Pharma, Biotech & Medtech 2017 in Review

Pharma, Biotech & Medtech 2017 in ReviewAmy Brown, Elizabeth Cairns, Edwin Elmhirst – February 2018

EP Vantage Pharma, Biotech and Medtech 2017 in review

In the early weeks of 2017 biopharma investors were preoccupied with working out whether the year would head up or down. Put generously, 2016 had been flat, and hopes were high that the months ahead would see a recovery.

On most measures, 2017 delivered a resurgence. And the picture was similar for the medical technology industry,

though life got tougher for the smaller groups.

Drug approvals in the US jumped, with plentiful evidence emerging over the year of the FDA’s industry-friendly

stance. Stock market indices climbed, helped in no small part by US politicians, who eased back on the drug pricing

rhetoric and finally pushed through tax reform. The rebound in investor optimism threw open the IPO window and

helped venture funding soar – all of which helped forge a fertile environment for small drug developers working on

innovative technologies.

These conditions caused valuations in certain areas of biopharma to surge ever higher last year – though this was

not true across the sector. Concerns about the growth prospects of large drug developers, most notably in the

biotech arena, led to a disappointing year for many in the big cap space. The ability of these companies to raise

prices on some elderly franchises in the coming months will remain a worry.

Meanwhile, the widely wished for pick-up in M&A never materialised, and activity dimmed even further – uncertainty

around tax reform and a refusal by buyers to accept sky-high valuations were widely blamed.

Over in the device sector, 2017 was a good year in many respects: most listed medtechs – and all the big-caps – saw

their share prices head skywards, often to record-breaking heights. In contrast to biopharma M&A activity increased

markedly, by value if not by number. And the FDA had a storming year, approving 50 new devices at the fastest rate

for the past five years.

But the funding crunch still exists for small medtechs. This phenomenon has been manifest for several years now and

it would be tempting to refer to it as a “new normal” if it were not for the fact that every year it gets worse. Last year

so few venture deals were done, and so few IPOs got away, that there is a real possibility that the pool of start-ups

could dry up completely if this trend is not reversed.

With two vast deals closing in 2017 at significant premiums, shareholders know that buying into big-cap medtech can still

result in significant payoffs. Investors, however, are well aware that with every megamerger, a potential acquirer of venture-

backed companies vanishes. The ebbing prospect of exits is one of the main factors behind the venture crunch.

Small players in both the medtech and biotech sectors will be hoping to see an increased appetite for deals in the

coming year.

Report authors | Amy Brown, Elizabeth Cairns, Edwin Elmhirst – February 2018

Unless stated, all data are sourced to Evaluate and were compiled in January 2018.

2 Copyright © 2018 Evaluate Ltd. All rights reserved.EP Vantage Pharma, Biotech and Medtech 2017 in review

Contents

Introduction 2

Pharma and Biotech in review 4

Few storms for biopharma to weather in 2017 4

M&A fails to pick up 8

Venture funding accelerates 11

New issues rebound 13

US FDA adds quantity to new drug approval speed 15

Medtech in review 18

The stars align for big-cap medtech 18

M&A comes back with a bang – or two – in medtech 20

Medtech funding ventures into the unknown 22

US listings disappoint in quiet year for medtech floats 24

Twice as many in half the time: the FDA speeds up approvals 26

Looking forward to 2018 29

3 Copyright © 2018 Evaluate Ltd. All rights reserved.EP Vantage Pharma, Biotech and Medtech year in review 2017

4 Copyright © 2018 Evaluate Ltd. All rights reserved.Few storms for biopharma to weather in 2017

Few storms for biopharma to weather in 2017

Biopharma investors started 2017 praying for a market recovery, and by the end of the year

their wish had pretty much been granted. The worst fears about the economic impact of

Donald Trump’s US presidency failed to materialise, and low-tax rhetoric ensured that by

the end of the year the markets presented a picture of health.

All major healthcare indices climbed in 2017, in Europe, the US and Japan, echoing wider stock market strength.

The dizzy heights of mid-2015 might not have been reached, but the indisputable trend for the year was up.

Stock index % change in 2017

NASDAQ Biotechnology (US) 21%

S&P Pharmaceuticals (US) 10%

Dow Jones Pharma and Biotech (US) 15%

S&P 500 (US) 19%

DJIA (US) 25%

Dow Jones STOXX Healthcare (EU) 2%

Thomson Reuters Europe Healthcare (EU) 16%

Euro STOXX 50 (EU) 7%

FTSE-100 (UK) 8%

TOPIX Pharmaceutical Index (Japan) 11%

Indices

Among individual stocks Abbvie ended the year as big pharma’s winner by a wide margin, thanks to the group’s

success in delaying biosimilar competition to its mega-blockbuster Humira.

Astrazeneca surprisingly overcame the initial failure of its flagship immuno-oncology asset Imfinzi in a hugely

important lung cancer study called Mystic. And Johnson & Johnson climbed on a strong performance from its

pharmaceutical unit over the year, demonstrating resilience to biosimilars and delivering a big win with its prostate

cancer drug Zytiga.

At the other end of the table, Glaxosmithkline made its annus horribilis official, its new chief executive Emma

Walmsley suffering a baptism of fire on several fronts. Ironically Glaxo was the best-performing big cap stock of 2016.

Sanofi was buffeted by mounting concerns around its reliance on the difficult diabetes space and a lack of pipeline

prospects; the French firm responded in early 2018 with an M&A spree. Meanwhile Merck & Co never recovered

from October’s collapse on a third-quarter revenue miss and an expected delay to Keytruda’s confirmatory first-line

lung cancer study, Keynote-189, which has now yielded positive top-line results.

Pharma and Biotech in review


Teva’s fall from grace continued in 2017; the Israeli company lost nearly 50% of its value last year, and has lost 70% since

January 2016. Even with a new chief executive and a recovery plan in place, fresh concerns about its debt burden are

never far from the surface, and Teva’s fourth quarter results suggested that the group’s problems are intensifying.

A poor year for Allergan also served to demonstrate how tough things have become for speciality pharma groups

– the Botox maker is struggling to drive top-line growth, and its controversial attempts to protect the patents on its

dry-eye drug Restasis won the company few friends.

Not so Australia’s CSL, basking in US approval for its hereditary angioedema drug Haegarda, which now has a handy

head start over Shire’s lanadelumab. And Novo Nordisk showed that life is not terrible for all diabetes players. Its

GLP1 agonist Victoza beat expectations in a competitive market, sending the Danish group’s stock on a tear from

early August.

Takeda represented the sole Asian company among the larger cap rankings. Investors were seemingly convinced by

the Japanese drug maker’s shift towards oncology, and hopeful for a handful of new product launches.

