Written by Shailesh Maingi, CEO & Founder, Kineticos
Kineticos recently published the results of the Q3/4 2016 Biopharma CEO Confidence Index. Our forward-looking study focuses on six unique areas:
- Capital Markets
- Deal Landscape
- Clinical Development
- Regulatory Affairs
- Business Model and Workforce
In this most recent study, we also asked questions related to Brexit and the 2016 US Presidential Elections. Virtually all the responses came in prior to the US election and therefore, the results.
Before going into the data, my thanks to all the CEOs who responded to this survey, as our analysis is only as good as the data submitted by the CEOs. Thank you for your continued support and as always, we welcome any feedback you have regarding the results or methodology.
First, let us discuss the results. Later, I will try to provide some context from a broader perspective.
As we have discussed previously, biopharma CEOs have 2 primary sources to fund clinical programs: capital markets2 and deal making. Confidence in both of these areas increased in this latest batch, close to the results we published in our inaugural study in Q3 2015.
In Q3/Q4, only 51% of CEOs surveyed were very confident in their ability raise funds in the capital markets, compared to 24% in Q2. In Q3 2015, 53% of biopharma CEOs were very confident. Consistent with previous data, 72% of biopharma CEOs were somewhat or very confident in their ability to raise capital in the next 18 months. Fully 82% of the capital raise is focused on equity versus debt, consistent with previous data.
Our Q3/Q4 results indicate that confidence in the Deal Landscape stabilized. Recall that in our inaugural survey in Q3, 2015, 82% of respondents were very confident in their ability to raise capital. By Q2 2016, confidence in the deal landscape had declined to 35%. In the most recent data, confidence has stabilized to 57%.
The value of transactions has stabilized as well, with roughly 73% expecting little change in valuations. Competition for deals also appears stable, with 75% of respondents believing that competition is moderate while only 2% indicated that the competition is weak.
But there is broader theme emerging from this data (and other data for the biopharma industry) – the biopharma industry is more resilient and robust than most believe! Over the last 18 months that we’ve been surveying CEOs, there have been numerous endogenous and exogenous events (Brexit, 2016 elections, congressional inquiries into price gouging, to name just a few) that have impacted biopharma. But in every case, the effect has been momentary.
The science is difficult so individual start-ups certainly come and go. But this is true in every industry tackling difficult problems. Successes abound if we only look in the right places and through the right lens.
See you at JPM!