A Bright Outlook

As the world prepares for the new normal, the pharma industry seems set for a favourable 12 months ahead. Bolstered by the increased public awareness of healthcare, expanding government activity—particularly in the vaccine sector—and rapid actions taken by bio/pharma companies in reaction to the pandemic, the pharma industry is expected to experience continued growth in 2021.

“The industry will continue to benefit from favourable demographic and lifestyle factors, innovations, and a diminishing threat from expiring patents in addition to the shot in the arm for the whole sector from the COVID-19 pandemic, whose impact goes beyond the vaccines,” said Olaf Tölke, head of corporate ratings at Scope and lead healthcare-sector analyst, in a press release (1).

M&A activity

Merger and acquisition (M&A) activity within the industry is also expected to have an upturn in 2021. During 2020, there was a pause in M&A activity as a result of COVID‑19; however, the year finished reasonably strongly with the largest deal of the year taking place in December—AstraZeneca’s acquisition of Alexion Pharmaceuticals for a total of US $39 billion (€32 billion) (2).

According to recent insight from McKinsey, M&A is a critical aspect to a pharmaceutical company’s recovery within the new normal (3). The McKinsey analysts note that there will be a decrease in valuations, a trend that is commonly seen after a crisis (3). With the potential discounted opportunities available, companies that are agile enough to take advantage of the most relevant M&A prospects will come out on top (3).

Additionally, a focus on less crowded and faster growing treatment areas should continue to be in focus for bio/pharma companies. This strategy has already been seen with AstraZeneca’s December acquisition and the latest announcement of Sanofi, which has acquired Kymab—a clinical-stage biopharmaceutical company with a focus on immune-mediated diseases and immune-oncology therapeutics (4).

Post-Brexit deal

After months of negotiations, a post-Brexit trade deal was finally reached on 24 Dec. 2020, which was welcomed by industry bodies from Europe and the United Kingdom. “We have always said that a deal is in the best interest of patients in the UK and the EU [European Union],” said Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry (ABPI), and Nathalie Moll, director general, European Federation of Pharmaceutical Industries and Associations (EFPIA), in a joint statement on the deal (5). “This means ongoing collaboration in key areas including scientific research and cooperation in areas like medicines safety.”

The main advantage of the deal being agreed is the ensured free trade between the regions, which means that there will be no tariffs on trade in goods, such as medicines. However, even with a deal in place industry still has to navigate certain difficulties, which will not all be apparent immediately. In the Cover Story feature for this issue, on pages 10–14, experts discuss the uncertainty over Brexit in more detail.

Favourable overall

Overall, the outlook for the bio/pharma industry is looking favourable. Public perceptions of the industry have improved, thanks to the way it has stepped up in the fight against COVID-19—forging unprecedented cross-industry collaborations to be able to deliver treatments and developing at phenomenal speeds—and the first positive steps toward a cooperative future relationship between the UK and EU have been taken. As the industry moves further into 2021, it will be interesting to see if the momentous shifts in traditional practices that have been seen during the pandemic continue and create a prosperous and healthy future.

Stay alert, stay safe, and stay healthy.

References

1. Scope Ratings, “Pharmaceutical Credit Outlook 2021: Stable, with Positive Bias from Vaccines, Healthcare Refocus,” Press Release, 7 Jan. 2021.
2. AstraZeneca, “AstraZeneca to Acquire Alexion, Accelerating the Company’s Strategic and Financial Development,” Press Release, 12 Dec. 2020.
3. J. Ascher, et al., “A New Prescription for M&A in Pharma,” McKinsey & Co., Article, 10 Sept. 2020.
4. Sanofi, “Sanofi to Acquire Kymab, Adding KY1005 to its Pipeline, a Human Monoclonal Antibody Targeting Key Immune System Regulator OX40L,” Press Release, 11 Jan. 2021.
5. ABPI and EFPIA, “Joint EU-UK Pharmaceutical Industry Response to Brexit Deal,” Press Release, 24 Dec. 2020.

About the Author

Felicity Thomas is the European editor for Pharmaceutical Technology Group.

Article Details

Pharmaceutical Technology Europe
Vol. 33, No. 1
January 2021
Page: 6

Citation

When referring to this article, please cite it as F. Thomas, “A Bright Outlook,” Pharmaceutical Technology Europe 32 (12) 2020.