Market capitalisation ($bn)

Top 3 risersShare price % change

YE 2017 12 M change

Abbvie ($) 54% 154.4 52.6

Astrazeneca ($) 27% 87.9 18.7

Johnson & Johnson ($) 21% 375.4 61.9

Top 3 fallers

Glaxosmithkline (£) (15%) 86.5 (8.0)

Sanofi (€) (7%) 106.7 (2.6)

Merck & Co ($) (4%) 153.3 (9.0)

Big pharma companies: Top risers and fallers in 12 months Source: Evaluate® January 2018



YE 2017 12 M change

CSL (A$) 44% 49.8 14.9

Takeda (¥) 32% 44.8 8.0

Novo Nordisk (DKr) 31% 132.1 56.2

Top 3 fallers

Teva ($) (48%) 19.2 (17.5)

Allergan ($) (22%) 54.4 (24.4)

Fresenius (€) (13%) 42.3 (2.4)

Other big pharma companies ($25bn+): Top risers and fallers in 12 months Source: Evaluate® January 2018


Among mid-cap drug makers – those capitalised at $5-25bn – Asian companies dominated the leading quintet.

South Korea’s Celltrion benefited from securing a positive EU regulatory opinion for Herzuma, a biosimilar version

of Herceptin. Meanwhile Chugai, majority owned by Roche, proved to be a better way for investors to trade on the

success of the haemophilia A therapy Hemlibra than did its Swiss parent.

And China’s Jiangsu Hengrui Medicine reaped the rewards of a modest licensing deal covering its anti-PD-1, SHR-

1210/INCSHR1210, with Incyte.

As for non-Asian winners, Vertex cemented its perceived lead in cystic fibrosis, the best efforts of Galapagos/Abbvie

notwithstanding. And Ipsen benefited from buying out Merrimack’s irinotecan formulation Onivyde and the successful

progress of its deal with Exelixis over the cancer drug Cabometyx.

Mid-cap fallers included Mallinckrodt, punished for flatlining sales of H.P. Acthar gel; Hikma, hurt by revenue forecast

cuts and US delays to generic versions of Advair; and Tesaro, the victim of a 2017 drift as its newly launched ovarian

cancer drug Zejula struggled in the face of competition from Astrazeneca’s Lynparza.



YE 2017 12 M change

Celltrion (KRW) 106% 24.0 12.9

Vertex Pharmaceuticals ($) 103% 37.9 19.6

Chugai Pharmaceutical (¥) 72% 28.6 10.5

Jiangsu Hengrui Medicine (RMB) 52% 29.3 13.5

Ipsen (€) 45% 9.8 3.5

Top 5 fallers

Mallinckrodt ($) (55%) 2.1 (3.1)

Opko Health ($) (47%) 2.7 (2.4)

Lupin (Rs) (40%) 6.1 (3.9)

Hikma Pharmaceuticals (£) (40%) 3.6 (2.0)

Tesaro ($) (38%) 4.5 (2.7)

Mid cap ($5bn-$25bn): Top risers and fallers in 12 months Source: Evaluate® January 2018

Of course, for those with a taste for volatility the real money was to be made trading smaller biopharma groups.

Among companies capitalised at $250m to $5bn Sangamo and Esperion climbed fivefold, while Nektar,

Immunomedics and Spectrum rose over 300%.

Nektar added a huge $7.5bn to its market value over 2017 in large part due to its early-stage immuno-oncology

project, NKTR-214. Despite having generated only scant phase I data, the asset has become one of the hottest

pipeline projects in this space, based on its potential to turn “cold” tumours “hot”.

Sangamo and Esperion were both recovery stories, the former receiving a massive boost from a technology-

validating deal with Pfizer in May. The case of Spectrum is more curious: the group surged on the promise of its pan-

Her inhibitor poziotinib in a small NSCLC niche, before firing its chief executive, Rajesh Shrotriya.


On the downside, Ipsen’s Onivyde buy explains Merrimack’s poor showing: part of the $575m received from Ipsen

was paid out as a special dividend to Merrimack investors. Forward Pharma also collapsed after paying out a one-off

windfall to investors.

Novan suffered a clinical setback with its acne candidate SB204, while Adocia lost Lilly as a partner for

BioChaperone Lispro.

Market capitalisation ($m)


YE 2017 12 M change

Sangamo BioSciences ($) 438% 1,386 1,171

Esperion Therapeutics ($) 426% 1,725 1,443

Nektar Therapeutics ($) 387% 9,404 7,529

Immunomedics ($) 340% 2,457 1,754

Spectrum Pharmaceuticals ($) 328% 1,908 1,551

Top 5 fallers

Novan Therapeutics ($) (84%) 67 (344)

Curis ($) (77%) 115 (275)

Forward Pharma (DKr) (77%) 347 (356)

Merrimack ($) (74%) 137 (389)

Adocia (€) (73%) 116 (289)

Small cap ($250m-5bn): Top risers and fallers in 12 months Source: Evaluate® January 2018

Top 5 risers

Sangamo BioSciences Sangamo’s gene therapy gets Pfizer stamp of approval

Esperion Therapeutics Positive triplet data spurs Esperion deal-making chatter

Nektar Therapeutics SITC – Nektar’s plan to make cold tumours blossom

Immunomedics Activist investor puts Immunomedics phase III in play

Spectrum Pharmaceuticals World Lung – Spectrum shoots for another lung cancer niche

Top 5 fallers

Novan Therapeutics Novan’s spotty acne performance hurts shares

Curis -

Forward Pharma Biogen burned as Forward goes backwards

Merrimack Daily Market Movers: Global Majors & Industry (30 May 2017)

Adocia Lilly dumps Adocia again

Related EP Vantage commentary and analysis

One company is not captured in the 2017 numbers by virtue of having been taken over: the $11.9bn acquisition of

Kite Pharma by Gilead in August cemented that group’s 304% share price appreciation on the year. Had Kite had a

standalone existence at the end of 2017 it would have graduated to the mid-caps according to this classification.

http://www.epvantage.com/Universal/View.aspx?type=Story&id=707068&isEPVantage=yes&notSub=false








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8 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A fails to pick up

M&A fails to pick up

The strength exhibited by biopharma shares in 2017 is perhaps surprising when considering the

failure of M&A action to pick up. Widely considered a driver of investor enthusiasm, takeover

activity actually dimmed over the year.

A paltry 179 deals were struck, raising just $80bn and thus making 2017 the slowest M&A year of the past five. These

figures encompass global drug makers - medtech M&A is detailed later.

Source: Evaluate® January 2018Five years of M&A – deal values and volumes

Com

bine

d de

al v

alue

($bn

)

Dea

l cou

nt

50

100

150

200

250 350

300

250

200

50

100

150

00

Combined deal value ($bn)

Deal Count

Year2017

80.0

2016

104.4

2015

188.9

2014

219.3

2013

79.5

203

290

229226

179

Many blamed uncertainty over US tax reforms for holding big companies back from making bold strategic moves.

