2012 Pharma Industry Summary Review: Pharmaceutical Industry's Winners and Losers

2012 has been a relatively fruitful year for Pharma. The financial performance of the biotechnology and healthcare indexes showed robust yield compared to the leading indexes, with the Nasdaq Biotechnology index returning ~35% growth YTD (more than 4 times that of the Dow Jones). For some of the publicly traded companies in the sector 2012 was an eventful year, with major achievements that were strongly reflected in their stock performance. The average return on investment this year for the top five companies was more than 350%, fueling up investors’ dreams.

This year we witnessed a bigger appetite for institutional funding when twelve new pharmaceutical companies entered the stock exchanges compared to the ten IPOs in 2011. The IPOs of 2012 were larger than last year, with Puma Biotechnology leading the pack with its mega IPO of $138M.

In addition, this year the momentum for M&A activities continued, as 7 deals above the $1 Billion target were completed and total deal value for the 50 biggest deals topped $27 Billion. Continuing the trend from previous years, M&A activities focused mainly on cancer and CNS therapeutics. Looking at licensing activities, we witnessed a tendency to license compounds in very early development stages, namely discovery and preclinical stages.

But this year wasn’t all about the finance. We also viewed some big achievements in bringing new life saving medications to patients. 2012 will be remembered as one of the years with the largest number of approvals from the FDA, with more than 30 new drugs, most of them targeted at cancer. Some of the drugs approved this year have the potential to become the next blockbuster drugs, addressing therapeutic areas that haven't seen new therapies for more than a decade. We also noticed some monumental failures of companies trying to develop treatments for some of the most serious diseases. We saw the industry giants, Pfizer and J&J, failing in the most expensive Phase III study for Alzheimer's disease, and Bristol-Myers being forced to write-off its very recent investment after the newly acquired compound, BMS-094, showed major safety issues.

For a full summary of the developments in the pharmaceutical industry in 2012 check out Bioassociate's latest free white paper: "2012: The Winners and Losers of the Pharmaceutical Industry"