M&A is off to a hot start in 2017; Too bad we can’t say the same for gender parity

M&A transactions are looking brighter this year, and valuations remain high

Two big M&A deals Thursday, the $30 billion acquisition of Actelion and Celgene’s pact to acquire newborn Delinia for $300 million upfront, are raising hopes that 2017 will be rich in buyouts. The still-preclinical Delinia had just raised a $35 million A round a few months ago, meaning that Sofinnova Partners and Atlas Venture made out like bandits on that one. Actelion CEO Jean-Paul Clozel also proved that he could get just about everything he wanted from J&J: A rich cash deal plus a new company that will spin out Actelion’s promising pipeline. Earlier, Takeda proved how much biotech assets are going for when it paid $5.2 billion for Ariad — bidding against itself in the process. There’s also plenty of pent up demand for M&A. Throw in some companies that almost have to shoot for a major deal this year — Gilead, Biogen, Sanofi, among others – and you have the makings for some brisk bidding wars ahead. That kind of M&A environment will do two things: Help buoy IPOs, as we’ve already seen in an early glimpse, and keep venture cash pumping into biotech. M&A is a very attractive alternative to IPOs now. And unless the Trump administration does something soon to really douse the market environment for drugmaking, 2017 is shaping up as a very interesting year.

 We have to do a lot better about gender parity in biotech, now

I found it hard to believe just how slowly women are gaining ground in biotech. A new study from Liftstream’s Karl Simpson shows that women hold only one in 10 board seats at the newly public biotechs he reviewed. And if you look at their rate of improvement in 2016, it will take some 40 years to achieve parity. Those are the kind of stats you’d expect to see in the construction field. A high-tech enterprise like drug development, centered in progressive urban areas like the Bay Area and Cambridge/Boston, with one of the best educated workforces of any industry? No way. And yet it underscores just how male-oriented the biotech industry is. CEOs recruit CEOs, largely men, or the men who dominate VCs go on the board – and stay on the board. A year ago, there was a moment when the dirty little secret of biotech’s entrenched sexism became something of a cause celebre when some of the parties at JP Morgan included female models to help facilitate the frat boy flair they were looking for. Parties may have changed as a result, but it’s a meaningful improvement in representation in positions of influence that will dictate real change. There has to be a tipping point at hand to make that happen much, much sooner. And I’m not talking about 20 years from now. Diversified management and boards have a proven, positive impact on company performance. It’s time for biotech to get out of the ice age.

PhRMA is dreaming if it believes it can reform the drug industry’s tattered image with an ad campaign

PhRMA believes it has an answer to what ails the industry. After drug companies emerged from 2016 painted with the same brush of scandal for rapidly rising prices – for new and old drugs alike – the industry lobbying group believes that spending 10s of millions of dollars on a publicity campaign aimed at giving pharma a better image with the public should help turn the tables. But the chances of it working are almost nil. Attacking something, like managed care’s old Harry and Louise ads, is a lot more effective than indirectly attempting a makeover of an industry’s rep. At this stage, when Donald Trump attacks pharma, it’s because he knows he’s on to a populist approach that will work like magic to build steam for some sort of reform. One Tweet from the president is easily worth many times what PhRMA’s membership will get from a million dollars of advertising. PhRMA’s best hopes lie in what it does best; influencing members of Congress to back biopharma on a bipartisan basis. That is what delivered the 21st Century Cures Act and that is how the group can best influence reform. Truth is, change is coming, one way or the other. It’s time PhRMA got ahead of that bus, rather than try to step in front of it. And don’t look for the classic red herrings to work this time. Drug prices are a much easier target than complex hospital costs. And solutions, like Medicare negotiations, are going to be difficult to resist.

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