Escalating valuations were another culprit, while the hobbling of several of the industry’s serial acquirers, namely the

speciality companies, cannot have helped.

Whatever the reasons, the analysis below suggests that a big drop in small and mid-sized takeovers pushed transaction

volumes, and total deal values, lower.

Year <$250m $250m-$1bn $1-10bn $10-25bn $25+bn

Count Avg ($m) Count Avg ($m) Count Avg ($bn) Count Avg ($bn) Count Avg ($bn)

2017 67 69 18 620 8 2.5 1 11.9 1 30.0

2016 72 54 28 564 14 2.8 1 14.0 1 32.0

2015 134 57 32 521 26 2.9 3 16.4 1 38.7

2014 86 47 35 524 23 3.6 1 16.0 2 49.3

2013 52 86 30 479 14 3.6 1 10.4 0 -

M&A totals by valuation category* Source: Evaluate® January 2018

* Where deal values disclosed.


The fall in total M&A spend last year was also due to an absence of very big deals. True, both Actelion and Kite

managed to attract $10bn-plus price tags last year, and the analysis above shows that deals of this size typically only

occur once a year. However, compared with the big deals of the biotech boom years, these takeovers were smaller –

the sector has not seen a $40bn-plus transaction since 2015.

And excluding Actelion and Kite, last year’s deals quickly slip into the $1bn dollar territory.

As an aside, it is clear that oncology remains a red-hot space – half of the targets below were involved in cancer research.

Date announced Acquirer Target Value ($bn)

Jan Johnson & Johnson Actelion 30.0

Aug Gilead Sciences Kite Pharma 11.9

Jan Takeda ARIAD Pharmaceuticals 5.2

Apr Fresenius Akorn 4.3

Oct Novartis Advanced Accelerator Applications 3.9

Aug Bristol-Myers Squibb IFM Therapeutics 2.3

Nov Shanghai Pharmaceuticals Holding Cardinal Health’s China business 1.2

Jul Mitsubishi Tanabe Pharma NeuroDerm 1.1

Apr Sawai Pharmaceutical Generic pharmaceuticals business of Upsher-Smith Laboratories 1.1

Jan Ipsen Merrimack’s commercial & manufacturing infrastructure for Onivyde 1.0

Biggest M&A deals announced in 2017 Source: Evaluate® January 2018

Johnson & Johnson J&J sets benchmark with massive Actelion price

Gilead Sciences For Gilead Kite is no Pharmasset

Takeda Takeda pays 2012 price for 2017-model Ariad

Fresenius Fresenius shows biotech how to get the deals done

Novartis Novartis bets big on US Lutathera approval

Bristol-Myers Squibb Bristol’s private Sting should have venture financiers celebrating

Shanghai Pharmaceuticals Holding -

Mitsubishi Tanabe Pharma Mitsubishi Tanabe joins Japanese biopharma in easing deal bankers’ pain

Sawai Pharmaceutical -

Ipsen Merrimack falls for $1bn oncology offer from Ipsen

EP Vantage coverage

One group of investors for whom takeovers are extremely important are venture capitalists. And, while buyouts of

private drug developers dipped along with the wider M&A market, these investors have reasons to remain cheerful.

VC-backed companies accounted for 28% of last year’s biopharma takeovers – a five-year high. It seems that the

private sphere is not only incubating increasingly desirable targets, it is also still managing to get the deals done.

The following analysis looks only at full company takeovers – data elsewhere in this M&A section also include

transactions such as stake purchases or product acquisitions.

http://www.epvantage.com/Universal/View.aspx?type=Story&id=684651&isEPVantage=yes









A surge in deals announced in January 2018 is raising hopes for a far more active period. It should be noted, however,

that for the last three years the opening months of the year have exhibited an enthusiasm that quickly petered out.

Source: Evaluate® January 2018VC-backed takeouts

Com

bine

d de

al v

alue

($bn

)

Dea

l cou

nt

4

2

8

6

12

10

14

16

18 30

25

20

5

10

15

0

Combined deal value ($bn)

Deal Count

Year

2016

16.6

2015

10.9

2013

5.7

2014

7.3

2012

6.1

2017

7.7

0

Abbvie –Stemcentrx$9.8bn

25

19

1717

14

21

Source: Evaluate® January 2018Pharma and biotech M&A transactions announced each quarter

Tota

l dea

l val

ue ($

bn)

Dea

l cou

nt

20

40

80

60

100

120 90

40

50

60

70

80

30

20

10

00

Total deal value ($bn)

Deal count

2013 2014 2015 2016 2017

Year

Q1

5.5

Q2

22.8

Q3

29.3

Q4

22.0

Q1

41.2

Q2

50.8

Q3

31.2

Q4

96.1

Q1

70.0

Q2

27.4

Q3

62.0

Q4

29.5

Q1

44.1

Q2

22.5

Q3

29.8

Q4

8.0

Q1

40.3

Q2

9.1

Q3

19.2

Q4

11.5

Teva-Allergangenerics:

$41bn

J&J-Actelion$30bn

Allergan-Actavis: $71bn

Shire-Baxalta:$32bn

Abbvie-Pharmacyclics:

$21bn

Allergan-Forest:$28bn

43

54

64 65

52

64

5558

7477

7168

60

46

53

44

65

31

37

46

GSK-Novartisasset swap:

$23bn

11 Copyright © 2018 Evaluate Ltd. All rights reserved.Venture funding accelerates

Venture funding accelerates

With two record-breaking final quarters under its belt 2017 moved into the annals as one the

biggest years for venture funding. The total haul for 2017 hit $11.3bn, putting it ahead of 2015’s

previous record.

The huge funds raised by venture firms over the past few years were deployed at pace last year, while the trend

towards making much bigger bets on companies also played a part in boosting the total amount raised. A notable

example of this much-to-few strategy was seen last year when Roivant pulled in a staggering $1.1bn in a single round.

1.5

1

0.5

Source: Evaluate® January 2018Quarterly VC investments

Inve

stm

ent (

$bn

)

Fina

ncin

g co

unt

2

2.5

3.5 140

3 120

100

80

60

40

20

0

Amount raised ($bn)

Financing count

Year

2013 2014 2015 2016 2017

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q40

3.6

3.3

1.91.9

2.5

2.72.72.72.7

2.22.1

1.61.61.7

0.7

1.1

1.5

2.92.9

2.290

133

106

121116

137

125

139

130 129

106

134

120

103

92

99

132

111

8385

The data here concerns only companies developing human therapeutics; medtech investments are covered later in

the report. The trend towards fewer but larger rounds is surely now the new normal though this pattern still seems

to be developing. The number of mega-rounds hit a new high last year, the following table shows, while falling deal

volume helped push averages ever higher.

