances of being acquired by larger groups. The irony is that many of these stocks have risen precisely because
investors believe the companies might be bought.
Market capitalisation ($m)
Top 5 risers Share price % change YE 2017 12 M
Abiomed ($) 66% 8,287 3,399
Exact Sciences ($) 293% 6,291 4,818
Mazor Robotics ($) 135% 1,344 822
Axogen ($) 214% 965 669
Intersect ENT ($) 168% 954 608
Top 5 fallers
Getinge (SKr) (19%) 3,697 14*
Elekta (SKr) (16%) 3,052 (315)
IBA Group (€) (43%) 841 (524)
Natera ($) (23%) 483 (130)
Modern Dental Group (HK$) (24%) 277 (90)
Other significant risers and fallers in 2017 (ranked on market cap) Source: Evaluate® January 2018
*Getinge carried out a share issue in September which caused its market cap to rise.
20 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A comes back with a bang – or two – in medtech
M&A comes back with a bang – or two – in medtech
In terms of mergers and acquisitions of medtech companies, 2017 started with a bang and
ended with another. The purchase of St. Jude Medical by Abbott Laboratories for $25bn was
closed in the first week of January, and Becton Dickinson completed its acquisition of C. R.
Bard, a deal only slightly cheaper at $24bn, on the last working day of the year.
And what a year it was. The total value of all mergers closed in 2017 came in just shy of $100bn, the second-highest
annual total after the bumper year that was 2015. But the number of deals is shrinking, and this is bad news for both
patients and the sector itself.
More than twice as much was spent on M&A deals last year than in 2016: $98.5bn compared with $48.1bn. But only
183 contracts were signed, the fewest since 2009 when the financial crisis was biting hard.
40
60
20
80
100
120
140
Source: Evaluate® January 2018Medtech M&A transactions closed over the last 5 years
Tota
l dea
l val
ue ($
bn)
Dea
l cou
nt
450
400
350
300
250
200
150
100
50
0
Total deal value ($bn)
Deal count
Year
2013
23.3
2014
41.6
2016
48.1
2017
98.5
2015
127.9
MedtronicCovidien
Deal$49.9bn
Abbott - St. Jude$25bn
BD - Bard$24bn
0
235222
239
183
234
The Abbott-St. Jude and BD-Bard deals are the third and fourth largest the sector has ever seen. Both were fuelled by
the still-present need to build scale in the face of continuing resistance to premium pricing for innovative technologies.
Another factor is that device makers’ customers are merging into ever-larger groups too. Hospital and care home
chains across the US and Europe are banding together, so medtechs need to offer the largest suite of products
possible to hook one of the shrinking pool of potential clients as a repeat customer.
21 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A comes back with a bang – or two – in medtech
The preponderance of large deals comes partly as a consequence of soaring market valuations of these groups.
Paradoxically, it is also a cause of them, as investors plough cash into companies talked of as M&A targets in the
hope of a future takeout. At some point, though, these companies will simply become too expensive, and the sector
will return to smaller deals.
Then again, there is another factor to consider. What effect the new US tax legislation might have on the frequency
of megamergers is as yet unknown, but if US companies find it easier to repatriate foreign cash even greater sums
could be spent on business development in 2018.
Completion date Acquirer Target Value ($bn) EP Vantage coverage
January 4 Abbott Laboratories St. Jude Medical 25.0 Abbott and St. Jude – it’s official
December 29 Becton Dickinson C. R. Bard 24.0 The return of medtech scale- building?
