CEO Confidence Prevailing Amid Political Pressures

Results of the Q2 2017 Biopharma CEO Confidence Index have just been released and confidence appears to be holding steady after stabilizing in the late part of 2016. Despite uncertainty surrounding the Trump administration, and how it may impact the Healthcare sector, our research indicates that biotechnology CEOs continue to be confident in their businesses.

In this most recent study, CEO confidence declined the most in Regulatory and Capital Markets. While confidence in the Regulatory landscape dipped due to the current political landscape along with FDA leadership changes, the slight decline in Capital Markets was likely a reversion to the mean. Additionally, despite reporting that the value of licensing deals decreased 19% ($17.8B to $14.4B) in the first 4 months of 2017 compared to the same period in 2016, CEO confidence in Deal Making remained strong and stable.

The market has recovered nicely from the sharp decline leading up to the election but uncertainty remains a secondary theme among biotechnology leaders.   Click here for a comprehensive analysis of the Q2 2017 results, which includes a nuanced view of CEOs’ expectations of the Trump administration.

Below are top line results of the Q2 2017 Biopharma CEO Confidence Index.

Respondent Profile

  • 66 CEOs representing biopharma companies
  • 52% privately held
  • 38% market cap < $250M
  • 10% market cap $250M – $1B

Industry Outlook

  • 96% of Biopharma CEOs are either very confident (58%) or somewhat confident (48%) in their companies and the overall industry
  • 71% indicated that the largest risk to their business is capital stability (46%), technical execution (14%), or global economy downturn (11%)

Across the Six Key Indicators

  1. Capital Markets
  • CEOs who are very confident in fund-raising prospects decreases directionally (51% to 38%)
  • CEOs who are very confident in ability to raise capital through public markets drops as well (57% to 40%)

Key Implication – Capital may be harder to come by than when confidence was very robust in late 2016

  1. Deal Landscape
  • CEOs labeling M&A and partnering as good remains stable (56%)
  • Strong product pipeline remains the primary driver of confidence

Key Implication – CEOs seeking partners need to maintain a differentiated pipeline

  1. Clinical Development
  • Confidence in delivering clinically differentiated assets increase from 63% to 70%
  • Outsourcing remains an important clinical strategy as more than 76% of CEOs outsource more than 50% of their firm’s clinical development activities

Key Implication – Outsourcing of Clinical Development activities is a popular and viable strategy for many development stage companies

  1. Regulatory Affairs
  • CEOs who are very confident in the overall regulatory environment continues to fall (20% to 11%)
  • CEOs expecting the frequency of FDA approvals to increase over the next 18 months doubles (16% to 32%)

Key Implication – The volatile political landscape will continue to be a driver of regulatory confidence

  1. Commercialization
  • 46% of CEOs do not have a commercial infrastructure
  • CEOs planning to commercialize via partners rebounds from 49% to 55%

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

  1. Business Model and Workforce
  • CEOs confident in their ability to find the appropriate staffing resources jumps from 39% to 49%
  • CEOs continue to outsource Clinical Development (53% to 59%) and Medical Affairs (39% to 44%) more than any other function

Key Implication – CEOs have adopted the virtual pharma model, prefer to keep Corporate Leadership and Business Development functions in-house

To view past results, click here

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

The Biopharma CEO Confidence Index is a partnership between KineticosIpsos Healthcare, and. Demy-Colton Life Science Advisors.

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