Biopharmas big bet on cancer is laid bare

12 February 2020

Edwin Elmhirst, Amy Brown / Vantage

Drug developers have directed more than a third of their dealmaking firepower at oncology projects over the past five years, with cardiovascular a distant second.
Various pills lying on top of $100 bills

The domination of cancer research above all other diseases is well appreciated. A new analysis of where the deal money is being deployed shows the extent of biopharma’s preoccupation.

More than a third of the cash spent by drug developers on company acquisitions and licensing deals has been directed at oncology over the past five years – a sum of around $95.3bn, according to a Vantage analysis of EvaluatePharma data. This excludes M&A targeting several therapy areas, like Celgene, so the real figure is likely to be larger.

The cardiovascular space has seen the second-biggest spend, though two substantial deals skew the figures here: Johnson & Johnson’s $30bn takeout of Actelion and Novartis’s more recent move on The Medicines Company, for almost $10bn. These transactions were left in the analysis as they were pure therapy area plays – and of course removing them only increases cancer’s proportional take.

Combined valueBiopharma M&A and licensing deal spend, by therapy areaInteractive legend - click series to toggle visabilityInfectionsCancerImmunologyGastro-intestinalSkinNeurologySensory organsRespiratoryCardiovascularMusculoskeletalBloodEndocrineMiscellaneousGenito-urinary20152016201720182019$0bn$10bn$20bn$30bn$40bnEvaluatePharma

This analysis has been constructed from all M&A transactions with a clear primary therapy focus. Where an up-front fee was paid, this was used rather than the total deal value.

To give a more complete look at the sector’s spending, Vantage also counted licensing deals, though only those with a disclosed up-front value. These were assigned based on the therapy focus of the lead project.

It is important to remember that the cancer and cardiovascular fields are vast compared with areas like dermatology or sensory organs, and as such, they can be expected to attract larger sums of money. Still, those working in infectious diseases, for example, would argue that the distribution of wealth has not always followed need.

What looks like a turn away from oncology in recent years is not what it seems: deal-making activity between drug makers overall has been dimming since the biotech boom of 2015, as previously described by Vantage for M&A and licensing deals alike. This decline is reflected in the chart above, a trend that has partly been driven by easy access to financing, which has lessened the need for smaller developers to sell up.

The notion that the sector is moving away from cancer is also disabused by the chart below, which shows little change in the proportion of the deployed cash that this area is attracting, a jump in 2016 notwithstanding. In that year, Pfizer bought Medivation for $14bn and Abbvie paid $5.8bn up front for Stemcentryx.

Big deals will naturally skew the numbers in this type of analysis, so it is actually quite surprising how constant cancer’s percentage has remained, in the last three years at least.

Proportion of annual valueProportional total biopharma deal spend, by therapy areaInteractive legend - click series to toggle visibilityInfectionsCancerImmunologyGastro-intestinalSkinNeurologySensory organsRespiratoryCardiovascularMusculoskeletalBloodEndocrineMiscellaneousGenito-urinary201520162017201820190%20%40%60%80%EvaluatePharma

Other areas that stand out above include cardiovascular, with the peaks representing the deals mentioned previously. Neurology has also seen big amounts spent, including all central nervous system-related indications like psychiatry and dementia, with the 2018 peak driven by Novartis’s acquisition of Avexis.

A similar story emerges when looking at a count of deals happening, below, first on a proportional basis, and then by actual numbers.

Outside the ever dominant cancer space, it is interesting to see that biopharma’s interest in neurology has remained constant, at around 14% of all deals announced since 2015. This is notable considering the exit of several big pharma groups from this space.

The miscellaneous group can also be seen emerging in the chart below; this contains a lot of rare disease projects that do not easily fit into traditional therapy areas.