July 30 Cardinal Health Patient care, deep vein thrombosis and nutritional insufficiency businesses of Medtronic
6.1 Medtronic’s top line receives Cardinal’s blessing
October 3 Abbott Laboratories Alere 4.6 Abbott-Alere deal to go ahead
February 27 Johnson & Johnson Abbott Medical Optics, subsidiary of Abbott Laboratories
4.3 J&J sees a future in Abbott’s eye care business
February 1 Allergan LifeCell, subsidiary of Acelity 2.9 Acelity offloads Lifecell to Allergan for $2.9bn
April 3 Essity BSN Medical 2.9 -
April 28 Allergan Zeltiq Aesthetics 2.5 Two deals in two days means aesthetics is looking good
August 9 Philips Spectranetics 2.2 Philips spends $2bn on loss-making Spectranetics
January 31 Grifols Blood screening business of Hologic 1.9 -
Top 10 deals closed in 2017 Source: Evaluate® January 2018
22 Copyright © 2018 Evaluate Ltd. All rights reserved.Medtech funding ventures into the unknown
Medtech funding ventures into the unknown
In terms of venture financing, the first quarter of 2017 was like nothing the medtech sector has
ever seen before. Driven by the two enormous deals signed by Grail and Verily Life Sciences,
the three-month total hit $2.7bn, nearly twice as much as the previous record-holder, the
second quarter of 2010.
But, in an amplification of a trend that has been accelerating for some years now, the number of deals signed has
cratered. The first-quarter total of 95 was respectable, but activity dimmed over 2017, culminating in just 20 deals in the
final quarter of the year, the fewest since the third quarter of 2002. Massive deals are safer for VCs, but if smaller device
companies cannot access growth funding these huge rounds could, overall, render the sector’s future highly unsafe.
1,500
1,000
500
Source: Evaluate® January 2018Quarterly medtech VC investments
Inve
stm
ent (
$m
)
Fina
ncin
g co
unt
2,000
2,500
3,000
140
120
100
80
60
40
20
0
Investment ($m)
Financing count
Year
0
2013
Q1
1,005
Q2
1,296
Q3
957
Q4
965
2014
Q1
863
Q2
1,378
Q3
1,093
Q4
1,132
2015
Q1
1,042
Q2
1,271
Q3
1,194
Q4
1,010
2016
Q1
1,382
Q2
984
Q3
875
Q4
885
2017
Q1
2,677
Q2 Q3 Q4
140
127
104
110 110
124
104 103
115
70
80
87
70
80
72
95
66
44
20
661
495
1,315
121
Naturally the extraordinary showing in the first quarter means the annual total was also a record-breaker: at $5.1bn
last year’s total was the highest on record. As well as Grail’s near-billion series B, putting the liquid biopsy company
firmly into unicorn territory, and the $800m seed funding picked up by Verily, formerly known as Google Life
Sciences, there were two other rounds in excess of $100m.
Guardant Health, also active in liquid biopsy, raised $360m in the second quarter and shared an investor with Verily:
Temasek, Singapore’s National Wealth Fund. These top three rounds of 2017 are also the top three in the medical
device industry’s history. Being cheap technologies with the potential for widespread use, sequencing and genomics
are catnip to VCs.
23 Copyright © 2018 Evaluate Ltd. All rights reserved.Medtech funding ventures into the unknown
Date Round Company Investment ($m) Focus
March 1 Series B Grail 900.0 In vitro diagnostics
January 26 Seed capital Verily Life Sciences 800.0 Diabetic care; ophthalmics; patient monitoring
May 11 Series E Guardant Health 360.0 In vitro diagnostics
November 2 Undisclosed Annoroad 105.0 Blood; in vitro diagnostics
May 3 Series C Outset Medical 76.5 Nephrology
October 24 Undisclosed Neuropace 74.0 Neurology
November 29 Series B Electrocore 70.0 Neurology
December 18 Series F Respicardia 58.5 Anaesthesia & respiratory; cardiology
August 16 Series C Color Genomics 52.0 In vitro diagnostics
March 16 Series C Moximed 50.0 Orthopaedics
Top 10 rounds of 2017 Source: Evaluate® January 2018
2017 was wonderful for a few companies seeking venture capital – but woeful for the majority. The number of deals
slipped again, with the annual figure of just 225 the lowest since 2006. The trend downwards is clear in both the
annual and quarterly analyses.
One statistic sums up the haves-and-have-nots aspect of venture funding in 2017: the top 10 rounds make up more
than half of the total invested. True, 2018 seems likely to see a diminution in these $100m-plus rounds – not least
because Grail, Verily and the rest of that cohort tend to be secretive companies that have a great deal to prove in the
clinic. But the number of funding deals must pick up if the sector wants to be sure of a healthier future.
