Biopharma CEOs expressed more uncertainty in the Q4 2015 Biopharma CEO Confidence Index compared to Q3 2015 in relation to capital markets and deal landscape while the other four areas, clinical development, regulatory affairs, commercialization and business model and workforce, remained stable.
The Q4 survey, conducted in December 2015 and through the first two weeks in 2016, was likely significantly influenced by the decline in capital markets, which was particularly harsh for biotech companies. The S&P Biotech ETF XBI, representing the broadest measure of emerging biopharma capital markets, hit its peak in July 2015 at 90.54. Through the first 2 weeks in January, the XBI declined by 39.5% to 54.74. One might have anticipated a decline in CEO confidence more in line with the weakening capital markets but the data indicates that biopharma CEOs remain confident. It’s quite possible their outlook will change if the capital markets continue to weaken, but it’s encouraging to know that CEOs of a leading sector are not overreacting to what is likely just a reversion to the mean.
Below are top line results of the Q4 2015 Biopharma CEO Confidence Index.
- 54 CEOs from US Companies
- 69% privately held
- 20% market cap < $250M
- 9% market cap $250M – $1B
- 2% market cap $1B-$5B
- 100% of Biopharma CEOs are confident in their companies and the overall industry
- The single largest risk to their companies is capital stability at 41%, up 6% from Q3 and clinical results, coming in at 33%, up 4 % from Q3.
Across the Six Key Indicators
1. Capital Markets
- 39% are very confident in fund-raising prospects (53% in Q3)
- 50% are somewhat confident in fund-raising prospects (33% in Q3)
- 9% are not currently looking to raise capital (14% in Q3)
Key Implication – Overall capital-raising confidence is less robust compared to Q3 2015
2. Deal Landscape
- 61% labeled M&A and partnering market as “Good” (82% in Q3)
- 70% are focused on doing a deal in Oncology (37%) and/or Neurology (33%)
Key Implication – Deal making confidence has eroded since Q3 2015 while the focus remains on Oncology and Neurology
3. Clinical Development
- 69% are very confident in their clinical differentiation (65% in Q3)
- 56% outsourced 75-100% of clinical studies (39% in Q3)
Key Implication – Confidence in delivering clinically differentiated assets is stable while outsourcing clinical functions remains a key strategy
4. Regulatory Affairs
- 67% are very confident in regulatory environment (53% in Q3)
- Confidence in filing an NDA or BLA in the next 1-3 years decreased 10% from Q3 to Q4 while it increased 3% when looking 4-5 years ahead
Key Implication – Overall regulatory confidence remains stable but CEOs look to delay filing an NDA or BLA
- 52% lack confidence in commercial capabilities (49% in Q3)
- 61% plan to commercialize with external partners vs. independently (47% in Q3)
Key Implication – External partnering is the preferred commercialization strategy for more than half of CEOs and their internal commercialization capabilities remain limited
6. Business Model and Workforce
- 15% lack confidence in current internal resources (6% in Q3)
- 13% anticipate no overall staffing changes in the next 18 months (2% in Q3)
Key Implication – CEOs retain confidence in their ability to find appropriate supporting resources but a greater number of CEOs do not anticipate overall staffing changes in the near term
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.