Foreword
The biopharma sector spent much of 2023 wondering whether investor sentiment could get any worse. As new depths were plumbed in October the answer appeared to be yes.
But there are reasons to believe that 2024 will see better times, if only because global interest rates, always this cash hungry sector’s Achilles’ heel, seem to have topped out.
But the macro environment is precarious, and vulnerable to shocks. Few are predicting a speedy, bump-free recovery.
This report seeks to highlight the hints of an upturn that many believe is already underway. It also finds signs of ongoing difficult times for many in biopharma. This will be particularly true for those groups that need to raise cash for projects outside of “A-list” therapy areas and mechanisms, or for early, unproven approaches.
These hot areas, for example metabolic conditions like obesity or antibody-drug conjugates in oncology, managed to attract huge financial support last year, even when the wider funding climate was dire. The gravitational pull of validated
and successful approaches is unlikely to abate next year, sucking cash towards a fortunate few.
Progress in treating obesity and related conditions will remain a big story for biopharma in 2024. The enormous valuations currently boasted by Lilly and Novo Nordisk, this field’s leaders, are bolstered by a belief that the incretin drug class will help promote radical improvements in the health of huge swathes of the population.
There are two themes to watch next year in this area: firstly, whether manufacturers manage to keep up with demand, and secondly, their progress in convincing payers that the benefits of their novel medicines are worth their high costs.
Follow-on projects from Lilly and Novo and others rank among the sector’s most valuable pipeline assets, so emerging metabolic data will also be a big story for next year. Pfizer’s stumble with its phase 3 oral agent danuglipron shows this field is not immune to setbacks.
This report also highlights other big hopes waiting in the wings. Could 2024 finally see a late-stage breakthrough in pain, delivered by Vertex? Meanwhile, small developers feature heavily in the list of biggest potential drug launches, which signals nervous times for biotech investors, and perhaps rich times for deal bankers.
Sections on IPOs and venture capital show how the financing wheels seemed to turn a little faster as 2023 went by,
raising hopes for further acceleration next year. Elsewhere, the FDA, another big sector preoccupation, is on track for another strong year of approvals, according to Evaluate Omnium.
These positive signals must be tempered by reality, however. While the financial markets remain jittery biopharma will be held to a high standard, with only clear successes rewarded.
This was true for both small and large developers last year. Sanofi and Bayer both suffered huge share price slumps after disappointing investors in 2023. Big pharma trading like biotech is a sure sign of poor sentiment.
Unless companies can tell a very convincing growth story, investors are
refusing to put money to work. This is likely to remain true next year, for both the public and private biopharma sectors.
Unless companies can tell a very convincing growth story, investors are refusing to put money to work. This is likely to remain true next year, for both the public and private biopharma sectors.