The expanding size of these mega-rounds indicates that in certain fields investment models have fundamentally

changed. The super-sizing of investments has meant much larger venture syndicates, which now frequently include

technology companies alongside traditional VC and pharma groups.

12 Copyright © 2018 Evaluate Ltd. All rights reserved.Venture funding accelerates

But as Roivant’s lead investor, Softbank, has found, investment in healthcare comes with great risk. The umbrella

company’s two public investments, Myovant and Axovant Sciences, have disappointed, the latter crashing with the

failure of its Alzheimer’s project intepirdine.

Other fund-raising winners in the year included the infectious disease company Vir Biotechnology, which despite

only being launched in January 2017 managed to pick up $500m in two funding rounds during 2017, including money

from the Bill and Melinda Gates Foundation.

Few expect much to change in the venture sector this year. Biopharma’s desire to stock pipelines is never sated,

while the IPO window so far shows no sign of shutting. However, these private investors are no doubt eyeing the

recent market volatility nervously.

Date Investment ($bn)

Financing count

Avg per financing ($m)

No. of rounds ≥$50m

No. of rounds ≥$100m

2017 11.3 411 30.5 68 15

2016 9.4 413 24.3 48 13

2015 11.1 499 23.2 58 14

2014 7.4 517 15.4 35 4

2013 5.1 450 12.7 12 3

2012 4.8 439 12.0 16 2

Annual VC investments Source: Evaluate® January 2018

Company Investment ($m) Round Date

Roivant Sciences 1,100 Series A Aug

Vir Biotechnology 350 Series A Oct

Ginkgo Bioworks 275 Series D Dec

Cheplapharm Arzneimittel 210 Series Undisclosed Sep

ADC Therapeutics 200 Series D Oct

Cullinan Oncology 150 Series A Oct

Vir Biotechnology 150 Seed Capital Jan

Bridgebio Pharma 135 Series A Sep

Rubius Therapeutics 120 Series A Jun

Semma Therapeutics 114 Series B Dec

Top 10 rounds of 2017 Source: Evaluate® January 2018

13 Copyright © 2018 Evaluate Ltd. All rights reserved.New issues rebound

New issues rebound

Though well below the frothy exuberance of 2014 and 2015, the $3.9bn raised by biotech

flotations last year represented a significant pick-up for companies wishing to make their

public debut.

And the continued upward quarterly trend, which culminated in one of the strongest fourth quarters since 2014,

indicates that the IPO window opened wider as the year progressed.

Source: Evaluate® January 2018Biotech initial public o�erings by quarter on western exchanges

Am

ount

rai

sed

($m

)

Cou

nt

250

500

750

1,000

1,750

2,000

1,250

1,500

2,250

2,500 50

40

30

10

20

0

Amount raised ($m)

Count

Year

2013 2014 2015 2016

0Q2

1,051

Q3

1,263

Q4

704

Q1

2,26

8

Q2

940

Q3

1,478

Q4

1,837

Q1

802

Q2

1,798

Q3

1,548

Q4

941

Q1

594

Q2

677

Q3

541

Q4

464

Q1

449

Q21,0

26Q3

995

Q4

1,381

Q1

2017

1719

12

33

18

26

20

15

25

16

22

10

17

12

68

16

1214

6

237

Denali’s ability to drum up $250m from investors, the biggest biopharma IPO of 2017, will only have increased the

confidence of those waiting to list, especially as the group operates in the high-risk CNS area.

Another winner was Apellis Pharmaceuticals, whose second bite at the IPO cherry resulted in a $150m raise. Its

shares finished the year up 55%, a remarkable comeback from a company which was forced to abandon its flotation

plans in 2016, citing poor market conditions.

14 Copyright © 2018 Evaluate Ltd. All rights reserved.New issues rebound

Company Date Amount raised ($m)

Discount/ premium

Share price change to YE17

Denali Dec 250 0% (13%)

Zai Lab Sep 173 6% 18%

Biohaven Pharmaceutical Holding May 168 13% 59%

Odonate Therapeutics Dec 150 (6%) 4%

Apellis Pharmaceuticals Nov 150 0% 55%

Akcea Therapeutic Aug 144 (38%) 117%

Optinose Oct 138 0% 18%

Rhythm Pharmaceuticals May 138 13% 71%

Deciphera Pharmaceuticals Sep 128 6% 33%

Clementia Pharmaceuticals Jul 120 7% 27%

Biggest IPOs in 2017 Source: Evaluate® January 2018

Notably, more companies achieved their proposed offer price in 2017 than in the previous four years. Discounts to

initially proposed price ranges averaged at 3% across the year, a stark contrast to the more risk-averse days of 2012

when the average discount hit 24%.

Perhaps companies floating last year approached public investors with more realistic valuations on the table. The

exuberant receptions seen in the market do not entirely support this theory, however, and many would argue that the

stock market became more accepting of risk as the year progressed.

The reception to Solid Biosciences is a case in point. The gene therapy player managed to list in January 2018 and

then soared on its debut, despite at the last minute revealing a clinical hold on its sole clinical asset.

Those with an ambition for a public life should strive to make hay while the sun is shining.

Q1 Q2 Q3 Q4

Source: Evaluate® January 2018O�er price premium/discount to original IPO price range

Ave

rage

pre

miu

m/d

isco

unt

5%

0%

-5%

-10%

-15%

-20%

-25%

-30%

10%

-35%

Year

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2012 2013 2014 2015 20172016

15 Copyright © 2018 Evaluate Ltd. All rights reserved.US FDA adds quantity to new drug approval speed

US FDA adds quantity to new drug approval speed

Last year saw the US recover from a new drug approvals slump in 2016, at the expense of a

slight increase in the average time taken to complete reviews.

2017’s tally of US approvals amounted to 57 new small molecules and biologicals, matching the record 2015 had set

for this century. Even better for industry bulls is that combined fifth-year US sales of drugs approved last year outstrip

those of the class of 2015, positioning 2017 as a year to remember – if analyst forecasts hold up.

