Predictions for Life Sciences Industries for 2022, and no ‘San Francisco’ This Year!

19/01/2022
Insights
Kevin Bottomley

The Covid 19 pandemic continues to have a major impact on the healthcare industry, both positive if you are close to the discovery and provision of treatments for this infection and negative if you are selling certain other drugs, such as antibiotics or providing care services, which have been negatively impacted by this pandemic. However, one key benefit arising from Covid 19 is the pandemic has raised the profile of life sciences both for investors and, probably more importantly, for those who are looking for a meaningful career. We have all become better medical experts and epidemiologists over the last 24 months!

COVID 19 IN 2022

In 2022 in first world countries, these will move from a Covid 19 pandemic to endemic. This will probably lead to a gradual staccato return to a more normal life, with a return to travel (although I predict less business travel and more use of Zoom and Teams). Active management of Covid through the ongoing use of vaccines, anti-viral drugs and continued care in social interactions will prevail. There is still an open question about the first world’s commitment to vaccinate the rest of the world. Will Covid 19 become endemic in first world countries but continue to be a pandemic in third world countries in 2022?

PREDICTIONS FOR TRANSACTIONS IN HEALTHCARE

We have seen investor interest in life science assets grow over the last year, driven by strong PE and trade interest measured by the both the number and value of transactions, signs are that despite the first hints of some debt headwinds this will continue strongly into 2022. Every year we start the year surprised by the valuations achieved in the previous year, only to see them surpassed in the next. It continues to be a sellers’ market with strong competition for all reasonable companies and assets.

M&A and Private Equity transactions in the Pharma sector over the last 3 years1,2

Specific areas within healthcare where we are seeing a lot of investor interest are Healthcare IT/Healthtech/Digital Health; 2022 will see continued increased application of digital technologies for the diagnosis, discovery, development, and commercial delivery of therapeutics to patients. This is a series of terms which cover the application of digital and AI technologies to all aspects of healthcare and presents a significant investment opportunity. With Contract Research Organisations (CROs), we have seen investor interest in this sector blossom over the last five years, as the search for innovative drugs is increasingly outsourced from pharma to academia, biotech and CROs. Finally, there has been a scramble for pharmaceutical manufacturing capacity driven by overall demand for pharmaceuticals, the nationalisation of pharmaceutical supply chains, and the continued externalisation of manufacturing, particularly small molecule-based drugs. Pharma and biotech companies are focussing on building manufacturing capacity for large molecule (protein), cell and gene-based therapeutics. We expect these trends to continue into 2022 and beyond. For more information on the CDMO sector, please see Results Healthcare latest CDMO market update click here3.

NEW MEDICAL TECHNOLOGIES

The mRNA vaccines have and will revolutionise vaccines, both in addressing Covid infections, however, clearly they have applications in other diseases such as those traditionally addressed with vaccines as well as new opportunities, such as treatments for cancer. While the mRNA vaccine technologies were many decades in development before the success of the Pfizer/BioNTech and Moderna Covid 19 vaccines validated mRNA-based therapeutics, they now provide a platform for new mRNA-based technologies. However, it is the promise of revolutionary cell and gene therapies in the coming years which underpin the notion that we are in a golden age of drug discovery and these new therapeutics will transform healthcare in the next few years. Immunotherapy based drugs have had and continue to have a profound impact on the treatment of certain cancers.

Computer aided computational approaches to disease diagnosis, drug discovery, development and commercialisation will continue to gain momentum and become a bigger feature in new therapeutics, be they traditional pharmaceuticals or computer based therapeutics. Investors are following Tech increasing in-roads into all aspects of life sciences and healthcare closely.

REFLECTIONS ON J.P. MORGAN HEALTHCARE CONFERENCE, SAN FRANCISCO 2022

When the J.P. Morgan Healthcare Conference went virtual in Dec 2021, we cancelled our flights. Since this I have had many Teams calls with those I was scheduled to meet in San Francisco, the bittersweet is a missed opportunity to see old friends and colleagues in person and not having to endure a 12-hour flight, in a face mask, along with the jetlag! The key themes seem to be no one misses San Francisco and everyone misses the opportunity to meet people. Hopefully we will be back to face-to-face conferences very soon.

REFERENCES:

  1. “PHARMACEUTICALS MONTHLY DEALS ANALYSIS SEPTEMBER 2021 – PARTNERSHIPS, LICENSING, INVESTMENTS AND M&A TRENDS.” GLOBAL DATA. 2021.
  2. “PHARMACEUTICAL & HEALTHCARE ANNUAL DEALS ANALYSIS: M&A AND INVESTMENT TRENDS – 2020”. GLOBAL DATA. 2021.
  3. KADIWAR, KERSSE, NEWRZELLA. “CDMO MARKET UPDATE: M&A ACTIVITY AND VALUATIONS IN THE PHARMACEUTICAL MANUFACTURING SECTOR.” RESULTS HEALTHCARE. 2021. CLICK HERE