100
200
300
400
500
600
0
Source: Evaluate® January 2018Number of VC rounds 2013-17
Fina
ncin
g co
unt
Year
2013
492
2014
448
2015
368
2016
309
2017
225
24 Copyright © 2018 Evaluate Ltd. All rights reserved.US listings disappoint in quiet year for medtech floats
Date Company Amount raised ($m)
Offering price
Share price change to YE17
Exchange Focus
June 21 Bonesupport 57.6 SEK29 (33%) Nasdaq Stockholm General and plastic surgery; orthopaedics
October 12 Orthopediatrics 52.0 US$13 48% Nasdaq Orthopaedics
October 13 Biom Up 45.0 €10.5 65% Euronext Paris Cardiology; dental; orthopaedics
October 12 Celcuity 26.2 US$9.5 99% Nasdaq In vitro diagnostics
March 28 Visioneering Technologies 24.9 Aus$0.42 31% Australian Securities Exchange
Ophthalmics
June 21 Sedana Medical 11.5 SEK19.5 95% Nasdaq First North Drug delivery
May 9 Endra Life Sciences 9.7 US$5 (3%) Nasdaq Diagnostic imaging
September 20 Co-Diagnostics 7.1 US$6 (56%) Nasdaq In vitro diagnostics
June 12 Myomo 5.0 US$7.5 (50%) NYSE Cardiology; physical medicine
May 15 Integrum 2.5 SEK20 75% Nasdaq First North Orthopaedics; physical medicine
2017’s medtech IPOs Source: Evaluate® January 2018
US listings disappoint in quiet year for medtech floats
The coming year is expected to play host to the largest healthcare flotation in history when
Siemens spins off its Healthineers unit in a deal that could raise more than $10bn. Last year,
though, was conspicuously quiet: the total value of medtech IPOs came to just $241m.
Despite the roaring health of the public exchanges across the year, with most listed medtech companies enjoying
share price growth and some trebling or even quadrupling in value, just 10 companies went public in 2017. The deals
themselves were small and, unusually, only half of them were conducted in the US.
The unusual preponderance of Stockholm-based IPOs – three of the 10 – is a reflection of the Swedish market’s
receptiveness to life science companies. Highly unusually the lion’s share of the cash raised through 2017’s deals
came via offerings outside the US – $141m to the US’s $100m. The general rule that US-listed healthcare stocks do
better than European ones was unchanged in 2017, yet the medtech companies that listed on the main Nasdaq
exchange or the NYSE performed more poorly than the European and Australian stocks, judged by the share price
change to the end of 2017.
The US-listed stocks improved by an average of just 8%, versus 47% average share growth for the non-US stocks. It
looks like the Europeans were right to stay home.
Source: Evaluate® January 2018Medtech IPOs 2013-2017
Am
ount
rai
sed
($m
)
Cou
nt
300
200
100
600
700
500
400
800 12
10
8
6
4
2
00
Amount raised ($m)
Count
Year
2013
Q1
58
Q2
111
Q3 Q4
2014
Q1
293
Q2 Q3
278
Q4
306
2015
Q1
208
Q2
384
Q3
480
Q4
2016
Q1
48
Q2
57
Q3 Q4
2017
Q1 Q2 Q3 Q4
5
2
8 8
12
6
7
5
8
5
3
2
4
2
4
1
5
1
3
7
12386
2
25
208
93
172
126
652
418
25 Copyright © 2018 Evaluate Ltd. All rights reserved.US listings disappoint in quiet year for medtech floats
2017 saw the fewest listings of any year since EP Vantage started tracking them. It also raised the lowest annual total.
Even when Convatec’s aberrant £1.47bn ($1.9bn) IPO is removed the 2016 total and average deal size – previously
both the lowest – outstripped 2017’s.
The quarterly analysis, from which Convatec’s listing has also been excluded, makes this diminishing of IPO value
explicit.
But it is equally clear that few of these small groups can make it out to the public exchanges either. The current
market wobble could mean things get even worse in 2018.