Source: Evaluate® January 2018FDA approval count vs. 5th year US sales

US

sal

es 5

th y

ear

post

app

rova

l ($

bn)

Tota

l NM

Es +

bio

logi

cals

app

rove

d

5

10

15

20

25

35

30

60

50

40

30

20

10

00

US sales 5th year post approval ($bn)

Total NMEs + biologicals approved

Avg. number of annual approvals. 39

Year

2010 – Prevnar 13 (Pfizer), Victoza (Novo Nordisk), Prolia/Xgeva (Amgen)

2011 – Xarelto (J&J/Bayer), Eylea (Regeneron/Bayer)

2012 – Eliquis (Bristol-Myers Squibb/Pfizer), Stribild (Gilead)

2013 – Sovaldi (Gilead), Tecfidera (Biogen)

2014 – Opdivo (Bristol-Myers Squibb), Harvoni (Gilead)

2015 – Orkambi (Vertex), Ibrance (Pfizer)

2016 – Tecentriq (Roche), Epclusa (Gilead), Venclexta (Abbvie)

2017 – Ocrevus (Roche), Dupixent (Sanofi)

2008

5.6

2009

5.4

2010

12.5

201 1

11.9

2012

13.3

2013

14.7

2014

22.4

2015

27.2

2016

13.0

2017

30.7

31

34

26

34

43

35

45

57 57

25

For investors, even more important than absolute approval numbers will be the economic potential of those new

drugs. And here 2017’s forecast beats that expected for 2015’s approvals, at $30.7bn in total, versus $27.2bn.

True, this could largely be down to the sellside becoming increasingly positive in a bull market. But the class of 2017

did have its fair share of expected blockbusters, including Roche’s Ocrevus and Sanofi’s Dupixent.


Product Company 2022e US sales ($bn)

Ocrevus Roche 3.94

Dupixent Sanofi 3.56

Ozempic Novo Nordisk 1.83

Imfinzi AstraZeneca 1.47

Tremfya Johnson & Johnson 1.22

Top approvals of 2017 Source: Evaluate® January 2018

Fast approvals for products like the novel CAR-T therapies Kymriah and Yescarta will have helped bump up the

numbers last year. Indeed, applications with priority review – which both Kymriah and Yescarta boasted – sailed

through in an average of 7.3 months, the fastest since 2013.

Conversely, the average time for applications under standard review went back up to that seen two years ago, while

overall review times amounted to 12.3 months, slightly above 2016’s total, with the caveat that the total numbers are

relatively small.

First-cycle approval, without requests for additional information, was achieved by 85% of applicants. And, given the

earlier reports of the FDA collapsing under the strain of its workload, the statistic about which the agency might be

most proud is that the CDER met its target PDUFA date for 100% of applications.

Source: Evaluate® January 2018NME approval times and counts

Ave

rage

rev

iew

tim

e (m

onth

s)

5

10

15

20

25

0

Standard

Breakthrough therapy

Priority review

Priority review decade average

Standard decade average

PDUFA IVPDUFA III PDUFA V

2006(n=29)

n=16

n=13

2007(n=26)

n=13

n=13

2008(n=31)

n=22

n=9

2009(n=34)

n=21

n=13

2010(n=26)

n=16

n=10

201 1(n=34)

n=18

n=16

2012(n=43)

n=28

n=14

n=1

2013(n=35)

n=24

n=9

n=2

2014(n=45)

n=23

n=13

n=9

2015(n=57)

n=29

n=17

n=11

2017(n=57)

n=25

n=15

n=17

2016(n=25)

n=8

n=11

n=6


Should this pace of approvals continue and the FDA’s apparent lenient stance persist, it will take issues beyond the

regulatory sphere to hit biopharma’s current optimistic mood – particularly as a look at the biggest launches lining up

for 2018 reveals a healthy clutch of blockbusters in the pipeline.

Novo Nordisk’s new once-weekly diabetes medicine and Gilead’s latest HIV combination represent hugely important

franchise extension strategies – and hopes are sky-high for commercial success in both cases.

Incyte’s epacadostat is one of the most closely-watched immuno-oncology assets in the industry’s pipeline; release

of pivotal data from the Echo-301 trial, due in the coming months, is arguably one of the most important readouts for

the sector this year. And while hopes for Rova-T have dimmed somewhat, impending results are still important for

Abbvie’s oncology ambitions.

Investors will be tracking the progress of these future blockbusters with great interest over the coming months.

The success or otherwise of these products will help determine just how impressive a year 2018 turns out to be.

Source: Evaluate® January 2018Top 10 potential launches in 2018 by 2022 sales ($bn)

2022e sales ($bn)

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Bictegravir/F/TAF(Gilead)

5.05

Ozempic(Novo Nordisk)

3.05

Epacadostat(Incyte)

2.24

Rova-T(Abbvie)

1.44

Ozanimod(Celgene)

1.26

Apalutamide(J&J)

1.24

Elagolix(Abbvie)

1.21

AVXS-101(Avexis)

1.14

Lanadelumab(Shire)

1.13

Epidiolex(GW pharma)

1.05

18 Copyright © 2018 Evaluate Ltd. All rights reserved.The stars align for big-cap medtech

Medtech in review

The stars align for big-cap medtech

It was already clear that 2017 would be a different kettle of fish to 2016. But the extent of the

year-on-year difference in investor sentiment when it comes to large-cap medical device

makers is genuinely surprising.

Not a single company with a market cap in excess of $10bn saw its shares finish the year lower. And one group in

this cohort put in a performance better than any other since EP Vantage began analysing the share performance of

medtech groups: stock in the cosmetic dentistry company Align Technologies climbed an unprecedented 131%. No

big cap medtech has seen an annual share price increase this big within the last five years.

Certainly it is true that the general mood last year was markedly more positive than during 2016. The Thomson

Reuters Europe healthcare index reverted from a 12% fall in 2016 to a healthy growth rate of 16%, and US indices

jumped from sluggish growth in the 5-7% range to 31%.

Stock index % Change in 2017

Thomson Reuters Europe Healthcare (EU) 16%

Dow Jones U.S. Medical Equipment Index 30%

S&P Composite 1500 HealthCare Equipment & Supplies 31%

Indices

Indeed, big-cap medtech decisively outpaced big-cap biotech. This is partly due to confusing and often contradictory

messages from the White House on drug price controls; the pricing of medical devices does not grab headlines and

therefore largely escapes governmental attention.

Align’s 131% share hike was a result of an impressive commercial performance. For the nine months ended

September 2017 sales increased by 34% year on year, and profits 56%. The obvious question is how long Align can

maintain this kind of pace given that the wider orthodontics market is growing at around 4%.

The other top three big-cap risers are in robust health too, all showing share price increases of more than 50%.

19 Copyright © 2018 Evaluate Ltd. All rights reserved.The stars align for big-cap medtech


Top 3 risers Share price % change YE 2017 12 M

Align Technology ($) 131% 17.8 10.2

Straumann (SFr) 73% 11.1 4.7

Intuitive Surgical ($) 73% 40.9 16.3

Top 3 worst performers

Olympus (¥) 7% 13.1 (0.2)*

Essilor International (€) 7% 29.6 3.8

Philips (€) 9% 34.9 5.2

Large cap ($10bn+) medtech companies: Top risers and worst performers in 12 months Source: Evaluate® January 2018

*Market cap rose 7% on constant currency basis.

