The Burrill Report

In keeping with our annual tradition here at The Burrill Report we present Steve Burrill's predictions for the life sciences in 2011.

• Biotech and the Capital Markets: The biotech industry benefitted from the return of investor confidence in the second half of the year with the Burrill Biotech Select Index outperforming the Dow Jones Industrial Average on an annual basis. Expect to see the biotech industry continue to outperform the general markets as the financing environment continues to improve in 2011.

• Biotech IPOs: The biotech IPO window will remain open despite the fact that the 17 new biotech issues that debuted on the U.S. market in 2010 were plagued by lackluster receptions (selling fewer than expected and well below the target price range). Their average annual market performance was down by 13 percent. By the end of 2011, at least 25 biotech IPOs, possibly more, in the United States will be completed.

• Capital: The industry has achieved a steady state in terms of financing with about $15 billion raised annually. This situation will continue in 2011. The industry's collective market cap will also remain at its present $360 billion level as growth in value will be offset by acquisitions.

• Partnering: There will be no major slow down in Big Pharma’s appetite for biotech partnering. Both Big Pharma and Big Biotech will again compete for companies with advanced product pipelines. The deal structures will embrace shared risk. The days when biotech enjoyed major upfront payments from pharma companies to access their technologies are over. Collaborations with emerging market players in China, India, and Latin America will also increase.

• Mergers & Acquisitions: The predicted surge in big Pharma acquisitions of biotech companies did not happen in 2010. It will in 2011. Sanofi will finally seal the deal and acquire Genzyme. This will usher in several other marquee acquisitions of blue chip biotech companies.

• Pharma Restructuring: Pharma companies will continue to make job cuts and restructure their businesses ahead of loss of patent protection on blockbusters.

• Increased government involvement on healthcare: The federal government, through Medicare and Medicaid, will continue to play a greater role in the delivery and reimbursement of healthcare. This trend will create an array of new regulatory and compensatory rules, issues, and challenges for healthcare providers.

• Biosimilars: Healthcare reform carries provision instructing the FDA to create a pathway for biosimilars. Expect to see both biotech and pharma companies take a keen interest in the discussions on the drafting of new regulations governing the development of biosimilars.

• Converging technologies impact healthcare: Expect to see a greater emphasis on prevention and wellness. A greater understanding of human genomics and the advent of molecular diagnostics, and the convergence of information, wireless, and medical technology promises to make personalized medicine an ever present reality in the way doctors and patients approach healthcare.

• Regulatory environment: The industry will continue to adjust to a regulatory environment that includes comparative effectiveness research. Payors will be looking at comparative effectiveness as a way to gather the necessary data on whether to reimburse for genomically guided medicines. With the Prescription Drug User Fee Act expiring in 2012 there will be a major battleground over drug safety and review issues in Congress in 2011.

• Science and Technology: The evolving legal battle over the patentability of genes will heat up. Uncertainty will continue to swirl around stem cells, but regenerative medicine will be hot.

• Cleantech will boom: The cleantech boom in non-food crops will continue as major investments in solar power, wind power, and next generation biofuels gets attention. The market will not only embrace green technologies, but technologies that improve energy efficiency and are friendlier to the environment.

• Global markets: Expect emerging markets to continue to be a dominant factor. Increasing affluence, a growing middle class, and government policies will make healthcare big business in these countries.












December 30, 2010
http://www.burrillreport.com/article-gazing_into_his_crystal_ball.html