Source: Evaluate® January 2018Number of US approvals granted, 2007-2017
Num
ber
of a
ppro
vals
10
20
30
40
50
60
0
Year
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Number of de novo clearances
Number of PMAs and HDEs
3230
18
22
4341
23
33
51
40
50
7
3 4 3
10 10
18
28
18
26
31
26 Copyright © 2018 Evaluate Ltd. All rights reserved.Twice as many in half the time: the FDA speeds up approvals
Twice as many in half the time: the FDA speeds up approvals
In the end 2017 fell short of expectations. At the half-year point the data suggested that last
year might yield more US device approvals than any previous year, but with 50 devices getting
the FDA’s endorsement, 2017’s total fell just shy of 2015’s.
Still, this is not a shabby showing by any means, and there is another reason for cheer in the medtech industry:
these 50 products were approved faster than ever before. It took the agency an average of just 14 months to
process the applications, around half the time it took in 2013 and shaving five months off the previous year’s
average approval time.
The graph shows a clear, though hardly smooth, increase in the annual number of FDA approvals over the past
decade. It counts the number of first-time premarket approvals (PMAs), the type of marketing permission the FDA
grants for high-risk devices unlike anything yet approved, and human device exemptions (HDEs), which are
awarded to similarly innovative products for rare conditions.
The FDA has long struggled to find a balance between ensuring that crucial devices reach patients and denying
approval to dangerous or ineffective products. Perhaps surprisingly given the US’s reputation for being friendly to big
business the FDA is more stringent than European regulators, who tend to insist on safety but not always efficacy.
27 Copyright © 2018 Evaluate Ltd. All rights reserved.
10
15
20
5
25
30
35
40
45
Source: Evaluate® January 2018First-time PMAs and HDEs for therapy areas with most approvals over 5 years
Cou
nt
Cardiology In vitro diagnostics Orthopaedics Neurology Diabetic care
Year
2013
7
4
211
2014
11
9
311
2015
15
12
6
5
2
2016
12
10
3
2
4
2017
21
13
221
0
For simplicity, the graph above displays the number of PMAs and HDEs for the five therapy areas that have seen the
most approvals over the last five years.
In 2017 the FDA granted more than twice as many high-risk device approvals as it did in 2013 – and it did so in half
the time. The devices approved in 2017 took an average of 13.8 months to pass through the FDA’s hands, beating last
year’s average of 18.1 months and 2014’s previous fastest time, 16.7 months.
Twice as many in half the time: the FDA speeds up approvals
28 Copyright © 2018 Evaluate Ltd. All rights reserved.
One way the agency has cut these approval wait times is hiving off the safer innovative products into the de novo
510(k) pathway. The number of de novos to obtain clearance each year has also shown an unsteady but unmistakable
increase, with this year’s total of 31 setting a new record.
Concerns have been raised in the past that efforts to increase the throughput of devices might lead to rushed,
insufficient assessments. But it still takes around three years longer to obtain FDA approval for an innovative medical
device than it does to get European approval, since the agency generally requires larger, better controlled clinical
trials than its counterparts across the Atlantic.
The agency’s performance in recent years would seem to suggest that there has been room to liberalise without
becoming dangerously lax.
EvaluateMedTech device classification 2013 2014 2015 2016 2017
Anaesthesia & respiratory 61.3 18.5 - - 16.7
Blood 13.2 8.7 - - -
Cardiology 17.1 12.9 14.4 13.3 16.2
Diabetic care 15.7 19.0 9.8 12.0 7.6
Diagnostic imaging 16.8 13.0 11.7 11.6 8.5
Drug delivery - - - - 13.9
Ear, nose & throat - 9.5 - - -
Gastroenterology - - 17.7 9.6 13.0
General & plastic surgery 68.2 28.7 - 24.0 12.7
General hospital & healthcare supply - - - 39.8 -
In vitro diagnostics 8.6 13.3 11.3 9.8 10.2
Nephrology - - 25.1 - -
Neurology 40.5 8.9 19.4 10.6 19.8
Obstetrics & gynaecology - - 12.9 - 11.4
Ophthalmics 21.4 11.0 28.1 9.6 8.5
Orthopaedics 30.0 48.0 24.5 37.8 8.3
Physical medicine - - 80.9 - -
Urology - - 29.3 - -
Wound management 31.2 - 14.7 11.5 36.0
Average 26.9 16.7 17.3 18.1 13.8
Average review times of first-time PMAs and HDEsby therapy area (months) Source: Evaluate® January 2018
Twice as many in half the time: the FDA speeds up approvals
29 Copyright © 2018 Evaluate Ltd. All rights reserved.Looking forward to 2018
Looking forward to 2018
Throughout 2017 as sentiment climbed for the majority of pharma and biotech companies, the
big question for the sector was whether the good times could continue. The issue remained live
across the year, which was marked by several spells of choppy waters. Most notable was the
major correction in October caused by a disappointing reporting season from the big biotech
beasts, bringing concerns about the sustainability of US drug prices to the fore once again.