With massive risers and no fallers, it is clear that the good times are back for big-cap medtech, and huge gains can

be made by companies willing to invest in innovation and pioneer new commercial approaches. Investors might

be seeking safer, steadier growth than that seen in biotech, which last year often fluctuated on the basis of a single

Twitter account. But, if this analysis shows anything, it is that being relatively safe and steady does not preclude

vast increases.

If Align’s 131% share price rise across the past year was impressive, just look at Exact Sciences. The mid-cap

diagnostics group nearly quadrupled in value last year, and the overall performance of both mid- and small-cap

medtechs indicates that 2017 was a bumper year for investors.

But every silver lining has a cloud. The mounting valuations of device makers in this size bracket surely lower their

chances of being acquired by larger groups. The irony is that many of these stocks have risen precisely because

investors believe the companies might be bought.

Market capitalisation ($m)

Top 5 risers Share price % change YE 2017 12 M

Abiomed ($) 66% 8,287 3,399

Exact Sciences ($) 293% 6,291 4,818

Mazor Robotics ($) 135% 1,344 822

Axogen ($) 214% 965 669

Intersect ENT ($) 168% 954 608

Top 5 fallers

Getinge (SKr) (19%) 3,697 14*

Elekta (SKr) (16%) 3,052 (315)

IBA Group (€) (43%) 841 (524)

Natera ($) (23%) 483 (130)

Modern Dental Group (HK$) (24%) 277 (90)

Other significant risers and fallers in 2017 (ranked on market cap) Source: Evaluate® January 2018

*Getinge carried out a share issue in September which caused its market cap to rise.

20 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A comes back with a bang – or two – in medtech

M&A comes back with a bang – or two – in medtech

In terms of mergers and acquisitions of medtech companies, 2017 started with a bang and

ended with another. The purchase of St. Jude Medical by Abbott Laboratories for $25bn was

closed in the first week of January, and Becton Dickinson completed its acquisition of C. R.

Bard, a deal only slightly cheaper at $24bn, on the last working day of the year.

And what a year it was. The total value of all mergers closed in 2017 came in just shy of $100bn, the second-highest

annual total after the bumper year that was 2015. But the number of deals is shrinking, and this is bad news for both

patients and the sector itself.

More than twice as much was spent on M&A deals last year than in 2016: $98.5bn compared with $48.1bn. But only

183 contracts were signed, the fewest since 2009 when the financial crisis was biting hard.

40

60

20

80

100

120

140

Source: Evaluate® January 2018Medtech M&A transactions closed over the last 5 years

Tota

l dea

l val

ue ($

bn)

Dea

l cou

nt

450

400

350

300

250

200

150

100

50

0

Total deal value ($bn)

Deal count

Year

2013

23.3

2014

41.6

2016

48.1

2017

98.5

2015

127.9

MedtronicCovidien

Deal$49.9bn

Abbott - St. Jude$25bn

BD - Bard$24bn

0

235222

239

183

234

The Abbott-St. Jude and BD-Bard deals are the third and fourth largest the sector has ever seen. Both were fuelled by

the still-present need to build scale in the face of continuing resistance to premium pricing for innovative technologies.

Another factor is that device makers’ customers are merging into ever-larger groups too. Hospital and care home

chains across the US and Europe are banding together, so medtechs need to offer the largest suite of products

possible to hook one of the shrinking pool of potential clients as a repeat customer.

21 Copyright © 2018 Evaluate Ltd. All rights reserved.M&A comes back with a bang – or two – in medtech

The preponderance of large deals comes partly as a consequence of soaring market valuations of these groups.

Paradoxically, it is also a cause of them, as investors plough cash into companies talked of as M&A targets in the

hope of a future takeout. At some point, though, these companies will simply become too expensive, and the sector

will return to smaller deals.

Then again, there is another factor to consider. What effect the new US tax legislation might have on the frequency

of megamergers is as yet unknown, but if US companies find it easier to repatriate foreign cash even greater sums

could be spent on business development in 2018.

Completion date Acquirer Target Value ($bn) EP Vantage coverage

January 4 Abbott Laboratories St. Jude Medical 25.0 Abbott and St. Jude – it’s official

December 29 Becton Dickinson C. R. Bard 24.0 The return of medtech scale- building?

July 30 Cardinal Health Patient care, deep vein thrombosis and nutritional insufficiency businesses of Medtronic

6.1 Medtronic’s top line receives Cardinal’s blessing

October 3 Abbott Laboratories Alere 4.6 Abbott-Alere deal to go ahead

February 27 Johnson & Johnson Abbott Medical Optics, subsidiary of Abbott Laboratories

4.3 J&J sees a future in Abbott’s eye care business

February 1 Allergan LifeCell, subsidiary of Acelity 2.9 Acelity offloads Lifecell to Allergan for $2.9bn

April 3 Essity BSN Medical 2.9 -

April 28 Allergan Zeltiq Aesthetics 2.5 Two deals in two days means aesthetics is looking good

August 9 Philips Spectranetics 2.2 Philips spends $2bn on loss-making Spectranetics

January 31 Grifols Blood screening business of Hologic 1.9 -

Top 10 deals closed in 2017 Source: Evaluate® January 2018















22 Copyright © 2018 Evaluate Ltd. All rights reserved.Medtech funding ventures into the unknown

Medtech funding ventures into the unknown

In terms of venture financing, the first quarter of 2017 was like nothing the medtech sector has

ever seen before. Driven by the two enormous deals signed by Grail and Verily Life Sciences,

the three-month total hit $2.7bn, nearly twice as much as the previous record-holder, the

second quarter of 2010.

But, in an amplification of a trend that has been accelerating for some years now, the number of deals signed has

cratered. The first-quarter total of 95 was respectable, but activity dimmed over 2017, culminating in just 20 deals in the

final quarter of the year, the fewest since the third quarter of 2002. Massive deals are safer for VCs, but if smaller device

companies cannot access growth funding these huge rounds could, overall, render the sector’s future highly unsafe.

1,500

1,000

500

Source: Evaluate® January 2018Quarterly medtech VC investments

Inve

stm

ent (

$m

)

Fina

ncin

g co

unt

2,000

2,500

3,000

140

120

100

80

60

40

20

0

Investment ($m)

Financing count

Year

0

2013

Q1

1,005

Q2

1,296

Q3

957

Q4

965

2014

Q1

863

Q2

1,378

Q3

1,093

Q4

1,132

2015

Q1

1,042

Q2

1,271

Q3

1,194

Q4

1,010

2016

Q1

1,382

Q2

984

Q3

875

Q4

885

2017

Q1

2,677

Q2 Q3 Q4

140

127

104

110 110

124

104 103

115

70

80

87

70

80

72

95

66

44

20

661

495

1,315

121

Naturally the extraordinary showing in the first quarter means the annual total was also a record-breaker: at $5.1bn

last year’s total was the highest on record. As well as Grail’s near-billion series B, putting the liquid biopsy company

firmly into unicorn territory, and the $800m seed funding picked up by Verily, formerly known as Google Life

Sciences, there were two other rounds in excess of $100m.

