A Q&A with Bill Coyle, principal, ZS. ZS is a management consulting and technology firm focused on transforming global healthcare.
In some ways, 2022 could be seen as a challenging year—at least financially—in biotech. Do you see those trends continuing?
Although we see overall sentiments to invest in biotech turning positive in 2023 after a weaker 2022, the sector is expected to remain flat to slightly bearish amid an uncertain economic environment. We’re watching out for inflation- and recession-related concerns, the looming patent cliff (which will put $47 billion worldwide revenue at risk in 2023) and increasing regulatory scrutiny across the globe.
M&A is expected to be a significant driver of the biotech sector in 2023. Large-cap companies are well cushioned and will continue to focus on M&A activities. The strong pace of innovation in small- and mid-cap biotech will make them attractive targets, especially those with late-stage and high-quality assets or with disruptive platforms.
A backlog of companies seeking financing through IPOs is growing. IPOs will likely go on hold, and we’ll see limited opportunities in the VC market for biotech. Companies will lean toward creative financing options including PIPEs, licensing or royalty deals, debt financing and reverse mergers in 2023.
Sources: AlphaSense, NBI and S&P 500, pharmaintelligence
Is biotech/life science in a good place as we move into 2023?
There still is a lot of optimism, though the challenges are real. Breakthrough research and scientific innovations, changing regulatory environments, digital adoption across biotech operations and creative financing could drive some growth in the sector.
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In the U.S., will President Biden’s support for life sciences make a difference in the short term? And will we see support for the life sciences in other countries?
Governments worldwide are investing heavily to strengthen the biotechnology and life sciences sectors. They are considering multiple levers ranging from increased fund allocation to favorable policies designed to increase domestic manufacturing and R&D innovation for drug and vaccine development.
Biomanufacturing is a frontier for future competition. Other priorities include streamlining regulations for biotechnology products, expanding access to bioscience data for companies and getting patients earlier access to medicines.
The U.S. and China, the front-runners of advancements in life sciences, have been taking initiatives to strengthen their position in global pharma and biotech market.
Three of the biggest areas of concern may be cancer, antimicrobial resistance, and sepsis—are there others? And what progress do you think will be made in these areas?
Antimicrobial resistance, obesity, opioid use disorder, cancer, Alzheimer’s disease and sepsis will continue to be the key focus areas across healthcare stakeholders in 2023, owing to their rising global disease burdens and high unmet needs associated with these conditions.
Antimicrobial resistance (AMR)
There is a dire need to tackle this, as the AMR Action Fundestimates the death toll from antibiotic-resistant infections could rise to around 10 million per year globally by 2050, up from approximately 1.3 million in 2019. This could cost the global economy as much as $100 trillion by 2050.
The inadequate average revenue generated from limited antibiotic sales makes the research and development of next-generation antibiotics a risky and expensive investment for pharma companies. These economic challenges have led to a relatively thin pipeline of new antibiotics. Stakeholders, including governments, organizations and pharma, are developing innovative incentive models to boost revenues, encourage innovation and launch collaborative initiatives to expand access to effective antibiotic treatments.
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Sources: UN, healthaffairs, CIDRAP, Reactgroup.org, chemistryworld, downtoearth, bloomberglaw, fiercepharma
World Obesity Federation predicts that one billion people globally, including 1 in 5 women and 1 in 7 men, will be living with obesity by 2030, with the greatest number of obese people living in low- and middle-income countries. Stakeholders across the healthcare sector recognize obesity as a serious problem and not just a lifestyle issue and are working to treat it like other illness in addition to its prevention.
Sources: worldobesity.org, morganstanley, investopedia.com, biopharmainternational.com, reuters, Pharmaphorum.com, pharmaceuticaltechnology, upi.com, sugarnutritionresource.org
Opioid use disorder
Opioid use disorder and opioid addiction remains at epidemic levels worldwide, especially in the U.S. (16 million people globally and 3 million U.S. citizens have or have had opioid use disorder). The National Center for Health Statistics estimates 100,306 drug overdose deaths between Apr. 2020 and Apr. 2021) in the U.S., which is a 28.5% increase from the previous year.
