Pharma-Biotech In-licensing Trends, 2005--2008

Bank of America-Merrill Lynch Research
January 2009

As depicted in the exhibit below, biotechnology in-licensing activity with large pharmaceutical manufacturers witnessed a dramatic acceleration beginning in 2006. The bolus of in-licensing activity allowed under-capitalized biotechnology companies to fund research and development pipeline projects, which arguably contributed to greater outsourced development opportunities for contract research organizations, particularly those with early-stage offerings. We believe such a phenomenon is partly attributable to biotech companies taking advantage of opportunities to raise capital ahead of an expected slowdown in the funding environment in 2008.

We estimate total up-front considerations paid to biotech companies accelerated 42% to $1.6bn in 2006, up from $1.1bn in 2005. Momentum continued in 2007, with total up-front payments reaching an estimated $3.0bn, up 87% from 2006 levels. We estimate that total up-front payments increased 32% to $2.6bn, in 2008. However, when combined with total public and private fundraising commitments, we estimate net biotech fundraising is down 37% to $12.3bn through 3Q08.

Pharma/Biotech In-licensing Trends, 2005--2008


 

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