Overall Confidence Remains Strong in the Q2 Biopharma CEO Confidence Index
Results of the Q2 2016 Biopharma CEO Confidence Index have just been released and the good news is that Q2 survey results indicate that confidence in Q2 has stabilized. This is also in line with the Q1 survey results. This stabilization in the last 2 quarters is in contrast to the sharp drop in confidence in Q4 of 2015, which was primarily a result of the disruption of capital markets in late 2015 and early 2016. Confidence has not returned to where it was in Q3 of last year but our most recent data set reflects that CEOs remain confident in their overall business.
Below are top line results of the Q2 2016 Biopharma CEO Confidence Index.
- 51 CEOs representing biopharma companies
- 61% privately held
- 35% market cap < $250M
- 4% market cap $250M – $1B
- 98% of Biopharma CEOs are either very confident (53%) or somewhat confident (45%) in their companies and the overall industry
- 71% indicated that the largest risk to their business is either capital stability (57%) or clinical results (14%)
Across the Six Key Indicators
1. Capital Markets
- 24% are very confident in fund-raising prospects (42% in Q4)
- 39% are very confident in ability to raise capital through public markets (18% in Q4)
Key Implication – Confidence in public markets increases significantly as overall confidence dips
2. Deal Landscape
- CEOs labeling M&A and partnering as “Good” drops from 45% to 35%
- Both deal values and competition increase marginally from Q1 to Q2
Key Implication – Deal making confidence declines for a 3rd straight quarter. Deal values and competition suggest the tides may be turning.
3. Clinical Development
- Confidence in delivering clinically differentiated assets declines slightly, remains high at 65%
- CEOs who do not outsource clinical development activities increases significantly from (6% to 18%) while those who outsource between 75-100% declines from 61% to 49%
Key Implication – Confidence in delivering clinically differentiated assets is high while outsourcing clinical functions appears to be trending down.
4. Regulatory Affairs
- CEOs that are “very confident” in the overall regulatory environment increased from 22% in Q1 to 31% in Q2
- 75% expect the frequency in FDA approvals over the next 18-month to remain stable
Key Implication – Confidence in the regulatory environment is growing stronger even with little change expected in near-term approvals
- CEOs that are “very confident” in their commercial capabilities declined from 19% in Q1 to 12% in Q2
- CEOs planning to partner externally decreases (70% to 65%), remains significantly higher than those planning to commercialize independently (12%)
Key Implication – Confidence in internal commercial capabilities declines while partnering remains the primary commercialization strategy
6. Business Model and Workforce
- CEOs looking to add corporate leadership roles rebounds in Q4 (34% to 43%)
- The two functions that the majority of CEOs are focused on building internally are corporate leadership (98%) and business development (84%)
Key Implication – CEOs are focused on building out internal leadership teams.
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The results of this Index and the implications are much more impactful and applicable to any company’s business situation when they are delivered in person. Request that a Kineticos team member present the full Index and survey results to your organization.