Sources: StatPearls, cdc, hhs.gov
According to the International Agency for Cancer Research, cancer-related deaths are likely to rise by 72% by 2030. Drug development in oncology has seen a lot of activity in 2022 and will continue to be a priority therapy area for pharma companies in 2023, not only in terms of R&D pipelines but also across the M&A and investment landscape. Late cancer diagnosis—especially driven by the pandemic’s effect on screening—isanticipated to lead to an emerging mortality crisis and a growing trend of a higher proportion of advanced metastatic cancers. Government agencies are continuously implementing new initiatives to reduce cancer mortality rates, increase access to quality treatment and enhance access to cancer therapies.
Alzheimer’s disease
The prevalence of Alzheimer’s is on the rise: More than 6 million individuals in the U.S. are living with Alzheimer’s disease (AD) currently. This number is expected to increase to 13.8 million by 2060. Though the industry is working to address the unmet needs of this disease, 99% of the drugs in the pipeline fail to effectively treat it, especially after symptoms appear.
Source: Medcitynews, fiercehealth, icrinc, evaluate, fool, urmc.rochester.edu, fiercehealthcare-tech, who
Sepsis affects 750,000 people in the U.S. and nearly 50 million people globally each year. Effective vaccines and precision medicine could aid in prevention. Yet the current treatment strategies employ a one-size-fits-all approach. Unlike the other conditions covered here, few initiatives have been launched by healthcare stakeholders to address this disease.
Sources: downtoearth, ctpost, ncbi, gmss
We’ve seen gene editing make big strides, and AI seems to be more in the public eye, are there other areas showing huge promise?
Genomics (gene editing/engineering), AI and machine learning, and 3D printing have picked up significantly in the last few years. Genomics played vital role during the pandemic by serving as the basis of the mRNA COVID-19 vaccines and by dramatically accelerating the drug discovery process. 3D printing powered on-demand solutions that helped quickly produce ranging from personal protection equipment to medical devices.
Other technologies such as blockchain, augmented reality and virtual reality, digital twin and quantum computing have vast potential within next 3-5 years and are likely to experience significant growth driven by strong regulatory support and increasing investments.
Sources: drugdiscoverytrends, Nature,Global data, 3dprint, Grandviewresearch, gminsights, idtechex, Forbes, quantum computing, Fiercepharma, grandviewresearch, pharmaphorum, globenewswire
Can biotech help in other areas, such as climate change, food security, etc.?
Apart from developing diagnostics, vaccines and treatments for diseases, biotechnology also is providing solutions to world’s most pressing health and nonheath issues. Modern biotechnology is providing breakthrough products and technologies to reduce negative effects on the environment; ensure cleaner energy, water and air; reduce poverty and hunger; and support safer, cleaner and more efficient industrial manufacturing processes. Additionally, biotech can help protect biodiversity and maintaining balance within the world’s ecosystems.
Will sustainability become more important for biotech and life science companies in 2023?
Sustainability has become a major trend across different industries including biotech and pharma. The pandemic accelerated efforts by companies to take on new environmental, social and governance (ESG) targets. In 2023, we expect pharma to develop new technologies that significantly improve the sustainability of research workflows and bioprocesses, while encouraging equity within their organizations, for their consumers and for their communities. Pharma companies such as Pfizer and Merck have launched sustainability bonds, or specific financial allocations to support their future sustainability efforts.
Biopharma companies have been committing to sustainability through efforts across three key areas: environmental, social and operational sustainability. While the majority of their efforts have skewed toward environmental concerns, social and operational sustainability is gradually picking up more focus.
Sources: Livemint, pharmaceutical-technology, europeanpharmaceuticalreview, climatechampions, weforum, Fiercepharma, biospectrumasia, capgemini, pharmtech, EcoAct
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