BiopharmaCEOIndex

 CEO Confidence High Leading up to JP Morgan Healthcare Conference

Results of the 2016 Q3/Q4 Biopharma CEO Confidence Index pointed towards a slight uptick in confidence compared to the Q2 results. This data set is particularly interesting given the research was conducted shortly after the Brexit announcement, and also leading up to the controversial 2016 US Presidential election.

The results indicate that CEOs have renewed confidence in market performance in spite of election uncertainties. This suggests both that the flow of productive innovation and access to capital are currently in-balance. Looking ahead, deals may already be tougher to consummate, given the elevated levels of confidence from development stage leaders. In 2017, dealmakers will need to move quickly to protect their interests in the competitive market and should expect a robust discussion on relative valuation and strategic fit that showcases long-term opportunities to deliver new therapies.

This increase in confidence also comes almost 1 full year after a disruption of the capital markets resulted in sharp decline in Q4 of 2015. After confidence seemingly stabilized in Q1 and Q2 of 2016, we’re now seeing confidence creep up towards the levels we witnessed in the inaugural study in Q3 of 2015.

Click here for a comprehensive analysis of the Q3/Q4 2016 results, which includes a look at how biopharma CEOs anticipated the impact of Brexit and the Presidential election.

Below are top line results of the Q3/Q4 2016 Biopharma CEO Confidence Index.

Respondent Profile

  • 51 CEOs representing biopharma companies
  • 49% privately held
  • 43% market cap < $250M
  • 8% market cap $250M – $1B

Industry Outlook

  • 96% of Biopharma CEOs are either very confident (61%) or somewhat confident (35%) in their companies and the overall industry
  • 89% indicated that the largest risk to their business is either capital stability (47%), clinical results (22%) or FDA/regulatory approvals (20%)
  • 73% of CEOs expected the 2016 US Presidential election to have an impact on their overall business compared to only 25% anticipating an impact caused by Brexit

Across the Six Key Indicators

  1. Capital Markets
  • CEOs who are very confident in fund-raising prospects more than doubles (24% to 51%)
  • CEOs who are very confident in ability to raise capital through public markets continues to rise (39% to 57%)

Key Implication – Confidence in fundraising strengthens across the board

  1. Deal Landscape
  • CEOs labeling M&A and partnering as good rebounds from 35% to 57%
  • Both deal values and competition remain stable

Key Implication – Deal market spikes significantly after 3 consecutive quarters of steady decline

  1. Clinical Development
  • Confidence in delivering clinically differentiated assets remains stable (63%)
  • 77% outsource more than 51% of their firm’s clinical development activities

Key Implication – CEOs outsource the majority of their clinical activities, remain confident in their development programs

  1. Regulatory Affairs
  • CEOs who are very confident in the overall regulatory environment drops to 20% (31% in Q2)
  • 90% are very confident (46%) or somewhat confident (44%) in the US approval process compared to 82% in Europe and 70% in Japan.

Key Implication – Confidence in the overall regulatory environment remains strong, particularly in the US and Europe

  1. Commercialization
  • 59% are confident in their commercial capabilities, up from 45% in Q2 (Prior commercialization experience was the leading confidence driver)
  • CEOs planning to commercialize independently (22%) continues to rise, remains significantly lower than those planning to commercialize externally (49%)

Key Implication – Confidence in internal commercial capabilities increases while partnering remains the primary commercialization strategy

  1. Business Model and Workforce
  • 53% anticipate increasing overall staff by 10% in the next 18 months
  • Clinical development (53%) and medical affairs (39%) remain the two most commonly outsourced functions

Key Implication – CEOs are anticipating increasing staff, primarily in corporate leadership and business development functions.