Guardant Health, also active in liquid biopsy, raised $360m in the second quarter and shared an investor with Verily:

Temasek, Singapore’s National Wealth Fund. These top three rounds of 2017 are also the top three in the medical

device industry’s history. Being cheap technologies with the potential for widespread use, sequencing and genomics

are catnip to VCs.

23 Copyright © 2018 Evaluate Ltd. All rights reserved.Medtech funding ventures into the unknown

Date Round Company Investment ($m) Focus

March 1 Series B Grail 900.0 In vitro diagnostics

January 26 Seed capital Verily Life Sciences 800.0 Diabetic care; ophthalmics; patient monitoring

May 11 Series E Guardant Health 360.0 In vitro diagnostics

November 2 Undisclosed Annoroad 105.0 Blood; in vitro diagnostics

May 3 Series C Outset Medical 76.5 Nephrology

October 24 Undisclosed Neuropace 74.0 Neurology

November 29 Series B Electrocore 70.0 Neurology

December 18 Series F Respicardia 58.5 Anaesthesia & respiratory; cardiology

August 16 Series C Color Genomics 52.0 In vitro diagnostics

March 16 Series C Moximed 50.0 Orthopaedics

Top 10 rounds of 2017 Source: Evaluate® January 2018

2017 was wonderful for a few companies seeking venture capital – but woeful for the majority. The number of deals

slipped again, with the annual figure of just 225 the lowest since 2006. The trend downwards is clear in both the

annual and quarterly analyses.

One statistic sums up the haves-and-have-nots aspect of venture funding in 2017: the top 10 rounds make up more

than half of the total invested. True, 2018 seems likely to see a diminution in these $100m-plus rounds – not least

because Grail, Verily and the rest of that cohort tend to be secretive companies that have a great deal to prove in the

clinic. But the number of funding deals must pick up if the sector wants to be sure of a healthier future.

100

200

300

400

500

600

0

Source: Evaluate® January 2018Number of VC rounds 2013-17

Fina

ncin

g co

unt

Year

2013

492

2014

448

2015

368

2016

309

2017

225

24 Copyright © 2018 Evaluate Ltd. All rights reserved.US listings disappoint in quiet year for medtech floats

Date Company Amount raised ($m)

Offering price

Share price change to YE17

Exchange Focus

June 21 Bonesupport 57.6 SEK29 (33%) Nasdaq Stockholm General and plastic surgery; orthopaedics

October 12 Orthopediatrics 52.0 US$13 48% Nasdaq Orthopaedics

October 13 Biom Up 45.0 €10.5 65% Euronext Paris Cardiology; dental; orthopaedics

October 12 Celcuity 26.2 US$9.5 99% Nasdaq In vitro diagnostics

March 28 Visioneering Technologies 24.9 Aus$0.42 31% Australian Securities Exchange

Ophthalmics

June 21 Sedana Medical 11.5 SEK19.5 95% Nasdaq First North Drug delivery

May 9 Endra Life Sciences 9.7 US$5 (3%) Nasdaq Diagnostic imaging

September 20 Co-Diagnostics 7.1 US$6 (56%) Nasdaq In vitro diagnostics

June 12 Myomo 5.0 US$7.5 (50%) NYSE Cardiology; physical medicine

May 15 Integrum 2.5 SEK20 75% Nasdaq First North Orthopaedics; physical medicine

2017’s medtech IPOs Source: Evaluate® January 2018

US listings disappoint in quiet year for medtech floats

The coming year is expected to play host to the largest healthcare flotation in history when

Siemens spins off its Healthineers unit in a deal that could raise more than $10bn. Last year,

though, was conspicuously quiet: the total value of medtech IPOs came to just $241m.

Despite the roaring health of the public exchanges across the year, with most listed medtech companies enjoying

share price growth and some trebling or even quadrupling in value, just 10 companies went public in 2017. The deals

themselves were small and, unusually, only half of them were conducted in the US.

The unusual preponderance of Stockholm-based IPOs – three of the 10 – is a reflection of the Swedish market’s

receptiveness to life science companies. Highly unusually the lion’s share of the cash raised through 2017’s deals

came via offerings outside the US – $141m to the US’s $100m. The general rule that US-listed healthcare stocks do

better than European ones was unchanged in 2017, yet the medtech companies that listed on the main Nasdaq

exchange or the NYSE performed more poorly than the European and Australian stocks, judged by the share price

change to the end of 2017.

The US-listed stocks improved by an average of just 8%, versus 47% average share growth for the non-US stocks. It

looks like the Europeans were right to stay home.

Source: Evaluate® January 2018Medtech IPOs 2013-2017

Am

ount

rai

sed

($m

)

Cou

nt

300

200

100

600

700

500

400

800 12

10

8

6

4

2

00

Amount raised ($m)

Count

Year

2013

Q1

58

Q2

111

Q3 Q4

2014

Q1

293

Q2 Q3

278

Q4

306

2015

Q1

208

Q2

384

Q3

480

Q4

2016

Q1

48

Q2

57

Q3 Q4

2017

Q1 Q2 Q3 Q4

5

2

8 8

12

6

7

5

8

5

3

2

4

2

4

1

5

1

3

7

12386

2

25

208

93

172

126

652

418

25 Copyright © 2018 Evaluate Ltd. All rights reserved.US listings disappoint in quiet year for medtech floats

2017 saw the fewest listings of any year since EP Vantage started tracking them. It also raised the lowest annual total.

Even when Convatec’s aberrant £1.47bn ($1.9bn) IPO is removed the 2016 total and average deal size – previously

both the lowest – outstripped 2017’s.

The quarterly analysis, from which Convatec’s listing has also been excluded, makes this diminishing of IPO value

explicit.

But it is equally clear that few of these small groups can make it out to the public exchanges either. The current

market wobble could mean things get even worse in 2018.

Source: Evaluate® January 2018Number of US approvals granted, 2007-2017

Num

ber

of a

ppro

vals

10

20

30

40

50

60

0

Year

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Number of de novo clearances

Number of PMAs and HDEs

3230

18

22

4341

23

33

51

40

50

7

3 4 3

10 10

18

28

18

26

31

26 Copyright © 2018 Evaluate Ltd. All rights reserved.Twice as many in half the time: the FDA speeds up approvals

Twice as many in half the time: the FDA speeds up approvals

In the end 2017 fell short of expectations. At the half-year point the data suggested that last

year might yield more US device approvals than any previous year, but with 50 devices getting

the FDA’s endorsement, 2017’s total fell just shy of 2015’s.