The opening weeks of 2018 have proven equally volatile, pointing to another up-and-down year for the sector. At the
same time, however, many positive indicators of sector health show no sign of reversing – readily available funding
for innovative companies, for example, and an open-minded US regulator.
After 2017’s M&A lull many are predicting that desperation will force the hands of several larger acquirers this year,
potentially giving biopharma another boost. A spree of deals in early January – Sanofi snapped up Ablynx and
Bioverativ and Celgene moved on Juno and Impact Biomedicines – seemed to support this theory.
However the huge valuations that investors are bestowing on attractive assets will continue to act as a major drag
on this type of deal-making. Bristol-Myers Squibb’s eye-watering deal with Nektar Therapeutics is a case in point – in
February 2018 the pharma giant paid $1.85bn up front to access a hotly-tipped but very early stage immuno-oncology
project. Nektar’s $14bn market cap presumably made a full takeover unjustifiable.
So those banking on an M&A push in 2018 could be disappointed, particularly if fundraising options remain open. But,
overall, 2017 has left the sector looking pretty comfortable heading into 2018. As always, high-profile pipeline failures
remain a threat, as does a reinvigorated push from the White House, or other vested interests, on drug pricing.
Many of these arguments carry over into the medtech sphere. There has been just one $1bn-plus acquisition so far
in 2018 – that of Sirtex by Varian Medical Systems. The recent stock market lurch might bring some valuations down,
allowing buyers to pounce, but the large companies are already so consolidated that antitrust concerns pose an
increasing risk to megamergers.
Further fluctuations in the market might also deter device makers from going public. If smaller companies find the
conditions for listing unpropitious this will cut off a much-needed funding source in an industry that is finding it harder
than ever to attract venture cash.
The FDA provides cause for optimism. The agency’s increasing lightness of touch is extremely welcome as European
device regulations tighten, and there is no reason to think that the scorching pace of approvals for innovative
products will slow down in the coming year.
The friendly FDA will provide a major comfort to both medtech and biopharma sectors this year, should wider stock
market volatility continue.
Additional complimentary copies of this report can be downloaded at: www.evaluate.com/2017Review
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EvaluatePharma® delivers exclusive consensus sales forecasts and trusted commercial insight into biotech and pharmaceutical performance.
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EvaluateMedTech® sets a new standard in commercial analysis and consensus forecasts of the global medical device and diagnostic industry.
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EvaluateClinical Trials® delivers unique clinical trial intelligence expertly curated to efficiently analyse the global clinical trial landscape.
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EP Vantage an award winning editorial team, provides daily commentary and analysis with fresh perspectives and insight into current and future industry trends.
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Evaluate Custom Services provides customised solutions to help you access, analyse and manage the information you need to support effective decision-making.
The Evaluate services enable the life science community to make sound business decisions about value and opportunity.
Evaluate Headquarters Evaluate Ltd. 11-29 Fashion Street London E1 6PX United Kingdom
T +44 (0)20 7377 0800 F +44 (0)20 7539 1801
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T +1 617 573 9450 F +1 617 573 9542
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T +81 (0)80 1 164 4754
www.evaluate.com
PHARMA & MEDTECH 2017 REVIEW – FEB 2018