Still, this is not a shabby showing by any means, and there is another reason for cheer in the medtech industry:

these 50 products were approved faster than ever before. It took the agency an average of just 14 months to

process the applications, around half the time it took in 2013 and shaving five months off the previous year’s

average approval time.

The graph shows a clear, though hardly smooth, increase in the annual number of FDA approvals over the past

decade. It counts the number of first-time premarket approvals (PMAs), the type of marketing permission the FDA

grants for high-risk devices unlike anything yet approved, and human device exemptions (HDEs), which are

awarded to similarly innovative products for rare conditions.

The FDA has long struggled to find a balance between ensuring that crucial devices reach patients and denying

approval to dangerous or ineffective products. Perhaps surprisingly given the US’s reputation for being friendly to big

business the FDA is more stringent than European regulators, who tend to insist on safety but not always efficacy.

27 Copyright © 2018 Evaluate Ltd. All rights reserved.

10

15

20

5

25

30

35

40

45

Source: Evaluate® January 2018First-time PMAs and HDEs for therapy areas with most approvals over 5 years

Cou

nt

Cardiology In vitro diagnostics Orthopaedics Neurology Diabetic care

Year

2013

7

4

211

2014

11

9

311

2015

15

12

6

5

2

2016

12

10

3

2

4

2017

21

13

221

0

For simplicity, the graph above displays the number of PMAs and HDEs for the five therapy areas that have seen the

most approvals over the last five years.

In 2017 the FDA granted more than twice as many high-risk device approvals as it did in 2013 – and it did so in half

the time. The devices approved in 2017 took an average of 13.8 months to pass through the FDA’s hands, beating last

year’s average of 18.1 months and 2014’s previous fastest time, 16.7 months.


28 Copyright © 2018 Evaluate Ltd. All rights reserved.

One way the agency has cut these approval wait times is hiving off the safer innovative products into the de novo

510(k) pathway. The number of de novos to obtain clearance each year has also shown an unsteady but unmistakable

increase, with this year’s total of 31 setting a new record.

Concerns have been raised in the past that efforts to increase the throughput of devices might lead to rushed,

insufficient assessments. But it still takes around three years longer to obtain FDA approval for an innovative medical

device than it does to get European approval, since the agency generally requires larger, better controlled clinical

trials than its counterparts across the Atlantic.

The agency’s performance in recent years would seem to suggest that there has been room to liberalise without

becoming dangerously lax.

EvaluateMedTech device classification 2013 2014 2015 2016 2017

Anaesthesia & respiratory 61.3 18.5 - - 16.7

Blood 13.2 8.7 - - -

Cardiology 17.1 12.9 14.4 13.3 16.2

Diabetic care 15.7 19.0 9.8 12.0 7.6

Diagnostic imaging 16.8 13.0 11.7 11.6 8.5

Drug delivery - - - - 13.9

Ear, nose & throat - 9.5 - - -

Gastroenterology - - 17.7 9.6 13.0

General & plastic surgery 68.2 28.7 - 24.0 12.7

General hospital & healthcare supply - - - 39.8 -

In vitro diagnostics 8.6 13.3 11.3 9.8 10.2

Nephrology - - 25.1 - -

Neurology 40.5 8.9 19.4 10.6 19.8

Obstetrics & gynaecology - - 12.9 - 11.4

Ophthalmics 21.4 11.0 28.1 9.6 8.5

Orthopaedics 30.0 48.0 24.5 37.8 8.3

Physical medicine - - 80.9 - -

Urology - - 29.3 - -

Wound management 31.2 - 14.7 11.5 36.0

Average 26.9 16.7 17.3 18.1 13.8

Average review times of first-time PMAs and HDEsby therapy area (months) Source: Evaluate® January 2018


29 Copyright © 2018 Evaluate Ltd. All rights reserved.Looking forward to 2018

Looking forward to 2018

Throughout 2017 as sentiment climbed for the majority of pharma and biotech companies, the

big question for the sector was whether the good times could continue. The issue remained live

across the year, which was marked by several spells of choppy waters. Most notable was the

major correction in October caused by a disappointing reporting season from the big biotech

beasts, bringing concerns about the sustainability of US drug prices to the fore once again.

The opening weeks of 2018 have proven equally volatile, pointing to another up-and-down year for the sector. At the

same time, however, many positive indicators of sector health show no sign of reversing – readily available funding

for innovative companies, for example, and an open-minded US regulator.

After 2017’s M&A lull many are predicting that desperation will force the hands of several larger acquirers this year,

potentially giving biopharma another boost. A spree of deals in early January – Sanofi snapped up Ablynx and

Bioverativ and Celgene moved on Juno and Impact Biomedicines – seemed to support this theory.

However the huge valuations that investors are bestowing on attractive assets will continue to act as a major drag

on this type of deal-making. Bristol-Myers Squibb’s eye-watering deal with Nektar Therapeutics is a case in point – in

February 2018 the pharma giant paid $1.85bn up front to access a hotly-tipped but very early stage immuno-oncology

project. Nektar’s $14bn market cap presumably made a full takeover unjustifiable.

So those banking on an M&A push in 2018 could be disappointed, particularly if fundraising options remain open. But,

overall, 2017 has left the sector looking pretty comfortable heading into 2018. As always, high-profile pipeline failures

remain a threat, as does a reinvigorated push from the White House, or other vested interests, on drug pricing.

Many of these arguments carry over into the medtech sphere. There has been just one $1bn-plus acquisition so far

in 2018 – that of Sirtex by Varian Medical Systems. The recent stock market lurch might bring some valuations down,

allowing buyers to pounce, but the large companies are already so consolidated that antitrust concerns pose an

increasing risk to megamergers.

Further fluctuations in the market might also deter device makers from going public. If smaller companies find the

conditions for listing unpropitious this will cut off a much-needed funding source in an industry that is finding it harder

than ever to attract venture cash.

The FDA provides cause for optimism. The agency’s increasing lightness of touch is extremely welcome as European

device regulations tighten, and there is no reason to think that the scorching pace of approvals for innovative

products will slow down in the coming year.

The friendly FDA will provide a major comfort to both medtech and biopharma sectors this year, should wider stock

market volatility continue.

Additional complimentary copies of this report can be downloaded at: www.evaluate.com/2017Review

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PHARMA & MEDTECH 2017 REVIEW – FEB 2018

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Pharma, Biotech & Medtech 2017 in Review

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